House of Commons

Monday 30th January 2012 Commons Chamber

Monday 30 January 2012

The House met at half-past Two o’clock

Prayers

Monday 30th January 2012 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Monday 30th January 2012 Commons Chamber

The Secretary of State was asked—

[Mr Douglas Carswell (Clacton) (Con)]

1. What steps his Department has taken to increase transparency in (a) local government and (b) departmental spending.

[The Secretary of State for Communities and Local Government (Mr Eric Pickles)]

We have replaced the previous Administration’s byzantine bureaucracy with transparency and local accountability. We have asked every council to open up their books and to publish their spending over £500. Every council is doing this, apart from Nottingham city council, which finds it a bit difficult.

My Department is practising what we preach. Not only do we publish our spending over £500, but we have also published every single item of corporate credit card spending since 2004.

[Mr Carswell]

Will my right hon. Friend join me in congratulating and applauding Tendring district council, which has decided not only to publish items over £500, but to publish all items of expenditure every month? This has created a climate of thrift that has allowed it to cut council tax. Will he ensure that Whitehall Departments, agencies and quangos take similar steps?

[Mr Pickles]

I am happy to join my hon. Friend in congratulating Tendring. The council did not make the headlines for many years, but suddenly it has started coming up with lots of new initiatives. It is certainly in the forefront of transparency, and where Tendring leads, I am more than happy to follow.

[Mr Denis MacShane (Rotherham) (Lab)]

Frankly, it is not good enough, because the Department is not publishing spending between 50p and £500, and that is where—on credit cards and in other areas—a lot of things go wrong. Can we have some transparency in this wretched Department, instead of the cover-up it is currently practising?

[Mr Pickles]

I am afraid that the right hon. Gentleman is quite wrong. We have published every penny of spending on credit cards, and that is why we know that Labour Ministers wined and dined at some of the finest restaurants in the country, including the Boisdale, Somerset House, the National Gallery, the Wolseley and the Cinnamon Club. It may be of interest to know that Labour Ministers were not alone—the Audit Commission managed to go to L’Escargot, Coq d’Argent and the Cinnamon Club, and its board members even went to an oyster bar to discuss corporate governance, and then lost the receipt.

[Sir Bob Russell (Colchester) (LD)]

2. What plans he has to return empty homes to use.

[Dr Julian Huppert (Cambridge) (LD)]

5. What plans he has to return empty homes to use.

[Charlie Elphicke (Dover) (Con)]

6. What plans he has to return empty homes to use.

[The Parliamentary Under-Secretary of State for Communities and Local Government (Andrew Stunell)]

We have put in place powerful tools and incentives to support local communities to tackle empty homes. The Government published “Laying the Foundations—A Housing Strategy for England” on 21 November 2011. This sets out our plans for tackling empty homes.

[Sir Bob Russell]

I thank the Minister for that reply and I congratulate the coalition Government on taking action after 13 years of failure. While I welcome the empty homes premium and the empty homes fund—and bearing in mind that the borough of Colchester has 2,024 empty houses, 591 of which have been empty for more than six months—may I urge him to bring more pressure to bear on local authorities, especially as 2,000 dwellings is roughly the size of a sprawling estate, land for which is short and which would be a planning and environmental disaster if it went ahead?

[Andrew Stunell]

I certainly agree with my hon. Friend that it is a scandal that there are so many empty homes, especially if they are empty for more than six months. The total at the moment is 270,000 across the country, but the good news is that that is a reduction of 21,000 in the last year. It is important to tackle the problem and that is why we have committed £150 million to bringing empty homes back into use. I am sure that his friends in Colchester will want to take advantage of that.

[Dr Huppert]

Will my hon. Friend join me in congratulating councillors Sian Reid and Catherine Smart of Cambridge city council on their work to reduce the number of empty homes in Cambridge since 2004? The Government’s £150 million empty homes fund is welcome. How can Cambridge city council access it in order to get even more empty homes back into use?

[Andrew Stunell]

Local authority bids will be invited shortly for the £100 million that we have announced for providing affordable housing, and I hope that Cambridge will be right there. We are currently drawing up the criteria for the £50 million to tackle the worst concentration of empty homes. I also know that several community and voluntary groups in the east of England have their eyes on Cambridge.

[Charlie Elphicke]

Although the number of homes empty for six months in the Dover district has fallen sharply, to 872, do Ministers agree that a lot more work is needed to undo the damage of the past in Dover? In 2005, there were 674 empty homes. I urge the fastest possible action. During the same time, the social housing waiting list has grown by 14%.

[Andrew Stunell]

I absolutely agree with my hon. Friend that it is an urgent task to get empty homes back into use, particularly affordable use. Often, the waiting lists facing many local authorities could be shortened if authorities tackled empty homes vigorously. That is why we have provided the new homes bonus as a reward and are investing £100 million to switch empty homes to affordable homes.

[Gloria De Piero (Ashfield) (Lab)]

Does the Minister accept that making use of empty homes is vital not just to tackling homelessness but to protecting the green belt from house building?

[Andrew Stunell]

The hon. Lady is absolutely right. An empty home already has planning permission and is capable of use without all the aggravation often created by new development. More than that, an empty home is often the cause of antisocial behaviour and other problems in a community, so it is a double win; in fact, a treble win. I agree entirely.

[Bill Esterson (Sefton Central) (Lab)]

Sefton has a shortage of land for building houses but has 6,000 empty homes. Why do the Government not let councils such as Sefton include those homes in their housing strategy? That would also be a way to protect the green belt and urban green space.

[Andrew Stunell]

I strongly urge Sefton council to develop a stronger policy on tackling empty homes. I hope that with the incentives that we have provided—the new homes bonus, the investment in affordable housing and the £50 million available to tackle the worst concentration of empty homes—it will do exactly that. The matter that the hon. Gentleman raises really relates to issues in the national planning policy framework and his council’s core strategy. I suggest that he watch this space.

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

Although dealing with empty homes is one way to address the housing crisis, what is the Minister doing to build more homes, particularly as the net supply, housing starts and housing completes have all fallen?

[Andrew Stunell]

First, we have commissioned a social and affordable housing programme, which will deliver 170,000 homes during this Parliament, resulting in more social and affordable homes at the end of this Parliament rather than a reduction, as happened under the Labour Administration. Secondly, the new homes bonus was paid out on approximately 160,000 new and returned empty homes in the past 12 months, and we are determined to increase that rate dramatically.

[Alex Cunningham (Stockton North) (Lab)]

3. What recent assessment he has made of value for money and standards for tenants in the private rented sector.

[The Minister for Housing and Local Government (Grant Shapps)]

The English housing survey shows that standards in the private rented sector have continued to improve more rapidly than in other sectors. In most areas, renting remains more affordable than purchasing a home.

[Alex Cunningham]

Shelter’s rent watch report 2011 found that, on average, private rents in 55% of local authorities in England were unaffordable for ordinary working families, and that 38% of privately renting families with children had to cut down on food to pay their rent. Many rogue landlords are still out there, providing appalling accommodation at poor value. What are the Government doing about those issues?

[Grant Shapps]

The hon. Gentleman is absolutely right to point out those issues. I am concerned to ensure that quality in the private rented sector is as good as possible, and I am undertaking work in that direction. It is worth considering, though, that satisfaction rates in the private rented sector are higher, at 85%, than those in the social sector, at just 81%.

[Annette Brooke (Mid Dorset and North Poole) (LD)]

What is the Department’s view on local landlord accreditation schemes, and what advice does he give on such schemes to local authorities?

[Grant Shapps]

Local accreditation and licensing schemes can be good value for local people. I attended a local accreditation in Welwyn Hatfield on Thursday evening. The scheme is very good and designed locally to address local problems; in our case, it happens to be a student population. That is the advantage of doing it locally: it can be fitted in with what the community requires.

[Jack Dromey (Birmingham, Erdington) (Lab)]

Rents are soaring in the private rented sector, and too many rogue landlords are ripping off tenants, undermining reputable ones. Yet earlier this month the Prime Minister said that rents were falling, and the Minister for Housing and Local Government has put up for grabs the remaining tenant protections that he has not already scrapped. Will he explain why the Prime Minister is so out of touch that he thinks that rents are falling and why he believes that basic tenant protections amount to red tape, at a time when it has never been more important to regulate the private rented sector, in order to drive standards up and rogues out?

[Grant Shapps]

On the first point, I imagine that the Prime Minister was probably referring to recent surveys by LSL Property Services showing two-month falls in rent levels. Those might be partially seasonal, but nevertheless rents have been falling—we will see what happens in future months. The hon. Gentleman calls for greater regulation. I will tell him what happened when there was greater regulation in the private rented sector. There used to be rent controls, for which some of his colleagues, including Labour’s London mayoral candidate, are calling, but when they were introduced, the housing rented sector fell from 55% of the overall sector to just 8%. However, since rent controls were abolished in the late ’80s, the market has doubled to 16%. I am afraid, therefore, that more regulation is unlikely to be the solution.

[Tessa Munt (Wells) (LD)]

House owners have a duty to declare neighbour problems or disputes when selling their properties. Will the Secretary of State protect tenants in the private and social housing sectors in the same way by making it the law that landlords and agents must disclose neighbour problems when they enter into a new tenancy agreement, so that we do not have one rule for house owners and another for tenants?

[Grant Shapps]

My hon. Friend makes a good point. It is important that when people move they know what their neighbours are like, whether for social housing, properties purchased or in the private rented sector. I encourage everybody thinking about renting to use an agent that belongs to something like the Safe Agent Fully Endorsed scheme, which provides reassurance that some of these checks are being carried out properly.

[Dr Sarah Wollaston (Totnes) (Con)]

4. What steps he is taking to make (a) empty houses and (b) vacant properties above shops available for rent.

[The Minister for Housing and Local Government (Grant Shapps)]

Our strategy for empty homes applies to all properties, including flats above shops, but we are also committed to revitalising high streets and shortly will publish the Government’s response to the Mary Portas review.

[Dr Wollaston]

The South Hams is one of the least affordable places to live in the UK, with house prices on average 16.7 times the average income, and more than 1,200 households on bands A to D of the housing waiting list. What does the Minister plan to do to address these affordability issues in the South Hams?

[Grant Shapps]

My hon. Friend is right that for levels of non-affordability in many areas to have reached 16.7 times average earnings is unacceptable. The Under-Secretary, my hon. Friend the Member for Hazel Grove (Andrew Stunell), referred to the social house building programme and the 170,000 being delivered during this Parliament. She will also be pleased to hear about the provisional allocation, within the local authorities comprising her constituency, of more than £3.5 million under the new homes bonus, which will also encourage greater affordability when used to build more homes. We are also considering allowing homes over shops, and many other changes coming from the Portas review.

[Mr Andrew Love (Edmonton) (Lab/Co-op)]

Will the Minister explain how dismantling the powers available to local authorities to deal with empty homes above shops—for example, the management orders have increased from six months to two years, and properties have to be substantially dilapidated before action can be taken—will help to deal with the problem?

[Grant Shapps]

There might just be a fundamental difference of opinion between Opposition and Government Members on this matter. The latter believe that private property should not be taken over automatically by the state just because somebody has gone on holiday or is working absent. There have been cases where people who have been working absent for six months have come back to find that their properties have been taken over. That is unacceptable, and we do not want that to happen. The hon. Gentleman is right that we have raised the limit to two years, but a range of tools is available to local authorities to get properties back into active use, and we are working actively on the empty homes programme. The Government are fully committed to getting properties back into use, hence the big drop in the number of empty ones.

[Dr Andrew Murrison (South West Wiltshire) (Con)]

Given the Mary Portas review and the flagging state of many high streets in our small market towns, what more can be done to help change to residential the usage of redundant retail properties that, realistically, are unlikely ever to be used for retail purposes again?

[Grant Shapps]

My hon. Friend makes an excellent point. He will be aware that we are looking at making changes to the use class orders, through the national planning policy framework, to allow for greater flexibility. We have a good opportunity to allow some commercial properties to be more easily converted to homes, and I hope that will help with the ever-present pressures on housing in this country.

[Grahame M. Morris (Easington) (Lab)]

8. What assessment he has made of the potential effects on lower-income households of his planned localisation of and changes to council tax benefit.

[The Parliamentary Under-Secretary of State for Communities and Local Government (Andrew Stunell)]

On 19 December my Department published an impact assessment setting out the Government’s assessment of the impacts of the reform of council tax support.

[Grahame M. Morris]

The Secretary of State has told councillors that they have a “moral duty” to freeze council tax this year, but at the same time he plans a cut of £500 million, or 10%, to council tax benefit for the poorest, so that the only people to face rising council tax bills next year in constituencies such as mine will be the most deprived and the working poor. Why is he balancing the books on the backs of the poorest?

[Andrew Stunell]

The hon. Gentleman’s original question referred to localisation and changes in level. I hope that he accepts that the localisation part of the proposal is absolutely right and fully consistent with what this Government are doing. The changes in level are necessary to tackle the deficit; they are part of the Government’s deficit reduction programme. I would remind him that the bill for council tax benefit has gone from £2 billion a year, in 1997, to £4 billion a year. That is largely a product of the rampant rises in council tax during the 13 years of Labour Government, so it seems absolutely right that we should tackle the deficit in this way.

[Geoffrey Clifton-Brown (The Cotswolds) (Con)]

Those on low incomes in Cirencester are suffering a double whammy. Their town council is increasing its precept by 4.7% and the police are increasing their precept by 2.9%, at a time when the district and county councils are making the tough decision to freeze council tax. Will my hon. Friend see what can be done to ensure that all precepting authorities keep their increases to a minimum?

[Andrew Stunell]

The Secretary of State has made the Government’s point of view clear. He believes—and I believe—that local authorities and precepting authorities should behave with responsibility in these difficult times. I am sure that his words will have been heard, and I am happy to underline them from the Dispatch Box.

[Mr Clive Betts (Sheffield South East) (Lab)]

Will the Minister confirm that localising council tax benefits in 2013 and cutting Government support by 10% will mean that if authorities that are strapped for cash cannot put extra money into the benefits scheme, if pensioners cannot have their benefits altered, and if councils have to take account of the tapers for people in work, those on council tax benefit who are out of work will see those benefits effectively cut by over 20%?

[Andrew Stunell]

First, may I thank the hon. Gentleman for his support for our localising the council tax benefit? Secondly, I do not recognise or accept that figure. If he looks at the impact assessment, he will see that he has grossly overstated the facts. In fact, the average weekly reduction in support will be £2.64 per household. I believe that is the right figure to be quoting in the House, not the one that he chose to use.

[Michael Ellis (Northampton North) (Con)]

Council tax more than doubled under Labour, whereas the coalition has funded a council tax freeze for two years in a row. I support this Government’s localism agenda. Does the Minister agree that it will be fairer for the general population as a whole under the current Government’s scheme?

[Andrew Stunell]

Yes I do. I would make the point that with localism comes the capacity of local authorities to fine-tune the schemes in their areas to suit their local circumstances, and I would encourage local authorities to start to do that.

[Helen Jones (Warrington North) (Lab)]

The Minister needs to accept that the scheme he is proposing is arbitrary and unfair, and hits the working poor most. How can he possibly justify cuts of between 13% and 25% in benefit for people of working age, and a switch from annually managed expenditure to grant, which means that any increase in claims will be paid for by cuts in benefit for the poorest people? Is it not time that the Government, who were prepared to accept a million-pound bonus for a banker, realise that they do not have the moral authority to inflict such cuts on the poorest people in our communities?

[Andrew Stunell]

I think that that was yesterday’s soundbite—[Interruption.]

[Mr Speaker]

Order. The hon. Member for Northampton North (Michael Ellis) must exercise the kind of restraint that I am sure has characterised his distinguished performances in the law courts over many years.

[Andrew Stunell]

I should like to remind the hon. Member for Warrington North (Helen Jones) that the proposals in the Bill will give local authorities the capacity to vary the discounts on second homes and empty homes, and that there will be extra income for local authorities in that regard. There will be scope for efficiency and for the authorities to tailor their schemes to their local circumstances. I do not accept the point that she has made.

[Diana Johnson (Kingston upon Hull North) (Lab)]

10. What assessment he has made of the possible effects on local authorities in deprived areas of his planned localisation of national non-domestic rates.

[Tony Lloyd (Manchester Central) (Lab)]

12. What assessment he has made of the potential effect of his proposals for the localisation of business rates on regional inequality.

[The Parliamentary Under-Secretary of State for Communities and Local Government (Robert Neill)]

Currently, local authorities see no financial benefit from delivering growth. Our proposals will create a strong incentive for all local authorities, wherever they are in the country, to promote growth, local enterprise and jobs. We will ensure that no council will lose out as a result of its business rates base at the outset of the scheme.

[Diana Johnson]

Recent estimates show that, after year 1 of the business rates reforms, Hull council could lose up to £45.5 million, on top of the cuts that it has already targeted. With richer areas such as the City of London and Westminster benefiting at the expense of places such as Hull, how will this policy help to rebalance the economy between the poorest areas in the north and the richest in the south?

[Robert Neill]

The hon. Lady neglects to mention that, throughout the period of the Labour Government, the economic position of the north deteriorated by 2%, while that of Greater London improved by 15%. Moreover, her city of Hull grew in excess of the national average over the past business rate period, as did Manchester, Leeds, Durham and Stockton-on-Tees. All those places will gain under our proposals; they did not do so under the system that her Government operated.

[Tony Lloyd]

It is astonishing that the Minister has just completely failed to address my hon. Friend’s question. The poorer areas, which have already done badly under this Government in regard to their funding from central Government, are going to be even worse off unless they can guarantee to generate increased economic activity. Not every area can give that guarantee, however. Are these measures not simply going to make the poor poorer, and is that not morally unacceptable?

[Robert Neill]

I am sorry that the hon. Gentleman is not pleased that his Manchester constituency grew at about 6.9%, as opposed to a national average of 5%. He might also like to take on board the fact that a baseline will be set for all local authorities that takes into account their needs and resources at the beginning of the scheme, and that they will thereafter be protected by the top-ups and tariffs that flow from the baseline being uprated in line with the retail prices index.

[John Stevenson (Carlisle) (Con)]

Does the Minister agree that the localisation of business rates will result not only in local councils taking a greater interest in the activities of local businesses, but in local business people taking an interest in the activities and performance of their councils? Does he agree that that will help deprived areas as well as others?

[Robert Neill]

I entirely agree with my hon. Friend. The proposal has been welcomed by the Local Government Association, and—the hon. Member for Manchester Central (Tony Lloyd) might be interested to know—by the Association of Greater Manchester Authorities. It was of course one of the recommendations of the Lyons inquiry, which was set up by the previous Government, and then ignored by them.

[Ian Lucas (Wrexham) (Lab)]

11. If he will undertake a comparative assessment of parking schemes in town centres.

[The Minister for Housing and Local Government (Grant Shapps)]

The Mary Portas review on the future of our high streets recommended the establishment of a new league table for parking charges. We welcome the review and will publish our response to it in the spring.

[Ian Lucas]

Why do so many parking schemes across the country involve the use of parking machines that do not give change? When the Government make their assessment of the Portas review, will the Minister check to see what proportion of local authorities have parking machines that give change to the hard-pressed people who are suffering in these Tory times?

[Grant Shapps]

First of all, I should point out that planning—and therefore many of the changes to parking regimes—is devolved in Wales and Scotland. Furthermore, one of the first things this Government did was to remove Labour’s incredible instructions to have only upward increases in parking charges and deliberately to build too few parking spaces in both residential areas and high streets throughout the county.

[Mr Marcus Jones (Nuneaton) (Con)]

rose—

[Ian Lucas]

Answer! The Minister did not answer my question.

[Mr Speaker]

Order. We must have order, however angry and irate is the hon. Member for Wrexham (Ian Lucas). He is shouting out that he has not had an answer to his question, but if that were to legitimise that sort of ranting, there were would have been permanent ranting in the House of Commons under successive Governments over the last 100 years. We cannot tolerate it.

[Mr Jones]

Excessive car parking charges are a tax on our town centres and high streets. Does my right hon. Friend believe that the implementation of free control parking schemes in many of our town centres would put us on a level playing field with out-of-town stores and therefore start to rejuvenate our town centres and high streets?

[Grant Shapps]

My hon. Friend is right. Key is ensuring that local and sensible plans are in place to ensure that people can arrive at a town centre, shop and not be exposed to unreasonable charges. I encourage all local authorities to think about their local economy—something that should be much easier to do when they know that they are going to be keeping the business rates in future.

[Angela Smith (Penistone and Stocksbridge) (Lab)]

13. When he plans to publish information on transitional arrangements in respect of his national planning policy framework.

[The Minister of State, Department for Communities and Local Government (Greg Clark)]

We are committed to publishing the national planning policy framework by the end of March, having taken account the consultation responses, and the framework will include transitional arrangements.

[Angela Smith]

I am glad to hear the Minister say that, as there have been reports that the Government are minded to introduce a transitional period of 18 months. Will he confirm what the transitional period will be—how much time will be allowed? Will he also explain why Members and local authorities have had to learn some of the details from the media?

[Greg Clark]

I would be keen to understand that myself. We made a commitment that we would consult and listen to the responses, and the transitional arrangements were included. I gave a commitment to work closely with the Local Government Association on the transitional arrangements, and we are having those conversations.

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

Will the Minister confirm that the transitional arrangements will cover the application of PPS25 to properties at risk of flooding, and that all the reassurances given under PPS25 will continue into the permanent arrangements afterwards?

[Greg Clark]

Clearly, the protection of properties against flooding is important to the whole country, and not least in my hon. Friend’s constituency. We are working on the transitional arrangements to ensure that there is no gap between the current regime and the new regime.

[Roberta Blackman-Woods (City of Durham) (Lab)]

In connection with the transitional arrangements to the national planning policy framework, will the Minister update us on village greens? Last year, in his speech to the Conservative party conference, the Secretary of State spoke glowingly about his determination to protect village greens, so why does he now have plans to charge local communities £1,000 just to start the process of protecting them? Is the policy of a grand for a green going to continue?

[Greg Clark]

I had not spotted the hon. Lady at our party conference, but she would be a welcome visitor at any time. The consultation on village greens is being taken forward by DEFRA. What we have consulted on in the national planning policy framework is a new designation of local green space, which will make it open to every authority for the first time to protect locally valued green space in the same way as the green belt. We shall respond to that consultation shortly.

[Iain Stewart (Milton Keynes South) (Con)]

14. What his timetable is for the next allocations of the new homes bonus.

[Amber Rudd (Hastings and Rye) (Con)]

16. What his timetable is for the next allocations of the new homes bonus.

[The Minister for Housing and Local Government (Grant Shapps)]

The Government will shortly announce the final new homes bonus payments for 2012-13. These were provisionally estimated in December at £430 million.

[Iain Stewart]

Will my right hon. Friend congratulate Conservative-run Milton Keynes council on its innovative plans to use part of a new homes bonus to acquire land assets from the Homes and Communities Agency, which will help to stimulate both more housing regeneration and economic growth?

[Grant Shapps]

Yes, absolutely. My hon. Friend’s council in Milton Keynes is a shining beacon of housing growth and delivery, which puts many other councils to shame.

[Amber Rudd]

Towns such as Hastings have almost no new land for the building of new homes, but we are encouraged by the new homes bonus to tackle derelict buildings and are doing it well, despite—if I may say so—being controlled by a Labour council. Does my right hon. Friend agree that that social bonus is as welcome to communities as the additional financial bonus?

[Grant Shapps]

I entirely agree. In the last year 85 homes in Hastings have been brought back into use, which is indeed welcome. It is essential for us to reverse the catastrophic policies that, under the last Government, led to the lowest level of house building since the 1920s.

[Mr Nick Raynsford (Greenwich and Woolwich) (Lab)]

May I draw the House’s attention to my interests contained in the Register of Members’ Financial Interests?

According to the Minister’s answer to a written question that I submitted on this subject recently, more than 70% of all homes qualifying for the new homes bonus in Kensington—one of the richest and most expensive parts of the country—are in council tax band A, which means that in 1991 their rateable value was less than £40,000. No developer or housing association director to whom I have spoken believes that it is possible to build a one-bedroom flat with that value, and some do not think that it is possible even to build a broom cupboard with that value. Is the Minister’s much-vaunted new homes bonus scheme delivering what it is supposed to deliver, or is it simply encouraging the reclassification of existing multi-occupied houses?

[Grant Shapps]

I know that the architect of the previous system does not like the new homes bonus, but I have to say that he is very mistaken about its impact. Nearly 160,000 new homes have been built—[Interruption.] Twenty-two thousand were brought back into use in the past year. I also know that the right hon. Gentleman is convinced that the new homes bonus does not benefit the right kind of homes, but I can tell him that two thirds of all new homes have been between bands A and C, which is exactly in line with the normal averages. The new homes bonus is rewarding homes throughout the country, and he should welcome the increase in house building.

[Graham Jones (Hyndburn) (Lab)]

The Minister will be aware that east Lancashire has received some of the lowest new homes bonus payments for the second year running. He will also be aware that there are more properties than people in the region, and that given such a market it is very difficult to build new properties. What is he going to do about the problem? It is not possible for us to receive the necessary amount of money in Hyndburn, yet we are paying into the pot year after year and losing out. Is this not just another example of “Take from the north and give to the south”?

[Grant Shapps]

The hon. Gentleman and I have had many discussions about the issue, and he will know that his local authority is being paid for homes that are returned to use when they have been empty for a long time. I should have thought that the new homes bonus money would be welcome and useful to him in that regard. Moreover, his area has just received all the housing market renewal money for which it asked, but I did not hear him say thank you.

[Julian Smith (Skipton and Ripon) (Con)]

15. What steps his Department is taking to ensure the efficient approval of applications to the European regional development fund.

[The Minister of State, Department for Communities and Local Government (Greg Clark)]

The Government have improved the management of the ERDF. We have already saved the taxpayer £100 million on the last programme, and two thirds of the way through the current programme, two thirds of the funds have been allocated.

[Julian Smith]

I thank the Secretary of State for using his weight to sort out the recent problems involving broadband and ERDF funding. Will he confirm that the North Yorkshire project and pilot can proceed to the next stage of the ERDF funding application?

[Greg Clark]

The Secretary of State has indeed been helping in the negotiations with the European Commission to ensure that there is more flexibility on broadband projects, which is absolutely right. I understand that Connecting North Yorkshire will proceed with those plans forthwith.

[John Healey (Wentworth and Dearne) (Lab)]

Does the Minister accept that the big block on the approval of applications is the failure to provide the match funding that is needed for many investments to boost jobs and growth? There is £245 million going begging that is earmarked for Yorkshire. What is the Minister going to do about match funding?

[Greg Clark]

The right hon. Gentleman is incorrect. The allocations that have been made are on track, and the correct proportion have been made for this point in the programme. Many match-funding opportunities are available, and they are being taken up, not least in Yorkshire. The chaos caused by the previous administration of the programme lost £100 million of taxpayers’ money that could have been invested, but by making the changes that we have made, we have saved that money for the taxpayer.

[Heidi Alexander (Lewisham East) (Lab)]

17. What progress the Troubled Families Team based in his Department has made in its work.

[Damian Hinds (East Hampshire) (Con)]

19. What steps he plans to take to tackle the problems of the most troubled families.

[The Secretary of State for Communities and Local Government (Mr Eric Pickles)]

In December, the Prime Minister announced a £448 million programme to turn around the lives of 120,000 troubled families. So far, more than 95% of upper-tier local authorities have engaged with the programme. Local authorities have begun to recruit a local troubled families co-ordinator, and to pull together their own list of local troubled families. We have also been able to offer each area £20,000 to help it to prepare for the programme.

[Heidi Alexander]

The funding for the troubled families initiative involves councils covering 60% of their costs up front and central Government picking up the tab for the remaining 40%, albeit on a yet-to-be-defined payment-by-results basis. Merrick Cockell, Conservative chairman of the Local Government Association, describes this model as “doomed to failure”. Does the Secretary of State agree with him?

[Mr Pickles]

The hon. Lady has, I am sure accidentally, given a partial quote. Sir Merrick is, of course, completely behind our approach, and was laying out a theoretical example that we are not adopting. We do not expect the entire 60% to come from local authorities’ moneys; we expect some of it to come from other agencies, and indications so far suggest that that will be successful.

I listened carefully to the hon. Lady’s questions to the Select Committee, and should she want to be actively involved, let me say that it is my intention that things will be handled on an all-party basis and that she will be most welcome to make a contribution.

[Damian Hinds]

Some 55,000 of the 120,000 most-troubled families have children with behavioural problems. How will the work being done to deal with problems such as serial truancy dovetail with other initiatives dealing with parenting and early intervention?

[Mr Pickles]

Probably about 65% of those 55,000 cases involve truancy issues, while others involve criminal convictions and special educational needs. The purpose of this initiative is to pull all the various interventions and programmes together so that we can, at last, tackle these issues. I have found from talking to council leaders of all political parties that we all recognise that we must solve these problems, and this is our big chance to work together to do so.

[Dr Alan Whitehead (Southampton, Test) (Lab)]

18. What assessment he has made of recent trends in housing affordability.

[The Parliamentary Under-Secretary of State for Communities and Local Government (Andrew Stunell)]

The housing strategy recognised that affordability has significantly deteriorated in recent decades. Under-supply of housing is a major factor. The strategy announced an ambitious package of measures to boost house building, including the £420 million get Britain building fund, the release of public sector land and a new-build mortgage indemnity scheme.

[Dr Whitehead]

Is the Minister aware that the average family in Southampton would have to spend nine times its salary in order to purchase an average house in the city, and that, based on rent as a proportion of median income, Southampton’s private sector rents are also deemed very unaffordable? How does he intend to take people out of this trap, given that even if the Government’s affordable housing programme works it will produce only 70% of what the Labour programme produced in its last five years?

[Andrew Stunell]

I thank the hon. Gentleman for his question. I should perhaps point out to him that we have a programme for 170,000 social and affordable homes by the end of this Parliament, which will leave the country with a net addition to the amount of social and affordable housing, unlike the 220,000 fall in such housing during Labour’s period in office.

I should also point out that the most important thing we are doing is stabilising the financial situation of this country and keeping interest rates low. The combination of policies the coalition Government are following will produce the results that the hon. Gentleman and I both want.

[Gordon Henderson (Sittingbourne and Sheppey) (Con)]

20. What steps he has taken to support former members of the armed forces in relation to housing.

[The Minister for Housing and Local Government (Grant Shapps)]

I am determined to help current and former members of the armed forces gain the housing they deserve. Among the several measures I am taking, I have given service personnel priority for the Government’s affordable home ownership schemes, including Firstbuy, and I am consulting on proposals to change the law to make it easier for service personnel to access social housing.

[Gordon Henderson]

I welcome the Minister’s reply. Will he join me in congratulating UK Homes 4 Heroes, which supports homeless ex-service personnel? In order to see the great work that that charity is doing for our brave ex-servicemen and women, will he consider visiting a base for the charity’s outreach programme that is opening in my constituency in March?

[Grant Shapps]

I congratulate UK Homes 4 Heroes, which does a tremendous job. I know that 16 very dedicated people work with that charity. I also congratulate all the other charities across the country that do such great work for homeless and returning personnel. Last year I held a housing summit as part of the military covenant to try to ensure that we do everything possible to ensure that housing for people who return from having fought for this country is a No. 1 priority.

[Simon Kirby (Brighton, Kemptown) (Con)]

Does the Minister agree that it is vital to consult all organisations that represent ex-service personnel when framing housing policy that affects them?

[Grant Shapps]

Yes; my hon. Friend is absolutely right. I mentioned the housing summit a moment ago, and I invited a range of service organisations to represent those personnel. It is important to get their ideas. I have also recently written to two service organisations to invite further contributions and all ideas are welcome, so I extend that invitation across the House.

[Charlotte Leslie (Bristol North West) (Con)]

T1. If he will make a statement on his departmental responsibilities.

[The Secretary of State for Communities and Local Government (Mr Eric Pickles)]

I congratulate the 150 local authorities that have already signed up and intend to take the council tax freeze. I expect those numbers to grow as the weeks progress. On a more sombre note, I thank Members of the House for their contributions to the commemoration of Holocaust memorial day. It is very clear to me, looking at the various events that have taken place around the country, that Members of Parliament have been very heavily involved. It is important for us, at all times, to speak up and speak out against extremism and hate.

[Charlotte Leslie]

Will the Minister outline the measures he is taking to ensure that front-runner schemes, such as the Lockleaze front runner project in my constituency, have sufficient expertise, resources and actual power to do what they are remitted to do? Will he meet representatives of the project in my constituency?

[Mr Pickles]

Obviously, neighbourhood planning is a radical new right that gives communities and businesses real power in deciding the shape of the place. We will be providing £20,000 for each of the front-runner projects so that they can get on to the front foot. Should my hon. Friend wish to be involved and to meet me or my right hon. Friend the Minister of State, she would be more than welcome.

[Hilary Benn (Leeds Central) (Lab)]

The Secretary of State is on record as saying that he is determined to help those facing the “frightening prospect of repossession”, yet the Government are making that prospect more likely for many hard-pressed families. The number of forced repossessions, in which the bailiffs come in, has risen by 27% since he took up his job. What is he going to do about it?

[The Minister for Housing and Local Government (Grant Shapps)]

Any recession or downturn has a very long tail. When there are pressures such as those we see in the world economy, one can understand how household budgets are under pressure. That affects repossessions. It must be said that had interest rates not stayed at 0.5%—something that has been possible only because we have cut the deficit, because we have been working to cut the deficit and because we have had a credible plan to do so—and had the previous Government remained in power, we would surely have seen great numbers of people facing repossession.

[Hilary Benn]

I am sorry that the Secretary of State was not able to answer for himself. People want not excuses but help. The Secretary of State knew that there would be a problem, because he sent a letter to No. 10 last year to say that there would be an increase in the number of people who would lose their homes. However much he tries to disown that letter, is it not the case, whether it is because of benefit cuts that threaten more people with the loss of their home, the collapse in affordable housing starts or a Housing Minister who seems to believe that council housing is a “stagnant option for life”, that the only thing families can look forward to is more and more insecurity?

[Grant Shapps]

First, the Council of Mortgage Lenders said that there would be 40,000 repossessions last year, but there were fewer than that; they came in at 36,000 or 37,000. I should have thought that that would be welcomed, even by Opposition Members. I understand that the right hon. Gentleman is tempted to go back to old letters, but that letter has already been proved wrong in several different ways, including the fact that its main concern was the number of affordable homes that would be built. We now know that rather than 150,000, 170,000 will be built. I should have thought that he welcomed those moves rather than going back to old letters that have already been discredited.

[Tony Baldry (Banbury) (Con)]

T3. Will my right hon. Friend instruct the Planning Inspectorate that in considering whether a local authority has made adequate provision for housing over a five-year period it should take into account all the extant granted permissions for housing that a local authority has given, irrespective of whether construction work on such housing has started?

[The Minister of State, Department for Communities and Local Government (Greg Clark)]

My hon. Friend makes an excellent point. We want to strengthen the sovereignty of local plans and it seems to me that if councils have done their bit by granting planning permission, that ought to be taken into account by the Planning Inspectorate. I will certainly make sure that that point is reflected in the new framework on which we are consulting.

[Alex Cunningham (Stockton North) (Lab)]

T2. What briefing does the Minister plan to give to the Prime Minister to ensure that he knows that, contrary to what he has repeatedly suggested in statements, rents are, apart from the odd small drop, continuing to rise across the country, hitting hard-pressed families? The Prime Minister needs to know.

[Grant Shapps]

It is absolutely true that rent rises are of concern and put a lot of pressure on people, but it is also true that private sector rents did not rise at the same pace as mortgage costs right up to 2007, so to some extent the market has been catching up with house prices. However, the hon. Gentleman is wrong to say that it is only one month of drops, because LSL has reported a second month of drops in rent prices.

[Mark Menzies (Fylde) (Con)]

T5. Given that the Fylde borough council local plan will not come into force for a couple of years, what assurances can my right hon. Friend give me and my constituents that we will not see a stampede of planning applications in the meantime?

[Greg Clark]

I certainly encourage my hon. Friend’s council to make all speed in producing its plan, as it is desirable that there should be a plan in place. However, the transitional arrangements that we will put in place will make sure that councils that are doing the right thing by planning for the future of their area will not be disadvantaged.

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

T4. The Minister’s Department estimates that neighbourhood plans could cost each council up to £63,000, but each council could receive only £20,000 at best. Given that both council planning and planning aid budgets are being cut, will the Minister explain just how these will be implemented without diverting scarce resources from other much-needed services?

[Greg Clark]

We have put funds aside to make sure that there is support for communities in preparing neighbourhood plans. In fact, we have another round of front-runners. We have been deluged with applications to get on with neighbourhood planning and we have heard examples of that from across the House today. We will make sure that there is support for all these communities.

[Paul Maynard (Blackpool North and Cleveleys) (Con)]

T6. I am sure that my right hon. Friend will join me in praising the contribution that many indoor markets across the north of England make to our local communities, including Cleveleys and Bispham in my constituency. Will he update the House on the progress he is making on implementing the recommendations of the Mary Portas review?

[Grant Shapps]

I am pleased to tell my hon. Friend that we will have a Government response to the Mary Portas review by spring. We have also backed the “Love your local market” fortnight, working with the sector, and I know that there are many excellent markets across the north of England, including in his own patch.

[Pat Glass (North West Durham) (Lab)]

T7. I met the chief executive of Dale and Valley Homes in my constituency on Friday, when he told me that nearly a quarter of his tenants will be hit by the bedroom tax. He said that many of those people are not on benefit but are working and are on a low-income or minimum wage, and that he has no smaller houses to move them on to. What does the Minister say to my constituents who risk losing their home or being driven out of minimum-wage jobs on to benefits as a result of the reforms?

[Grant Shapps]

The hon. Lady points to an unnecessarily miserable view of the changes being made, which have the overwhelming support of this country. Things have to be the same for those on welfare as for those in work and, as Members will know, there are many people in their 20s and 30s who share properties—not rooms but properties—and the same should be the case for those on benefits.

[Gordon Henderson (Sittingbourne and Sheppey) (Con)]

T8. Last week, Thames Steel in my constituency went into administration with 350 workers being made redundant. That is another employment blow for the Isle of Sheppey, which already has above-average unemployment. Will my right hon. Friend consider designating Sheppey as an enterprise zone so that we encourage more firms into the area?

[Mr Pickles]

It is relatively easy to create an enterprise zone without the Government’s help. All that is required is a local development order, which the council can provide, and deals on superfast broadband, which the council can put together. Councils now have the ability to discount business rates. If my hon. Friend would like to come to see us, I shall put my Department at his disposal to take him through the process to help his local council.

[Mr Jack Straw (Blackburn) (Lab)]

Is the Secretary of State aware that some developers, including Peel Holdings, which has a small retail park in Whitebirk, between Accrington and Blackburn, appear to have aggregated a series of minor planning permissions gained over the years for minor modifications to existing planning permissions to claim that they are entitled to a lawful development certificate justifying a major change of use? Does he also accept that that practice appears to run contrary to, and potentially undermines, his entirely commendable approach to strengthening high streets?

[Mr Pickles]

I am grateful to the right hon. Gentleman for giving me notice of his question. The whole process of securing small plots of land within a larger plot under change of use and making minor modifications is normal and, by and large, it works reasonably well. However, a local authority can take into consideration the cumulative effect on the larger plot in looking at those individual applications. If it appears to the local authority that the developer has abused the system or has taken a number of measures that will affect the whole, it is perfectly possible to take that into consideration.

[Mr John Leech (Manchester, Withington) (LD)]

T9. Under planned housing benefit changes, more than 2,000 of my constituents in social housing are expected to move to accommodation outside the social rented sector. They will be forced to move to smaller, more expensive accommodation in the private rented sector, thereby increasing the housing benefit bill. Is it not about time that the Minister for Housing and Local Government, along with the Department for Work and Pensions, scrapped those ludicrous plans for existing tenants?

[Grant Shapps]

The context of the housing benefit changes in particular need to be taken into account. The housing benefit bill was only £14 billion 10 years ago. It is now £21 billion, and left unchecked it would be £25 billion by the end of this Parliament. We propose to ensure that it does not increase to more than £23 billion. That is the scale of the changes—not £25 billion but £23 billion. Opposition Members seem to be disagreeing today. In the past week, they have agreed, then disagreed, then agreed, then disagreed. The House has a right to know where they stand on this matter as well.

[Alison Seabeck (Plymouth, Moor View) (Lab)]

I draw the attention of the House to my indirect interest in those registered by my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford).

May I take the Minister back to his answer to my right hon. Friend the Member for Leeds Central (Hilary Benn)? Will he give a straight yes or no—very simple—on whether he expects the number of forced evictions in the private rented sector to increase in the coming year?

[Grant Shapps]

The answer is that I very much hope that the number does not increase, and there is a very large sum of money—about £200 million—available for the mortgage rescue scheme. We are doing everything we can to ensure that people stay in their home, including encouraging people to seek early help and advice. In fact, I held a meeting of the home finance forum only last week in conjunction with the Treasury and the sector. The single greatest thing that we can do to keep people in their home in this country is to cut the deficit.

[James Morris (Halesowen and Rowley Regis) (Con)]

I think it is fair to say that there has been a healthy debate about the contents of the national policy planning framework, but does the Minister agree that there is an urgent need to press ahead with simplification of the framework so that we can secure the sustainable development and economic growth that we desperately need in this country?

[Greg Clark]

I do agree with that. My hon. Friend is a member of the Select Committee on Communities and Local Government, which considered the matter, and it concurred that it was necessary and desirable to simplify the planning system that has grown to such an extent that it holds back growth and gets in the way of local people participating in the future of their neighbourhood.

[Steve Rotheram (Liverpool, Walton) (Lab)]

It is nearly two years since this nightmare coalition was thrown together, yet we are still waiting for it to implement the regulations stemming from the Sustainable Communities Act 2007. To quote a twice delivered speech in the Chamber, if not now, when?

[Greg Clark]

An announcement will be made about the Sustainable Communities Act regulations very shortly.

[Duncan Hames (Chippenham) (LD)]

I thank the Minister for that answer and note that a quarter of the recommendations in the Portas review were suggestions that had been put forward under the Sustainable Communities Act. When bringing forward those regulations, will he ensure that town and parish councils have the right to make suggestions directly to the Government under the Act, rather than having to depend on county councils to act as unnecessary gatekeepers?

[Greg Clark]

My hon. Friend is absolutely right. We have opened up the Government to receive representations directly from all members of the community, whether community groups or individuals, rather than them needing to go through a filter before arriving with the Government.

[Sheila Gilmore (Edinburgh East) (Lab)]

I would like to give the Housing Minister a third opportunity to give a straight answer on the bedroom tax. The real reason housing benefit has risen so much is the growth of the private rented sector, so why are council and housing association tenants being told to leave their homes or take a benefit cut?

[Grant Shapps]

A whole range of protections is in place, including the fact that people can choose to bridge the gap themselves. If they cannot do that, a discretionary fund of £190 million is available. If that does not work, by definition a third of properties within the local housing area are available. There are just some decisions that cannot be delayed, and it must be right that people who are in receipt of different types of benefits, whether social housing or housing benefit, have to make the same decisions as people who rent or own privately.

[Zac Goldsmith (Richmond Park) (Con)]

Many of my constituents are wondering what the point is of local elections when so many decisions taken by the elected local authority, and supported by the majority of people, are simply overruled by remote authorities. Given that the referendum clause has been deleted from the Localism Bill, what hope can my constituents have that we will see a genuine shift in favour of local democracy?

[The Parliamentary Under-Secretary of State for Communities and Local Government (Andrew Stunell)]

I draw my hon. Friend’s attention to the referendum carried out in Salford last Thursday. Local residents convened a referendum on whether the local authority’s system of governance should be changed and got a positive result. It is entirely possible for local residents to take control of the governance of their local authorities should they wish to do so.

[Mr Andy Slaughter (Hammersmith) (Lab)]

The chief executive of Hammersmith and Fulham borough council recently retired. Thanks to a pay rise of £11,000 last year, which took his salary to £281,000, the Library calculates that he will receive a pension of £100,000 and a tax-free lump sum of £250,000. When the council is cutting Sure Start by 50%, is this a good use of public money?

[Mr Pickles]

I am sure that the answer is no. I am pleased that the level of chief executive remuneration has dropped by 14% and that 25% of chief executives have taken a voluntary pay cut. I am also pleased that Hammersmith and Fulham is reducing its council tax for the fourth year running.

Victims and Witnesses Strategy

Monday 30th January 2012 Commons Chamber

15:32

[The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke)]

Today I have laid before Parliament a consultation on far-reaching plans to improve the way our criminal justice system deals with victims of crime. Proper protection and support for those who have suffered at the hands of criminals is a fundamental part of a civilised justice system, yet ours is falling short in some respects. Victims of crime should be able to rely on justice that is not only swift and sure, punishing offenders properly, but intelligent and effective. That means, among other things, a system that promotes reparation, requiring criminals to make amends to victims and society for the wrongs that have been done, and a system in which compensation is focused on serious cases and is not available to those who have themselves committed crime. Current arrangements do not always measure up well against those ideals.

There has been a good deal of criticism recently about the experiences of victims in the aftermath of a crime. For one reason or another, a consistently high standard of victims’ services is not available all over the country. The Government have a responsibility to ensure that practical and emotional support to help victims recover from the consequences of crime is provided when required. Of course, high-quality counselling and practical support costs money and perpetrators of crime should, wherever possible, contribute to the costs instead of taxpayers having to pick up the entire bill.

The process of justice, as experienced by the victim, also needs to improve. Investigation and trial involve inevitable stresses, but it is unacceptable that victims still frequently report being told too little, too late about the progress of their case, or being expected in court to sit next to the families of offenders. It adds insult to injury that, if something goes wrong in the process, victims have to choose between 14 different routes of complaint. Victims have already been badly hurt by crime. The system should not be rubbing salt into the wounds.

Finally, in this list of matters that we are addressing, there is compensation. In my view, no amount of money can make up for the injury or emotional trauma that often results from a crime. The criminal injuries compensation scheme, since it was set up in 1964 and then reformed in 1996, has offered a measure of support from the taxpayer to victims of crime. Successive previous Governments, almost from the first, have never been able to ensure that the scheme has been properly funded, and this has had the wholly undesirable consequence whereby claimants can wait months and, in some cases, years for the process to run its course and payments to arrive. Meanwhile, millions of pounds have been spent compensating people for minor injuries such as sprained ankles and broken fingers. Even more perverse is the fact that over the past decade more than £75 million has been paid in compensation to 20,000 claimants who are themselves convicted criminals. It is no surprise that the scheme, in its current form, is not sustainable.

The consultation published today seeks views on a set of reforms to deliver a more proportionate, speedy and effective system to provide for the needs of victims of crime. I want to see a system that prioritises high-quality practical help to people in the aftermath of the crime, whereby we sort out compensation so that it is targeted at the most serious cases, and whereby criminals contribute to the costs of victims’ services, instead of being able to make claims as if they were blameless, law-abiding victims of crime themselves.

I propose therefore that we will introduce a new victims code, so that victims know what to expect during the investigation and trial process, and know where to turn when things go wrong; we will set out plans to make improvements to the practical and emotional support available to victims, raising up to £50 million from the perpetrators of crime through the victims surcharge and financial penalties; we will move decisions about local priorities for most victims’ services away from Whitehall, so that the vast majority of funding is in the hands of democratically accountable police and crime commissioners; and we will reform the criminal injuries compensation scheme, so that it is sustainable in the long term.

Compensation should be focused on those with serious injuries that have long-term or permanent consequences. We propose therefore that the top 13 bands—more than half the tariff bands—covering the most serious injuries continue to be compensated at the current level. We will also protect tariff awards at lower levels, if necessary, for the families of homicide victims, and awards for sexual crimes or persistent physical abuse.

In order to offer that protection, and to fund the scheme sustainably, we propose to reduce or remove awards for those with less grave injuries. Injuries such as sprained ankles, broken toes or bruised ribs, from which people tend to recover fairly quickly, will no longer be covered at all. In a further step, those who have committed crimes against others and have unspent criminal convictions will, in most cases, no longer be eligible to seek taxpayer compensation when others commit crimes against them.

The overall ambition of the changes is that total spending levels on victims—compensation, counselling and support—should remain the same. However, I believe that the proposals we are consulting on today will mean that finite funding is used more wisely. Instead of compensation going to those with less serious injuries and to those who have broken the law, it will be targeted where it counts most—on the most serious injuries. The support services, which many victims need as much as or more than compensation, will be available when required, paid for as far as possible by offenders and not by the taxpayer.

For families bereaved by homicide and those affected by serious violent and sexual crimes, the reforms will move compensation on to a sustainable footing and at the same time improve the quality and availability of practical support and advice. This constitutes intelligent, radical reform to sort out a system that is not working well and it will give a better deal to victims.

I wish to make good on the previous Government’s commitment—on which we agreed—to compensate victims of overseas terrorism. I believe that it is important that British victims of terrorist attacks abroad should in future qualify for compensation on a similar basis to victims of domestic terrorism. From April, we will make ex gratia payments to victims of past incidents, going back to 2002, on the basis of the current CICS tariff, as the previous Government proposed. I recognise the concern that was caused by the delay in confirming the details of these schemes and I thank all those who waited patiently for the announcement while the detail was being worked out.

Despite improvements introduced by successive Governments, victims still too often feel let down by the criminal justice system, yet they are the people to whom we have the greatest responsibility. Their needs should be dealt with sensitively, proportionately and promptly. I believe that the proposals that we are setting out today will ensure that victims’ services are on a more sensible and sustainable footing, and will go a long way to putting right the failings of the past. I commend the statement to the House.

15:41

[Sadiq Khan (Tooting) (Lab)]

First, I thank the Justice Secretary for his usual courtesy in giving me advance sight of the statement, albeit a much-delayed statement that it has taken the Government 20 months to draft.

Our attitude towards victims should always be at the top of our priority list. Quite simply, without victims and witnesses there would be no justice system. Without victims having confidence that our justice system will effectively punish and reform offenders, fewer would report crimes or come forward with evidence as witnesses. That is one reason why we have a basic duty to treat victims of crime and witnesses with the dignity that they deserve.

Sometimes it is the little things that make a big difference, such as ensuring that victims and witnesses have court proceedings explained to them, so that they understand how the trial is progressing. However, sometimes it is the bigger things that matter, such as giving them the support that they need to recover from the trauma of a crime, or ensuring that sentencing is transparent and fair in delivering effective punishment. Many of those things do not cost anything.

As a result of Labour’s record on crime, there were 7 million fewer crimes a year by the time we left government in 2010 than in 1997. There were therefore countless fewer victims of crime. That is the most sure-fire way in which we can help. We must have policies backed up by adequate resources to ensure that people do not become victims in the first place.

This Government’s policy on law and order is all over the place. The way they treat victims of crime is a prime example. Over the past 20 months, their policies on bail, sentencing, the chief coroner, domestic violence and rape have shown them to be out of touch with victims of crime in this country.

I welcome the fact that, after nearly three years in government, in April 2013 the Justice Secretary will finally honour the commitment to compensate innocent victims of overseas terrorism. However, the time that it has taken to come to that decision, despite cross-party support, is shameful. Will he confirm that the funds for that policy will not come from the resources destined for victims of crime in this country?

On the Criminal Injuries Compensation Authority, the Justice Secretary focused on the £75 million that has been paid to those with unspent convictions, which was just 3% of the total over the past 10 years. Will he confirm that there will be no further cuts to the CICA budget?

I put it on the record that we continue to support the victims surcharge, which was introduced by the previous Government and under which offenders work and pay towards victims’ services and victims. Will the Justice Secretary assure the House that none of the services that are funded by the surcharge will face cuts because of the additional surcharge that he referred to, which will go to the CICA?

As well as presiding over a 43% reduction in crime, Labour sought to improve the experience of victims in the justice system. To be fair, the 98-page White Paper lists some of the advances made over the 13 years of a Labour Government. I am already on record as saying that Labour would commit to working with victims groups and the Government to introduce a victims law so that the rights of the bereaved families of homicide victims were honoured, and I am pleased that the right hon. and learned Gentleman has announced a victims code today. I am pleased also that he has taken on board the announcement that I made at the Labour party conference—I have no problems with his stealing our ideas, I just hope that he will go the whole distance and ensure that the code is enshrined in statute and not just another unenforceable and ignored code of practice.

We have a duty to support victims through all stages of the process, and today’s strategy will be judged against that duty. My fear is about whether the Government will be able to deliver the justice that victims in this country deserve, bearing in mind their record over the past 20 months. I hope that I am wrong.

[Mr Clarke]

The right hon. Gentleman first touched on the arguments that we have been having on a wide range of other justice and sentencing issues, and on one or two subjects on which I was not aware that we had any differences on policy. The fact that he started on that basis rather led me to believe that he was not really very opposed to a great deal of what we have put forward in our consultation document.

I shall deal with the right hon. Gentleman’s specific questions. We are able to go ahead with terrorism compensation. I quite accept that it has taken some time since it was announced, and supported by us, during the time of the previous Government. We are putting it on exactly the same basis as the domestic CICS, and the time has been taken up getting the details of that scheme right. The domestic compensation scheme was left to us with an enormous financial deficit, and we are striving to make it sustainable and financeable, I hope without significant further change, in a way that it has never really been since it was first introduced back in the 1960s.

The right hon. Gentleman asked whether I could guarantee that there would be no further reductions in criminal injuries compensation. As I have just said, I very much hope there will not be. The scheme was set up in 1964 and ran into financial difficulties almost straight away. It was altered in 1996, and the last Government kept consulting on it but not doing very much. By one measure, when I took over from my predecessor there was an unfunded deficit of £750 million. We have had to find a lot of extra money from the Treasury to deal with unfunded pre-tariff liabilities, and we are trying to put the matter on a set footing for the future.

The victims surcharge will be raised in a fairer way, and I do not think there is any question of any cuts being made. At the moment the surcharge is levied only on those who pay fines. It is fair that it should be levied also on those who go to prison or serve community sentences, and that is how we are changing it. We hope to get a substantially bigger contribution from those who commit a crime, to compensate the people who have suffered from it.

As we move the detail of the current services to local responsibility and to the new police and crime commissioners, we will still provide specialist services for bereaved families nationally. We have put extra money into that, and into specialist groups, on Louise Casey’s recommendation, but we will not reduce the support for Victim Support. Support will be provided more locally and sensitively by the commissioners, who will have to build up partnerships with a lot of local agencies. We have of course done such things as putting extra money into rape support centres to open some new ones and give the current ones long-term funding security for the first time.

I concede that the last Government made considerable improvements on victims and witnesses during their term of office. Awareness of the inadequacies of how the criminal justice system dealt with victims and witnesses began to grow in the ’80s and ’90s, and it has been a fairly continuous process from the early 1990s onwards. However, we are making a significant step forward. As I said when I began my reply, I believe that the right hon. Gentleman and his hon. Friends will find it quite difficult to find very much with which they disagree.

[Anna Soubry (Broxtowe) (Con)]

I agree with and support today’s announcement of these reforms, but does the Lord Chancellor agree that nothing in them will stop the victims of crime receiving compensation directly from the offender when sentence is passed? Some would say that that is at the very heart of the Legal Aid, Sentencing and Punishment of Offenders Bill, which is currently going through the other place.

[Mr Clarke]

We are seeking to make it more of an obligation on the court to consider making a compensation order for the victim when they appear for a crime. We are also trying to address ways in which we can improve the collection of that compensation so it can be paid over. My hon. Friend touches on what ought to be a key feature of the justice system, and one that needs to be improved.

[Keith Vaz (Leicester East) (Lab)]

Six months on from the riots last August, only 42 people have received compensation under the Riot (Damages) Act 1886. The Home Affairs Committee report suggests that there should be a review of the victims surcharge. Is that part of the Lord Chancellor’s strategy? Does he agree that compensation should go directly to the victim rather than to a general fund?

[Mr Clarke]

The victims surcharge has always been separate from orders for compensation for victims—or at least it has for a long time. Either way, as I have explained, we are hoping to get more from the victims surcharge to give more money to victim support services in general across the country, because there are still deficiencies in them. I think we are all agreed that it is a very good idea that courts should make compensation orders for the victims of crime.

We hope that that will be done more often as a matter of course in court, but it depends on the defendant’s means, so we must look at how the court gets better information on the assets available to pay for such things. That will come later as we work on the proposals. We must also improve the recoverability of compensation orders. We all believe that we should cover more by way of fines, compensation orders and so on, and that that steadily improves. The difficulty is that a large number of people before the court either do not have much money or will not co-operate in recovering it. As for all creditors recovering money from extremely reluctant and feckless debtors, it is difficult for us to raise that money, but we hope to have the assistance and advice of the Home Affairs Committee from time to time on how we might improve that record.

[Mr Peter Bone (Wellingborough) (Con)]

May I clarify with the Secretary of State whether a mass murderer in prison will be entitled to compensation if they are beaten up by another prisoner?

[Mr Clarke]

There is a discretionary element in the current system so that a very bad criminal record can be taken into account. At least one mass murderer did not get compensation for an injury in prison. My answer to the question is no, he certainly should not get compensation. We are going much further; it is simply not right for someone one week to commit a crime against another member of the public, and the next week to say that the taxpayer must compensate him because somebody has committed a crime against him. There may be exceptions to that on the fringes, but we must go much further even in the straightforward case that my hon. Friend describes.

[Paul Goggins (Wythenshawe and Sale East) (Lab)]

I commend the Secretary of State for his statement, but what does he propose to do in cases—including a recent one in my constituency, to which I drew his attention—when an offender commits a serious offence and receives a community sentence, but then, via Facebook or other social media, claims to have got away with it, adding insult to injury for the victim? Will he consider a power of recall to the court so that such offenders can be held to account?

[Mr Clarke]

I will consider it. Such situations are extremely irritating, and in extreme cases could be contempt of court, but, as the right hon. Gentleman knows, no one has ever found a way to deal with them. There always will be cases when some miscreant leaves court and celebrates too vigorously the fact that he has not lost his liberty or in some other way. If he starts adding insult to the court or his victims, something should be done to find a way of dealing with him under the rules of contempt of court.

[Tom Brake (Carshalton and Wallington) (LD)]

I welcome the Secretary of State’s statement and the proposals, particularly on requiring offenders to pay more to compensate victims and on providing compensation to UK victims of terrorism abroad. On UK victims of crimes abroad, will the Secretary of State agree to meet a cross-party group of MPs to look at the issue of people who are victims of serious crimes of another nature, such as serious assault?

[Mr Clarke]

It would be very nice to do that, but that is the history of this scheme from the start, which is why the aspirations of Parliament and Government have always run rather ahead of the available funding. I would like to compensate people with broken fingers or sprained ankles, but that would get us into arrears and months and years of delay before anyone could be paid. We have to concentrate on the most serious cases. As far as people abroad are concerned, all kinds of nasty things can happen abroad, although we hope that they usually do not. People can have all sorts of crimes committed against them or catch all sorts of peculiar diseases, but we have to bear in mind that British taxpayers’ obligation to compensate in such cases has to be limited to a certain extent.

On terrorism, the case has always been that it cannot be insured against, and that is why everybody has agreed that the taxpayer should compensate in such cases. I would be reluctant to accede more readily to going further and adding yet more people whom the British taxpayer has to compensate for unfortunate experiences in Africa.

[Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)]

The victims code is most welcome, although not as novel as one might think. I seem to have heard about it a few times before. How will delivery of the service uniformly across England, Wales and Scotland be affected by the fact that the Lord Chancellor has closed 40% of the court venues, that police numbers are falling and that thousands of court staff have been made redundant?

[Mr Clarke]

The victims code has been steadily improved over the years—it is all very well for the right hon. Gentleman to be a little sarcastic about it; it has been renamed—and we intend to improve on that. The right hon. Member for Tooting (Sadiq Khan) says that he will make it a victims law, but it is the same thing. The one reason for not putting it on a statutory footing is that we are waiting to see what comes out of the European victims directive, which we have opted into, so that we can clarify the legal obligations. We will improve the service, and it has nothing to do with the closure of under-used courts in various parts of the country.

[Mr Robert Buckland (South Swindon) (Con)]

One of the problems that my right hon. and learned Friend referred to with the criminal injuries compensation scheme has been delay. The backlog reached a high of 85,000 cases a few years ago under the previous Government, although the figure is coming down. What effect will these proposals have on reducing the appalling delays that victims of crime are suffering?

[Mr Clarke]

I am glad to say that the figure is coming down, but delay is the most serious symptom of the underlying failing of the system. For as long as I can remember, we have had deficits in the funding and an inevitable delay in payments because they cannot be funded. Every year, the Home Office previously and now the Ministry of Justice has had to find more money to put into the scheme to try to keep ahead of the claims. A realistic attempt to concentrate the funding on the most serious offences that have lasting or permanent consequences should enable us to pay those people more promptly, rather than paying quite as many people as we do at present for a wide range of injuries.

[Jeremy Corbyn (Islington North) (Lab)]

There are many people who are victims of crime, but no prosecution follows because they are victims of racist harassment, neighbourhood terrorism or domestic violence. There is a problem of getting independent witnesses and therefore getting a prosecution. Within the context of the reforms, is the Secretary of State prepared to consider enhanced funding and support for professional witness schemes so that we can bring about a greater sense of safety for those people who are suffering serious racist harassment in our society?

[Mr Clarke]

One of the things that we are consulting on—we have not mentioned it much, but anything we can do would be valuable—is increased support for witnesses. It has got better in recent years, but support to enable witnesses to find the experience a little less intimidating than they otherwise might, and to explain to them the process through which they will go, is always valuable and needs to be improved. On people who are victims of crimes about which they do not complain or which have not led to a prosecution, we have considered that and are issuing a consultation document. But the underlying rule of the scheme has always been that, in order to get compensation, people must be prepared to co-operate with the police and the prosecutors to get the crime dealt with, and we have to keep that. We have dealt specially with repeated physical violence, and that is meant to address domestic violence and some of the other cases to which the hon. Gentleman referred.

[Nick Boles (Grantham and Stamford) (Con)]

I welcome the Lord Chancellor’s statement, but does he understand that my constituent Trevor Lakin can never be compensated for the loss of his son Jeremy in the Sharm el Sheikh attack? He has been fighting for years for compensation for the sake of such people as Will Pike, who survived an attack in Mumbai. Will Pike is trying to rebuild his life and needs help from the Government to do so.

[Mr Clarke]

I agree with my hon. Friend, who has campaigned consistently on the issue since arriving in the House. Nothing can ever compensate people who suffer severe consequences or bereavement as the result of a serious crime, which is why the scheme has always aimed only to make a contribution towards easing the financial problems that such victims suffer. In the case of overseas terrorism, we are moving as we are and in future the direct victims of overseas terrorism will be able to receive compensation on the same basis as on the domestic scene. We are still imposing some limitations on claims by family and so on, but this is an enormous advance on the previous situation in which nothing was being done, as all parties agreed in the last Parliament that it should.

[Ann Coffey (Stockport) (Lab)]

It cannot be right that children who have suffered sexual exploitation by multiple perpetrators then have to endure days of aggressive questioning by defence lawyers in court. What does the Secretary of State propose to do to support child victims giving evidence in court and make it a less distressing experience for them?

[Mr Clarke]

In the consultation document we address vulnerable witnesses, who often include children, particularly those whose evidence involves fairly traumatic events. There are arrangements now, of course: it is no longer necessarily the case that such children are exposed to open court. A certain amount of judicial discretion must be left, but in suitable cases video evidence and so on are now obtained. I hope that the consultation document will enable us to see what more can be done to ensure, first, that justice is done, but justice is best done when witnesses give evidence in the most suitable and justifiable circumstances. One cannot shield an adult from cross-examination, but one can certainly shield someone as vulnerable as a child of the kind that the hon. Lady described.

[Philip Davies (Shipley) (Con)]

It is fair to say that the Secretary of State and I have not always seen eye to eye on criminal justice matters, so it is a rare treat to be able to congratulate my right hon. and learned Friend on his proposals for preventing criminals from accessing the criminal injuries compensation scheme. What assessment has he made of whether the proposal will meet the requirement of the Human Rights Act 1998, or indeed his beloved European convention on human rights? If it falls foul of them, what does he propose to do at that stage?

[Mr Clarke]

It is a rare treat for me as well to find myself agreeing with my hon. Friend. Who knows where it might lead? It might not lead to instant agreement on the Human Rights Act, but I see no jeopardy to the proposals in the consultation paper from any claims under the Act. I look forward to continuing to have interesting debates with him about the subject on other occasions.

[Kevin Brennan (Cardiff West) (Lab)]

The Secretary of State used the example of millions of pounds being spent on compensation for sprained ankles and broken fingers, but he did not use the example that he used in the press of someone gaining compensation for being hit over the head with a bunch of flowers and the psychological damage caused. Will he outline to the House the details of that case, in the same way that he required the Home Secretary to outline the details of the cat in the immigration case?

[Mr Clarke]

The hon. Gentleman will notice that I did not use that example. [Interruption.] No, I have not. I might be quoted as having used that example, but I have not. He asked why I did not. I would like to make careful inquiries about exactly where that well-known case actually occurred, and what the precise circumstances were.

[Bob Stewart (Beckenham) (Con)]

On Friday, I was told by a constituent whose family were about to go to appeal court—they were victims, of course—that they were absolutely terrified of giving evidence again. The Secretary of State has said that there is no way to protect people giving evidence from cross-examination, but is there any system whereby these people, who are often very frightened when attending court, could be protected?

[Mr Clarke]

Nowadays, victim support officers will talk to witnesses before they attend court, and it is possible for witnesses to be shown the court beforehand—certainly they will be taken through the process that they can expect to be followed. It is essential to the rules of justice, however, that evidence be properly tested. If we are to deal severely with criminals, we have to ensure that the person convicted actually committed the offence. It is right, therefore, that he—or, better, his representatives—has the opportunity to test the evidence against him if he maintains his innocence. Judges have powers to intervene if the questioning becomes offensive or irrelevant, but in the light of recent cases we are considering how to strengthen those powers so that offenders do not gratuitously add insult to their offence. It is difficult, however, because one can treat an offender with proper severity only once he has had every opportunity to maintain his innocence and the court has found that he is lying and guilty.

[Ian Lucas (Wrexham) (Lab)]

Following the question from the hon. Member for Shipley (Philip Davies), may I ask whether the Government have specifically considered whether convicted criminals excluded from an application under the scheme could take their case to the European Court of Human Rights? This is a legitimate point.

[Mr Clarke]

We must ensure that the approach is proportionate and the circumstances appropriate. The hon. Gentleman, who raises a perfectly serious point, will see his question canvassed in the consultation document. It is not for me to suggest circumstances in which difficulties might arise. However, if someone was convicted for shoplifting and then, a year or two later, was the victim of an extremely serious assault in unrelated circumstances, that might be an exceptional case. If someone with a previous conviction has got themselves injured intervening to protect another victim from another crime, that, too, might be an exceptional case. I do not want to sketch out all the exceptional cases, however, because there would not be many of them. Nevertheless, I think that we can protect ourselves against challenge as long as it is possible to consider those cases. However, the bulk of criminals should not be entitled to payment from the taxpayer when they are victims of crime themselves.

[Mr David Nuttall (Bury North) (Con)]

The current maximum award available under the criminal injuries compensation scheme to the most seriously injured victims of crime is much less than they would receive from a civil law claim for damages. Do the plans contain any proposals to remedy this problem?

[Mr Clarke]

That was the problem when the scheme was first set up—I remember wrestling with it 20 years ago. At that point, we had slipped into a situation in which a compensation claim was assessed as though it was a personal injuries claim in a civil court, which meant that every case took ages to litigate, lots of lawyers would turn up to make representations on the basis of large numbers of medical reports, and the costs soared. Everybody accepted that this was completely unsustainable. The compensation scheme for criminal injuries is not meant to be full compensation; it is meant to be a contribution towards covering the financial consequences of the injury. As I said earlier, it would be nice if the taxpayer could pay everybody full compensation as if it were a civil award, but frankly that was never practicable from the moment it started, and it certainly is not affordable now.

[Tony Lloyd (Manchester Central) (Lab)]

May I return to the question of delays? Certainly for victims of serious crime—either threats of violence or violence itself—delays in the investigation and delays by the Crown Prosecution Service and in the court process simply add to the menace that victims suffer. The Secretary of State has made some suggestions on how to proceed, but will he assure us that this matter will be a key consideration when drawing conclusions from the consultation? Of all the matters I have dealt with, perhaps the most harrowing involve those who live in fear, suffering a sentence while those awaiting trial are free on the outside.

[Mr Clarke]

Most of the delays that I have been talking about are delays in payment of criminal injuries compensation, but I agree with the hon. Gentleman that it is just as important that we do something about delays in the criminal justice system. We must improve the efficiencies of the court, avoid wasting as much time as is wasted currently, and so on. Together with the Minister for Policing and Criminal Justice, my right hon. Friend the Member for Arundel and South Downs (Nick Herbert), we are working on ways of improving the efficiencies of the court so that the more straightforward cases can be dealt with more promptly and those that are contested are handled more efficiently, to everybody’s advantage, including in terms of court costs, police costs, and everything else. Our system does not have as many delays as some of the worst in western Europe, but if someone is staying in custody for too long before they can get a trial, it is bad for justice. However, I agree that the biggest complaint we usually get from laymen in criminal cases that have gone slightly wrong is that it has taken too long to get to court and that there have been several abortive appearances that wasted their time before the case finally got dealt with.

[Simon Hughes (Bermondsey and Old Southwark) (LD)]

The Justice Secretary has generously recognised the concern felt by the families of Jeremy Lakin, a constituent of mine, and others who were either killed or injured in serious incidents such as those in Sharm el Sheikh or Mumbai, given that the original commitment was made by the last Government, before the last election. Given the delay so far, can the Justice Secretary assure them and others in their position that the announcement of April payments will mean that it will be possible to make payments soon after the beginning of the next financial year? What they need is certainty.

[Mr Clarke]

Yes, I can assure my right hon. Friend on that. We are not consulting on this because it has been around for so long. We are not having further delay while we consult on it: it is a non-consultative part of the document. We are going to implement the scheme in April, and I hope that will lead to prompt payment. It has taken far too long, and we will certainly do everything we can to make the payments as promptly as possible, though some will have to be assessed, in order to get the figure right in each case.

[Sheila Gilmore (Edinburgh East) (Lab)]

One of the concerns in family law cases is that the victims of domestic violence can, in subsequent proceedings—perhaps on issues of custody or other things to do with children—be faced with a party litigant against them. Will not the changes to legal aid make that sort of thing more likely to happen, and that that is extremely oppressive to victims?

[Mr Clarke]

The hon. Lady has ingeniously raised a point that is wholly relevant to the legal aid provisions in the Legal Aid, Sentencing and Punishment of Offenders Bill, which is in another place, and not to this statement. In family law it is by no means unusual for the parties to face each other, and if one starts behaving badly towards the other, the judges just have to use the powers available to them to stop that happening. It is simply not possible to make every aspect of a dispute in court free of any stress or problem for both sides, because usually the parties in such cases are arguing about very stressful and emotional things about which both parties are considerably overwrought.

[Mr Tobias Ellwood (Bournemouth East) (Con)]

I welcome this statement, and in particular the commitment to support British victims of terrorism overseas. As the Secretary of State implies, this is long overdue. As compensation goes, I think terrorism falls into a different category from a broken finger, which he mentioned, or a robbery. It is a brutal message from the state. Terrorists do not recognise borders, but our compensation system does. Will he confirm that Britons affected by terrorist attacks, such as those in Bali, Sharm el Sheikh or Mumbai, will be supported in the same way as those affected by 7/7, including for loss of earnings?

[Mr Clarke]

My hon. Friend has campaigned strongly on this subject—again, ever since he has been in the House—and I am very much aware of his views. What I have announced for the ex gratia arrangement—that is, the one that is paid under no legal obligation, but which we have agreed to pay for those whose claims will predate the new scheme’s coming into effect—is in exactly the same terms as what was announced under the previous Government, which was agreed to by both my party and the Liberal Democrat party. That arrangement does not include loss of earnings, and we are not going back to try to revalue it. However, in future claims will be eligible for compensation on exactly the same basis as they would have been eligible for compensation for a similar crime in the United Kingdom.

[Pat Glass (North West Durham) (Lab)]

Will the Secretary of State confirm that the consultation will also look into the issue of prison officers who are assaulted by lifers? In such cases, the CPS routinely takes the view that it is not in the public interest to prosecute as the perpetrators are already in prison. Compensation matters, but so does justice, to prison officers such as my constituent Neil Walker, who, along with colleagues, was seriously assaulted by Kevan Thakrar. Some of those prison officers will never work again. They need compensation, but they also need justice.

[Mr Clarke]

Prison officers do an extremely important and sometimes dangerous job, so I entirely share the hon. Lady’s views on the need to look after and protect them. They are entitled to, and should receive, criminal injuries compensation on exactly the same basis as any other citizen. I would expect the CPS to take allegations of assault or violence against prison officers just as seriously as they would take such allegations relating to any other citizen, and I think that it usually does. I cannot intervene in individual cases, and there is always some discretion, but I agree that our prison officers deserve the fullest possible protection that we, as a society, can give them.

[Henry Smith (Crawley) (Con)]

Will the consultation document cover the possibility of curbing payments of compensation to people who have been convicted abroad but now reside in this country?

[Mr Clarke]

I think it certainly should, but I will have to examine further how effective the administrative arrangements for detecting such cases will prove to be. We are always trying to improve the exchanges of criminal records, so that people bear the proper consequences of any criminal records that they have built up.

[Rehman Chishti (Gillingham and Rainham) (Con)]

I welcome the Lord Chancellor’s statement. Will he confirm that the money raised by the increase in fixed penalties for motoring offences will also be used to support victim services?

[Mr Clarke]

Yes. The reason that we are raising more money from offenders through the surcharge is precisely to improve the services offered to the victims of crime. Whatever the source of the money, it will all be directed towards improving those services across the country.

[Dr Andrew Murrison (South West Wiltshire) (Con)]

I very much welcome my right hon. and learned Friend’s statement. He is right to direct the services of the criminal injuries compensation scheme towards those victims who have suffered the most. People who develop mental health problems as a result of a crime often find that their conditions are difficult to quantify or are not readily apparent. What can be done to ensure that such people are not disadvantaged?

[Mr Clarke]

As my hon. Friend says, the problem is often one of obtaining a proper diagnosis, in order that the consequences of crime can be recognised. In order to concentrate on the most serious offences that have lasting and sometimes permanent consequences, we had to draw the line somewhere. Below that line, the amount of compensation starts steadily to be reduced under the tariffs, with the very lowest tariffs receiving no compensation at all. Mental illness occurs at various levels in the tariffs, according to the lasting consequences that are being suffered, and to their severity. We will therefore still have the problem of assessing and diagnosing each case accurately, to ensure that it is the serious, lasting problems that are compensated, as they quite properly are now.

[Michael Ellis (Northampton North) (Con)]

I commend the Lord Chancellor for his statement, which any right-minded person would regard as sensible and forward thinking. Does he agree that support services are as important as compensation for many victims? Does he think it right and proper that the taxpayer should not be asked to pay for those support services when the offender can do so?

[Mr Clarke]

Support services are sometimes more important. The trauma suffered by a victim is not always proportionate to the seriousness of a crime. Some people, for example, are hardy and can get over a nasty experience fairly rapidly, while some frail, vulnerable people can be severely affected for many years by a comparatively minor incident. We are trying to ensure that the support services are better targeted so that we can concentrate on those who really need the help, and that local priorities are determined more locally. It is obviously sensible to say—no one has disagreed with the view today—that those who commit crimes, including those who go to prison and those who receive a community sentence, should contribute to the cost of the support given to the victims of crime in general.

[Dr Sarah Wollaston (Totnes) (Con)]

As a result of funding from the Ministry of Justice, women who have been victims of sexual crimes in my constituency can now benefit from help and support from Devon Rape Crisis. As a patron of Devon Rape Crisis, I ask the Secretary of State to ensure that a sufficient amount of the £50 million that is going to be taken from convicted criminals will go towards long-term secure funding for rape crisis centres around the country.

[Mr Clarke]

The Government will continue to look at rape crisis centres as a national responsibility and consider funding them from the centre. We have been able to open, I think, four new ones since we came to office, but for all existing ones we have for the first time pledged funding for three years, providing them with more sustainable security than under the previous year-by-year changes. I can assure my hon. Friend that we will continue to give very high priority to improving support for such valuable centres as much as we possibly can. I think she agrees and is prepared to say that our record so far is pretty good. My right hon. Friend the Home Secretary certainly helps me to ensure that we keep concentrating resources in this area.

[Dr Julian Huppert (Cambridge) (LD)]

I recently visited Cambridge victim support, which does an excellent job, but there is no doubt that greater help is needed for victims and witnesses. I welcome that much of the statement, but will the Justice Secretary clarify his comments about those who have been convicted? I accept that we need to stop those who simply take advantage of the scheme, but he will be aware that some convictions are never spent. Is he arguing that someone who was convicted for such an offence 50 years ago should still not be eligible for any compensation, irrespective of what happens to them?

[Mr Clarke]

As the hon. Gentleman will know, the Government are committed to introducing amendments to the Legal Aid, Sentencing and Punishment of Offenders Bill, currently in the other place, in order to amend the Rehabilitation of Offenders Act 1974. This is very much a Liberal Democrat initiative, and it will make the difference between spent and unspent sentences a little less rigorous. We are consulting on exceptions to an absolute bar. It is right that someone injured in their 60s does not necessarily lose all right to compensation on the basis that he had quite a serious conviction when he was 19. Without opening the gates too wide, we are, as it were, canvassing views on how to accommodate such exceptional cases—so long as they are rare and exceptional.

Civil Aviation Bill

Monday 30th January 2012 Commons Chamber

[Relevant document: The Thirteenth Report from the Transport Committee, Draft Civil Aviation Bill: pre-legislative scrutiny, HC 1694]

Second Reading

16:22

[The Secretary of State for Transport (Justine Greening)]

I beg to move, That the Bill be now read a Second time.

A successful aviation sector goes hand in hand with a growing economy; they are two sides of the same coin. That is why we need to ensure that the regulatory framework for civil aviation in the UK enables the sector to make a full contribution to economic growth, without compromising the high standards consumers rightly expect from the industry. Passengers are the lifeblood of successful aviation, so, above all, the Bill puts the interests of the consumer first, enabling the regulator to address the things that passengers care about most.

The aviation industry in the UK is vital and dynamic, and it has changed dramatically since the current regulatory framework was introduced in the 1980s. In many areas, competition has flourished and passengers have benefited, but while the industry has innovated and diversified, much of its regulatory framework has remained fixed and inflexible. There is compelling evidence that the current regulatory regime is distorting competition between airlines and needs to be reformed. When competition is distorted, the people who suffer are the consumers and customers—the 211 million passengers who travel by air each year and the freight customers who rely on aviation to transport their goods quickly and efficiently and make reliable connections with global markets.

We need only recall the scenes at airports closed by bad weather last winter to be reminded just how much people can suffer when air travel lets them down. The current regulatory regime proved itself a blunt and ineffective tool when it came to dealing with the issues that arose last winter—and we need to put that right.

With our independent Civil Aviation Authority we already have a world-class expert regulator with a first-class track record on safety, so the aim of this Bill is to give more responsibility to the CAA and to provide a better regulatory framework that would enable it to introduce more flexible and proportionate regulation and to take timely action on the issues that matter to passengers.

The Bill will devolve more responsibility to the specialist regulator for aviation, and will remove regulatory functions and unnecessary intervention by Government. It will also ensure that the CAA operates in a transparent and accountable manner, so that when appropriate it can carefully weigh up the costs and benefits of regulation as an integral part of the decision-making process. As a result, future regulatory intervention will be directed only at areas in which it is strictly necessary. For the first time, the regulator will be allowed to give the public reliable information about the sector’s performance and its environmental impacts, and about measures taken to address them. Moreover—this will be important as we work to reduce the deficit—the Bill will substantially reduce taxpayer funding for the regulation of aviation. It surely makes sense for the costs of regulation to be met by the sector itself.

The Bill focuses on three key areas: reform of the economic regulation of airports, a range of measures giving the CAA a role in aviation security and in the reform of its own regulatory framework, and reform of the air travel organisers’ licensing scheme to improve the protection of passengers. I will explain each of those in turn.

Let me begin with the importance of competition and the economic regulation of airports, a vital area that accounts for two thirds of the clauses in the Bill. Most airports up and down this country are subject to effective competition and do not need economic regulation, but for the small number with substantial market power, economic regulation is vital to defend consumers’ interests.

The case for reforming airport economic regulation is compelling. Few people would claim that the current regime, which, after all, was designed 25 years ago, is giving passengers the quality of service that they deserve. The industry and the regulator have urged change as well, and three years ago the Competition Commission concluded that the legislative framework distorted competition between airlines by adversely affecting the level, specification and timing of investment at airports and the service that passengers receive.

[Pete Wishart (Perth and North Perthshire) (SNP)]

Does the Secretary of State think that the takeover of British Midland International by the British Airports Authority will increase competition in the provision of air services to Scotland? What will the Government do to ensure that slots at Heathrow will be protected for the purpose of transport between Scotland and the rest of the United Kingdom?

[Justine Greening]

The hon. Gentleman is right to raise an issue that we also consider important. BAA also wants to ensure that it remains competitive, with connections to new markets, and that is the balance that we want to be struck. I know that the subject was raised last week at Prime Minister’s Question Time, and I know that the Prime Minister takes careful note of such matters. The hon. Gentleman will be aware of the work that the Government did to help ensure that we kept the connection between Northern Ireland and Newark airport in New York. We are strongly committed to ensuring that we have the connections between airports and across the country that our economy needs to be successful.

Part 1 of the Bill replaces the current framework for the economic regulation of airports with a flexible, modern regime designed to put consumers first. The current “one size fits all” system of economic regulation is rigidly focused on a five-year price control regime. The Bill replaces that with a flexible licensing regime which can be directed at areas where regulation adds real value, and which will allow the CAA to reduce or remove unnecessary regulation. The CAA will have the power to incentivise and improve airport resilience, and to take more speedy action to tackle poor performance. When competition in the market grows, airports will be removed from regulation when that is in passengers’ interests.

I understand the importance of clear and certain decision-making to the ability of businesses to make long-term investments in our transport infrastructure, particularly when billons of pounds of investment are at stake. Independent economic regulation ensures that there is no political interference, which is why it is such a common feature of modern economic regulatory regimes. The Bill will remove the Secretary of State’s role in deciding which airports are regulated and will give that responsibility to the independent CAA, which will need to make decisions based solely on the need to regulate and to protect the interests of consumers.

[Gavin Shuker (Luton South) (Lab/Co-op)]

The Secretary of State has said that the CAA will have additional powers and responsibilities. Will she say a little more about that? I find it odd, for instance, that it is excluded from the remit of the National Audit Office.

[Justine Greening]

The hon. Gentleman correctly points out that exclusion and I will address his point shortly. When Sir Joseph Pilling reviewed that matter in 2008 he concluded that the current approach was appropriate.

Importantly, the CAA’s decisions will become more accountable because the Bill will provide greater access to challenge regulatory decisions. As the CAA discharges its responsibilities, it is essential that its decisions are guided by the needs of customers. Therefore, clause 1 establishes for the first time a single, clear, primary duty on the CAA to further the interests of consumers—all passengers and owners of air freight both now and in the future—and, wherever possible, to do that by promoting competition.

Some airlines have argued that the CAA’s duty should be extended to airlines as users of airports, alongside passengers. The airlines are important of course, but I am in no doubt that if conflicts of interest arise between airlines and passengers, the regulator must be squarely on the consumer’s side. To protect consumers at all airports, the Bill gives the CAA powers to enforce competition law concurrently with the Office of Fair Trading in the airport services sector.

[Mr Tom Harris (Glasgow South) (Lab)]

The Secretary of State makes a valid point about what should happen if a conflict of interests were to arise between passengers and airlines. However, can we not address this issue by stating in the Bill that the CAA’s prime obligation is to passengers and that the airlines are specifically a secondary priority?

[Justine Greening]

I do not think we need to go that far. As I have said, the Bill’s key purpose is to provide clarity on what the CAA must focus on primarily, which is consumers. It is important to provide that clarity.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

The Secretary of State rightly points out that consumers’ interests can be protected by promoting competition and thereby giving passengers greater choice, but how does the Bill address situations that cannot be dealt with by more competition, such as passengers facing long queues to get on and off planes? In the short term, that will not be addressed by competition, so how might the Bill help in such respects?

[Justine Greening]

The Bill cannot deliver absolutely everything in respect of the aviation industry. It will, however, deliver a key element of the regulatory framework that will sit alongside how the industry operates. Competition is working. We need only consider the investment that both Heathrow and Gatwick are putting into winter resilience to see that passengers will make a choice between those two airports based on which one they believe they can rely on. As a result, we are seeing competition lead to far more investment on that side of airport operations. I have seen that development for myself, and I greatly welcome it. Providing the CAA with these new powers will promote effective competition by enabling the CAA to make use of its specialist knowledge and to co-ordinate its use of economic regulation and general competition powers.

Turning to modernising the regulators’ wider role, part 2 of the Bill includes changes to how the CAA operates by improving transparency and accountability, removing unnecessary Government funding and involvement and cutting red tape. Transparent information is of huge benefit to the public. It gives all of us as consumers the means, if we want to use them, to compare different services on offer to us and to judge for ourselves which we want to buy. In keeping with this approach, clauses 83 and 84 introduce two new information duties for the aviation regulator, to serve the interests both of consumers and those affected by air travel.

The CAA would arrange for consumer information to be published to help passengers and freight users make more informed choices about what is on offer, while having regard to the principle that the benefits of information should outweigh the cost. Similarly, the CAA would publish information for the public about the environmental effects of civil aviation in the UK, and the measures taken to limit environmental harm. What is more, it would be able to use both those powers to issue advice and guidance to the industry so that it can improve standards of service and operate more sustainably. As we modernise the legislative framework, we are taking the opportunity to give the CAA new freedoms to appoint its own executive directors and to carry out criminal proceedings without recourse to Government. As criminal proceedings can be both slow and costly, the Bill would also enable the Secretary of State to give the CAA powers to enforce existing offences through civil sanctions where they are more proportionate.

The Bill also includes some other measures enabling the disclosure of anonymised medical data about aviation workers who are subject to health checks by the CAA. That would pave the way for valuable medical research into the particular health risks for specialist workers such as flight crew and air traffic controllers.

Let me move on to our proposals to improve the regulation of aviation security. This section of the Bill is relatively short, amounting to just five clauses and two schedules, but I know the House will rightly consider it carefully. Above everything else, passengers expect the highest levels of safety and security.

For me, keeping people safe and secure when they travel is and will continue to be of key importance. At present, aviation safety is regulated by the CAA while security regulation is carried out by officials in the Department. The CAA has an excellent track record as a safety regulator, as good as any in the world, and it has empowered our airlines and airports to develop safety management systems that keep safety at the heart of their operations, striving for ever safer and more efficient systems. That is why I believe there would be real benefits to bringing the CAA’s impressive specialist expertise to the regulation of aviation security.

In the past, security regulation has been criticised for being too process-driven, too often relying on a tick-box approach. Although those arrangements have kept people safe, too often their inflexibility has caused frustration on the ground at airports. There would be attractive benefits for passengers if we could empower the experts to find the best and most efficient way of maintaining the highest levels of security for air travel. That means more involvement from the experts in aviation operations, which can bring real benefits. Of course, it is essential that the Secretary of State should stay responsible for aviation security policy and for giving security directions, although it also makes sense for the specialist expert regulator to have a role in maintaining and improving aviation security. Consequently, the Bill includes provisions for the CAA to keep under review security directions made by the Secretary of State and for it to provide advice and assistance to the industry and Government. With its track record in handling safety, I believe the CAA will approach those new responsibilities with the rigour they deserve.

[Mr John Leech (Manchester, Withington) (LD)]

Can we be assured that the transfer of staff from the Department to the CAA will not result in a loss of expertise in the security sector within the Department for Transport?

[Justine Greening]

We have considered that very closely and it is one reason why these changes will not happen overnight. They will take place over the next two to three years so that we can ensure we get the right staff transferred with the right expertise. As my hon. Friend points out, we have a wealth of security expertise within the Department and across Government and that will still be there for us to draw on within the Department for Transport. I am assured of that.

[Maria Eagle (Garston and Halewood) (Lab)]

Is the right hon. Lady at all concerned that the division of responsibilities will create new interfaces that might cause delay and problems in the swift implementation of policy?

[Justine Greening]

That is a very fair question and it is one that I have considered carefully, too. I do not believe that it will cause a problem at all; in fact, it will enhance the security approach that we are able to take. It will mean a far more ongoing and rigorous approach to security that will manage to combine the highest standards of security and safety at airports while delivering a more streamlined approach for passengers on the ground. That is better for everybody.

Clause 82 makes provision for the transfer to the Civil Aviation Authority of rights, powers, duties and liabilities as the Secretary of State considers appropriate. That will allow us to transfer to the CAA the experienced staff who carry out the regulatory compliance and vetting functions currently carried out by civil servants in my Department. That will not only devolve more responsibility to the CAA but will have the further advantage of bringing the “user pays” principle to aviation security. It is not right or fair that the taxpayer currently subsidises the cost of aviation by paying for its regulation. At a time when our overriding priority is to reduce the inherited debt and when difficult choices are being made about funding priorities it is right that the cost of regulatory compliance should be met by the industry that benefits from it and not by the taxpayer.

[Dr Andrew Murrison (South West Wiltshire) (Con)]

Has my right hon. Friend considered the impact of the transfer of powers from the Department’s Transport Security and Contingencies Directorate to the CAA on TRANSEC’s residual functions, particularly in relation to maritime safety and elements of rail safety?

[Justine Greening]

Yes, we have considered that and we are very happy that we will continue to strike the appropriate balance in our internal departmental expertise on security in all those areas. That is absolutely vital and we will not compromise on it in any way. We seek to have a more proportionate and smart approach to ensuring that we maintain the very highest standards of security and safety in our airports.

The final area of the regulatory framework that the Bill seeks to reform is the regulations covering the air travel organisers’ licensing scheme, or ATOL as it is known to millions of people each year. Those people have the peace of mind that comes from knowing that their package holiday is financially protected and that they will not be left stranded if a travel company becomes insolvent. Since the scheme was set up the holiday market has diversified, partly due to the innovations that internet booking has allowed. As a result, the holiday industry has told us that it is no longer clear to consumers whether their holiday has the protection of ATOL. Clause 94 will allow us to make regulations to improve clarity for the consumer by adding more flight-based holidays into the ATOL scheme, including holidays sold by airlines. That will mean that businesses selling holidays that include a flight should have a more coherent and consistent regulatory framework in which to operate.

[Mr Peter Bone (Wellingborough) (Con)]

I refer hon. Members to my declaration in the Register of Members’ Financial Interests. This area is very important because it is not clear to consumers at the moment whether they are protected or not, with some people on a flight being covered while others on the same flight are not. I do not think the Government are going far enough in that they are not going to say that all people on all flights are covered, but why not?

[Justine Greening]

No doubt my hon. Friend will want to return to this issue in Committee, but I think that our proposals are measured and will mean a real step forward in the number of consumers that ATOL can protect, while also making ATOL more financially sustainable in the longer term, which is important. The clauses that relate to the reform of ATOL are long overdue and are welcome. I appreciate that he might want them to go further and I look forward to having that debate in Committee because this is an incredibly important aspect of the Bill for people up and down the country who want to be able to book their holiday knowing that it has the protection they want behind it.

In conclusion, the Bill brings together the Government’s commitment to having a successful and sustainable aviation sector with our agenda on regulation. It will allow the CAA to modernise the way it regulates, bring a stronger consumer focus to its activities and improve transparency and accountability. It will also create a stable environment for investment in airports and will allow the UK aviation sector to continue to thrive and develop. I commend the Bill to the House.

16:43

[Maria Eagle (Garston and Halewood) (Lab)]

Let me begin by wishing the aviation Minister, the right hon. Member for Chipping Barnet (Mrs Villiers), well. Opposition Members were very sorry to hear of her accident and we wish her a speedy recovery from her injuries and from the surgery she is undergoing.

The Civil Aviation Bill started its life under the previous Administration and we were pleased, as was the industry, to see it included in the Queen’s Speech after the election. We will vote for the Bill’s Second Reading today and the Government will, in principle, have our continued support, subject to the scrutiny that this Bill should rightly receive as it progresses through its parliamentary stages and subject to the making of appropriate reassurances and necessary amendments.

The proposals that the Government inherited to reform the framework for airport economic regulation and modernise the CAA’s governance and operations are broadly correct. In a number of areas, we share the view of the Select Committee on Transport that the Bill could be improved, particularly in relation to passengers’ welfare and the sector’s environmental obligations. Should the Government not introduce their own proposals to do so we shall seek to improve the Bill in Committee.

We support the Government’s decision to use the legislation as a vehicle to reform and extend the ATOL scheme to provide greater protection for consumers, reflecting changes to the way in which holidays are sold today, as the Secretary of State set out. The Government have also decided to use the legislation to go beyond the economic regulatory purpose that was originally envisaged in the transfer of responsibilities relating to aviation security, which has emerged since the election or, more specifically, since the Government spending review. However, there are serious concerns about whether it is a desire to cut costs, rather than improve security, that is driving the changes. The Opposition will therefore require much greater assurance from the Government about how the changes will work in practice if we are not to seek to make amendments to the provisions or even to remove them during the Bill’s passage through the House.

[Steve Baker (Wycombe) (Con)]

Does the hon. Lady share my concern that passengers, as well as needing security, are worried about convenience and, indeed, their dignity?

[Maria Eagle]

The hon. Gentleman is correct, and proper security is always a balance between managing to make sure that the efforts of those who wish to commit terrorist offences on planes are foiled while, at the same time, not wishing to subject consumers and passengers to indignity or extensive delay. It is correct that the Department should have a full understanding of the extent of any threats so that it can make appropriate policy. It is just in those areas that we want to probe a little more in Committee precisely to assess the practical impact of the proposals.

It is unfortunate that the introduction of the Bill and its Second Reading should come so soon after the publication of the draft Bill. Considering that this package of reforms has been in preparation for many years, and given that it was widely believed that its introduction had slipped to the next Session, it is unfortunate that there has been a sudden rush of last-minute enthusiasm to bring it before the House. Consequently, the planned pre-legislative scrutiny, which we supported, has been curtailed. The Transport Committee has done its usual impressive job, but it had just three weeks to take evidence and produce recommendations on the proposals, many of which have been in gestation for six years or more. That meant that the Government have not been able to consider those recommendations in detail and improve the Bill before its introduction. Consequently, we are debating a Bill—and I hope that this is the case—that will doubtless be amended by the Government in Committee, which is a remarkable state of affairs for a measure so long in preparation.

The industry itself has rightly expressed concern about the limited opportunity it was given to engage with officials before the Bill’s introduction in Parliament. BAA, it is fair to say, may be affected more than other player in the industry by the measure, yet it says that it could secure only a single one-hour meeting with the Department for Transport in the past three months, which falls short of what might be expected for a regulatory Bill of this nature. There will be, at the very least, a suspicion that the hasty introduction of the Bill has less to do with the industry’s needs and more to do with the needs of business managers, who doubtless begged the Secretary of State to let them have something for the Commons to do, because the Government’s legislative programme is bogged down in chaos in the other place.

[Justine Greening]

I have met BAA on a number of occasions since taking on my present role, so I can assure the hon. Lady that there has been plenty of opportunity for BAA to raise any concerns with me.

[Maria Eagle]

I am grateful for the right hon. Lady’s intervention. I was just quoting what BAA said, and I hear what she says about her own efforts, which I commend.

There are three key reforms in the Bill—to economic regulation, to the Civil Aviation Authority itself, and to the transfer of security functions. I want to turn briefly to the wider aviation context within which the reforms will sit. We agree that the current framework for airport economic regulation is outdated and needs reform. It has been clear for some time that the CAA does not have the powers to apply the regulatory regime in a way that best benefits passengers and reduces costs for the industry. We are also dealing with a very different aviation landscape since the introduction of the existing regime, not least because of a major increase in passenger numbers, low-cost airlines, growth in regional airports and changes to ownership required by the Competition Commission. The proposed licensing regime, together with a more flexible and targeted set of regulatory tools, will better enable the CAA to carry out its work, while making its decisions more accountable, and reduce unnecessary regulation.

It is also right that the regulatory regime governing airports be reformed to put passengers at its core. The CAA’s primary duty should be to promote the interests of passengers. That was our intention in developing the reforms, and we are pleased that that approach has been accepted and adopted by the Government. We hope that in Committee the Minister will look carefully at the arguments that have been made and be clearer about how the CAA is to weigh the often differing interests of current versus future air transport users and, as the Select Committee has urged, explain in more convincing detail how the proposed aviation consumer advocacy panel will work in practice and, in particular, how it will identify, represent and promote the interests of passengers and relate to the regulatory process.

The lack of a specific requirement to publish passenger welfare plans is a major omission and should be addressed. It was a key recommendation from the Select Committee following its inquiry into the failure of both Government and industry to prepare and respond adequately to the severe winter weather in December 2010. The appalling experience faced by many passengers, particularly at Heathrow, demonstrated the need for the sector significantly to up its game in relation to passenger welfare. I welcome the new powers that the legislation will give the CAA and the Government and hope that the Secretary of State will issue clear and robust guidance to airport operators on winter resilience. However, we would like to see a specific obligation on the CAA to include in any licence issued a requirement that airports provide support to stranded passengers.

The Government must also ensure that each recommendation of the Quarmby report on the resilience of England’s transport systems in winter is implemented, particularly those relating to the need for early decisive action on whether to cancel services; the supply of de-icing and anti-icing products or road salt; better liaison between airports and local highway authorities over the treatment of appropriate public road networks; and improved access to performance statistics on the management of disruption by airlines and airports.

The former Transport Secretary, the right hon. Member for Runnymede and Weybridge (Mr Hammond), stood in the snow at Heathrow just over a year ago and pledged to learn the lessons of the chaos passengers faced. I know that because I was standing in the snow freezing alongside him and, more importantly, alongside thousands of stranded passengers. At the time he blamed Heathrow for seriously underestimating the amount of de-icer required and raised the prospect of establishing a central reserve for emergencies, much as exists for road salt. The Government should provide an update on this—they have gone quiet lately—and on the other promises made at the time. As well as the powers that this Bill rightly gives the CAA, the current Secretary of State must ensure that the Government do not take the view that this is all the responsibility of the industry. There is a strategic and economic need, as well as a UK reputational requirement, for the Government to get a grip on winter preparedness. I recall the Minister responsible for aviation telling the media on Boxing day 2010 that the Bill would do just that, but it is not obvious to me that it does it sufficiently well, so we will explore that further.

The CAA should also be required to focus licences on the specific experience of passengers in airports. That means, as the Transport Committee has urged, specifically structuring licences to address key areas of passenger satisfaction, including immigration and baggage handling. We all know that the failures that most give rise to frustration and anger, not to mention ruining business trips and holidays, are delays caused by inadequate management of immigration and poor baggage handling. Of course, although airports should rightly have obligations in this respect, the Government must also recognise that their decisions have an impact that is out of the hands of airport operators, not least the way they resource and manage the UK Border Agency. The speed and scale of the Government’s cuts is putting pressure on the agency. People across the country fear that corners are being cut and border security is being put at risk by the scale of the Government’s border cuts. Some 6,500 staff are going from the agency, with 1,500 going from the UK border force, including more than 800 this year alone. In the past year, we have already had the situation whereby the Home Secretary did not know what changes to border controls she had agreed to, how they were being implemented or how great the security risks were, and relaxing controls was a direct consequence of those staffing reductions.

It is incredible that the Government have overseen a reduction in checks at border control. The public expect proper immigration controls, and passengers expect there to be sufficient staff to prevent massive delays at airports, which damage our image and can impact on investment and business competitiveness. We agree that the passenger must be placed at the heart of the regulatory regime, but the Government must do the same as they carry out their responsibilities.

The Government should also consider the airlines’ case that, in the context of airport regulation, they too are customers. Although we agree with the Government that the law should be absolutely clear that the CAA’s primary duty is to passengers, we agree also that there is a case for a secondary duty to airlines, so the Minister should look again at the decision not to include such a duty.

Although it is right that we set out a primary duty on passengers to send a clear signal to the CAA about how it should manage competing interests, it is right also that we set out further duties. In doing so, however, the Government have chosen to omit the reference to environmental obligations that we intended the Bill to include. That is a mistake, so I very much hope that the Minister will reflect on it and think again.

Back in March 2009, the consultation document on economic regulation that the then Secretary of State published proposed that

“the CAA should have an environmental duty with respect to its economic regulatory functions.”

The final report of the Cave review recommended

“a duty on the CAA to protect the environment, subject to guidance on specified environmental matters by the Secretary of State.”

In December 2009, the previous Government published their decision document on economic regulation and concluded that one of the supplementary statutory duties should be

“to have regard to the airport operator’s legal obligations to comply with applicable environmental and planning law.”

When one considers the secondary duties that have been set out, one finds the absence of any environmental obligation to be a clear omission—and a late one: it was included in the press release accompanying the publication of the Bill, just not in the Bill. The CAA will be obliged

“to ensure that licence holders can finance the activities which are subject to the relevant licence obligations; to secure that all reasonable demands for airport services are met; to promote economy and efficiency on the part of licence holders in its provisions of airport services at regulated airports; to have regard to guidance issued by the Secretary of State; to have regard to any international obligation of the UK; to have regard to principles of better regulation.”

All those obligations are of course right, and we support them, but there seems to be no justifiable reason for removing the proposed additional requirement on the CAA in terms of economic regulation: to have regard to airport operators’ compliance with environmental and planning law. Without that, airports may be reluctant to invest in improving environmental performance, be it noise, vibration, visual disturbance or emissions.

It is not good enough for the Government to say it is obvious that airports must comply with statutory obligations and it does not need re-stating in the Bill. The issue is whether airports feel that they can recover the cost in charges to airlines. The consequence, as the Transport Committee has warned, is:

“Without giving the CAA a supplementary duty on the environment in relation to its economic regulation role, there is some risk that airports may be reluctant to invest in improving environmental performance.”

[Mark Lazarowicz]

Is the situation not worse than that? Is there not a danger that specifically removing the reference to environmental planning concern might be taken by some airport operators as a coded message that the Government do not take such issues seriously now?

[Maria Eagle]

My hon. Friend makes a good point. There are plenty of people who seek to read coded messages in what the Government do, or do not do, and in how they change their proposals, so in that respect there is a concern that the Government need to address.

If the Government’s green credentials had not already worn so thin, no ulterior motive might have been seen in their decision, but there will be considerable suspicion that it is yet another example of giving in to vested interests, coming on top of the Government’s failure to reassert the aviation emissions targets that we set in government, let alone to listen to the calls to look seriously at the UK’s share of international emissions and to include both in the UK’s carbon budgets. When the obligation on other sectors is to reduce carbon emissions by at least 80% by 2050 compared with 1990 levels, the aviation industry has agreed to work towards achieving the lower target of the same reduction but compared with 2005 levels. However, the industry believes that it can achieve the same reduction compared with 2000 levels. On that basis, we believe that the Committee on Climate Change should advise on the case for a tougher target. It is clear that the Bill sends out completely the wrong signal to industry.

The CAA, airport operators, airlines and National Air Traffic Services have a shared responsibility to achieve those goals. In addition to the original proposed duty on environmental and planning law, which has been deleted, there is surely a case for considering the practicality of using this Bill to reaffirm the shared responsibility on meeting emissions targets that have been agreed. That should be explored during the passage of the Bill.

The public should certainly be better informed about the environmental effects, including through emissions and noise, of civil aviation in the UK and about the measures that are being taken to limit the adverse environmental effects. I want to take this opportunity to welcome the CAA’s decision to open a three-month consultation on its environmental role and performance. The chief executive, Andrew Haines, has said that he is determined to work with the sector to help it manage its environmental footprint and realise its potential growth. He is clear that

“unless the sector faces its environmental impact head-on, it will not be allowed to grow.”

He is right to have set the goals to

“contribute to a cleaner and quieter aviation industry, improve airspace design through new operational measures, influence the environment debate and enhance consumer understanding of the environmental impact of flying.”

[Henry Smith (Crawley) (Con)]

Will the hon. Lady not concede that airport operators, such as the operator of Gatwick airport in my constituency, have for many years done an awful lot to ensure that there are environmental enhancements, such as through the Gatwick area conservation committee, which has made a positive difference locally?

[Maria Eagle]

I do concede that. I do not think that the aviation industry has anything to fear from closer scrutiny of the way in which it deals with these issues. I just want to ensure that this Bill does not send the wrong signals to industry and make it more difficult to do what many operators are starting to do in any event.

In addition to the revision of the statutory purpose of the CAA and its secondary duties, it is right that the Bill aligns the powers of the CAA with those of the Office of Fair Trading. That provides consistency with the approach taken for other regulated industries, including energy, water, telecoms and rail. The Secretary of State will be aware that there are concerns about the impact on competition of the sale of airlines and the slots that transfer ownership as a result. The recently agreed sale of British Midland International by Lufthansa to International Airlines Group has raised considerable worries, particularly in Scotland and Northern Ireland, about the impact on short-haul domestic routes and the price implications for passengers. The Government have to date refused to take those concerns seriously. My hon. Friend the Member for Glasgow East (Margaret Curran), the shadow Secretary of State for Scotland, and I have referred the sale of BMI to the OFT.

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

I am grateful to the hon. Lady for raising this issue again, because it is extremely serious. I have concerns not only about the flights into Heathrow but about the onward connectivity of those flights to the rest of the world. Aberdeenshire has a big energy sector and people are travelling onwards. She is right to highlight this issue.

[Maria Eagle]

I thank the hon. Lady for her intervention.

There are precedents within the EU of a single company controlling a larger percentage of slots at one airport, but I am sure that the Secretary of State will appreciate that the situation at Heathrow is different because of the capacity issues that significantly restrict the potential for competition. I fully understand and respect BA’s wish to expand its operations, not least to pursue the new long-haul markets from Heathrow that are needed for our economic competitiveness. However, many years before a high-speed rail service becomes a reality between Scotland and London, and Heathrow in particular, we must balance that with the need to maintain the domestic air links on which the Scottish economy depends.

I have two final points on the economic regulatory aspects of the Bill. First, there are concerns that there is no requirement on the CAA to consult on how it intends to prioritise and balance its new duties and discretion. Secondly, the Government must clarify who does and does not have a right of appeal on a decision by the CAA in respect of licence conditions, and how they intend to prevent repeated and unfounded appeals.

On the second major purpose of the Bill, which is to modernise the CAA’s governance, we agree that reform is needed and we support most of the proposed changes. Of course, there are changes that have been made without the need for legislation, such as the creation of a separate chair and chief executive. We do, however, question the decision to remove the requirement for the Treasury to approve the levels of remuneration for non-executive members of the board. Are we not seeing right now the need for greater, not less oversight of remuneration? I suppose that the experience of the past few days has shown that it is doubtful whether the Government would exercise their powers over excessive bonuses even if they retained them, but it might be a good idea to hang on to them.

It is also wrong that the CAA remains outside the remit of the National Audit Office, unlike all other industry regulators. That should be addressed, and there should be an explicit efficiency duty as recommended by the Transport Committee. I hope the Government will agree that it should be relatively straightforward to reach agreement on those issues in Committee. We agree on the outcomes that we want to see achieved through the modernisation, and I look forward to working with Ministers to improve the Bill further in the areas that I have mentioned.

We have much greater concern about the third major area with which the Bill deals, which is the Government’s proposals for a major change in how aviation security in ensured. They have not made the case for the change. It was included in the draft Bill at the last minute and has not been subjected to adequate scrutiny, and enough people across the industry have concerns about the proposals to require the Government to look again at whether they have got them right. We are open to being persuaded, but Ministers have more to do if they wish us to support the proposed changes.

I appreciate that under the Government’s proposals, the Secretary of State will remain responsible for aviation security policy and for making aviation security directions under the Aviation Security Act 1982. That is well and good and correct, but by enabling the transfer of a potentially very wide range of security functions to the CAA, the Government risk fragmenting an approach that has served us well. Let us not forget that the current arrangements, including the now abolished specialist unit Transec, arose from the tragedy of Lockerbie. We should not move lightly away from an approach that had such a tragic loss of life as its reason for existing, particularly not when the clearly stated purpose of the proposals is, to quote the Department’s impact assessment, to

“Reduce the costs to the taxpayer in line with SR”—

spending review—

“commitments by introducing the user pays principle.”

The changes that the Government propose are not minor. For example, they want to pass to the CAA the obligation to make arrangements for carrying out vetting, including those for renewing and withdrawing clearance. The CAA, rather than the Secretary of State, will maintain the list of persons approved for the provision of a particular aviation security service.

There are also concerns about the ability to retain staff. The Bill will allow for the transfer from the Department for Transport to the CAA of about 85 aviation security posts currently responsible for the review and upkeep of aviation security regulations, and for the monitoring and enforcement of the industry’s compliance with security requirements. The Transport Committee’s recommendations on that matter should be considered carefully, including the permitting of secondments rather than transfers to avoid the loss of experienced staff and expertise.

The Committee’s recommendation to delay the change, to bring it in line with the introduction of the outcomes-focused risk-based security regime, also makes sense. The airlines are concerned about the lack of transparency of the likely costs of the changes, and therefore about the impact on passengers, on to whom costs will be passed. There is real concern that although the costs of the transfer will materialise, the supposed reduction in obligations as a result of the move to the outcomes-focused regime will not.

Those concerns are particularly acute for smaller regional airports, which play a vital role in their local economies and will not easily sustain major additional cost burdens. The Government need to reassure the sector that they will retain an active engagement in operational matters, enabling airports to take the lead in the knowledge that they will have ministerial backing.

It is clear that there are growing tensions between the UK Government and the EU over security issues such as the permitting of full-body scanners without a right to select an alternative form of search. We have strongly supported the Government’s stance on that, although it is now important that Ministers work closely with their European partners to ensure a common, and preferably similarly robust, approach to security across the EU. The approach taken in the Bill risks leaving the industry without a clear lead or protection from Government on the decisions that it takes, be they on trials of new forms of security screening or other matters.

According to the explanatory notes, the Government’s Regulatory Policy Committee estimates that

“the impact on public expenditure gives expected savings in the order of £5.4m per annum.”

It is far from clear how the cost savings to the Department from the abolition of the security function can be secured without putting at risk high levels of aviation security or imposing a burden that will ultimately fall on passengers.

The Regulatory Policy Committee also identified transitional costs of transferring the security function of approximately £1.5 million, as well as ongoing costs beyond the transition, not least because

“the CAA will be responsible for upgrading systems in perpetuity”.

It is therefore

“likely that the CAA may borrow from the National Loans Fund to fund IT improvements.”

I appreciate that the Secretary of State inherited her predecessor’s plans to meet the 15% cut in the Department for Transport budget. She has shown a willingness to look again at some of his rasher decisions, and I hope that she does so in respect of that major change to aviation security, for which the case has not yet been made.

I urge the Government to think again about one other aspect of their aviation policy. An announcement is expected in the Budget—if not before—on the sale of their remaining stake in NATS. Recent media reports have suggested that DFS, Germany’s state-owned air traffic service, has been in talks with the Government. Yet again, just as with our rail industry, the Government’s ideological obsession turns out to be not so much opposition to a public stake in delivering transport services as an opposition to a British public stake in doing so. Just as the Dutch national railway will this week begin to operate the East Anglia franchise, with Deutsche Bahn and SNCF snapping at its heals on other parts of the network, our airspace might be controlled, in effect, by the German Government.

There are several very serious reasons why the Government would be wrong to withdraw completely from NATS. The current shared-ownership model between Government and airlines works well. The airline group has opposed an outright sale of the Government’s stake and raised the prospect of the industry walking away. The airlines are best placed to ensure the success that NATS has become, not least because of their healthy self-interest in safety and industrial relations. There are concerns about the impact of a foreign power taking a stake in NATS on the integration of civilian and military operations, which would put at risk the operational benefits of that integrated approach. There are also questions about the Government’s ability to play a leading role in air traffic policy at EU level if they become the only Government to have given up their stake in their air traffic service.

[Justine Greening]

It is probably wise for me to remind the hon. Lady that the Labour Government part-privatised NATS in the first place.

[Maria Eagle]

I am well aware that the Labour Government sold a stake in NATS. I am talking about the Secretary of State’s predecessor’s proposal to sell all of it. It is a question of the Government retaining a stake. If she is willing to confirm that the Government will retain a stake, I will be happy to give way to her. She shakes her head.

[Mr Brian H. Donohoe (Central Ayrshire) (Lab)]

Ownership is currently entirely within British hands. It is possible that that will no longer be the case if privatisation goes ahead.

[Maria Eagle]

That is indeed the worry. NATS does not cost the taxpayer a penny to run—in fact, it pays a dividend to the Government. In June last year, NATS paid a dividend of £42.5 million, and in November announced a further £8.2 million. The Government received a significant share of that as the majority shareholder. Their decision to sell all of NATS would therefore be a short-term, quick-buck decision. Like their approach to aviation security in the Bill, they are placing a narrow focus on deficit reduction ahead of the wider economic and security impact. I hope the Secretary of State ensures that she puts proper pressure on the Chancellor, whom she knows very well, to make a good decision and to retain a stake in NATS.

Finally, although the measures in the Bill are important —they are all concerns for the aviation industry—there is an elephant in the room, because the Bill does not and cannot address the capacity issues facing the industry, particularly in the south-east and the future of our hub status. The Government’s failure to set out a strategy for aviation and the lack of any plan to do so until late in this Parliament is putting jobs and growth at risk. Their call for airports to be “better not bigger” has always been a slogan, not a policy, but even they seem to be waking up to the fact that a blanket ban on growth and new capacity in the south-east makes no sense.

In government, Labour supported the industry’s proposal for a third runway at Heathrow—as the UK’s only hub airport—as the best way to add additional capacity. However, the Opposition have accepted the Government’s decision to cancel the third runway, and it is time to move on and seek an alternative way forward. Our decision can ensure that we do not waste another five years wrangling over that proposal while the industry risks falling behind our EU competitors, and while major airlines simply move more of their operations abroad, where there are no capacity constraints.

[Dr Julian Huppert (Cambridge) (LD)]

I am delighted that the hon. Lady’s party has come to its senses and ruled out the third runway. I hope that she will tell us what her suggestion is, because she has a long track record—such as on high-speed rail—of suggesting things but never quite pinning down an actual idea.

[Maria Eagle]

If the hon. Gentleman would wait just a moment, he might hear my suggestion.

Two weeks ago, the Prime Minister was apparently persuaded of the case for a new airport in the Thames estuary, a position that lasted a full 24 hours before the Under-Secretary of State for Transport, the hon. Member for Lewes (Norman Baker) slapped him down. Then the papers were briefed that new runways at Gatwick or Stansted were back on the agenda, despite the coalition agreement seemingly ruling that out. British business cannot afford this chaos and confusion continuing until or even beyond the next election. That is why I have made a clear offer to the Secretary of State for us to work together and put aside our differences for the good of the country to see whether we can agree a joint position on how we can meet the capacity issues in light of the decision on Heathrow. We have been disappointed that, three months on, the Government have not responded to that offer.

I was, however, encouraged by the constructive response from the Conservative party chair, Baroness Warsi, on last week’s BBC “Question Time”, in response to my hon. Friend the Member for Liverpool, West Derby (Stephen Twigg). She said:

“Some serious discussions—cross-party discussions—have to take place, because I don’t think anyone in this country wants us to be a republic which is left behind and really nobody wants to trade with.”

Leaving aside why the chair of the Conservative party believes that we are a republic, she is right to agree with us that we need a cross-party approach, and about the consequences of not agreeing a way forward. If the Transport Secretary would like to confirm that she does accept our offer and is willing to begin talks on how we can move forward on this issue together, then I am happy to give way.

[Justine Greening]

Part of the challenge is that the hon. Lady’s party has so many different policies on so many different days, it is difficult to know whom we would be talking with.

[Maria Eagle]

Coming from a party that last week had a different policy every day, none of which was in accordance with the majority party’s manifesto or the coalition agreement, it is a bit of a cheek for the Secretary of State to put that point to us.

A successful, thriving aviation sector is crucial for our economic competitiveness. It is vital that industry can plan for the future with certainty, not least to deliver the investment needed to provide the additional capacity required if we are not to fall further behind our EU competitors. I welcome the Government’s decision to bring forward this Bill and take forward the reforms that we began—

[Dr Huppert]

Will the hon. Lady give way?

[Maria Eagle]

I am coming to a conclusion now, so the hon. Gentleman should wait for his own speech—[Hon. Members: “Ah!”] I have given way to him once.

The regulatory regime governing the aviation sector is outdated and inflexible and this Bill will be an important modernisation, enabling the CAA to fulfil its functions in a way that better reflects the industry today, and in a way that can respond to the individual circumstances of our major airports. Putting the passenger at the heart of aviation economic regulation is overdue. I urge the Government to look again at those areas where there is considerable consensus that the Bill could be improved to provide even greater protection to passengers through clearer obligations on airports in respect of their welfare, not least during severe weather.

The Government should also live up to their increasingly hollow claim to be the “greenest Government ever” and place an environmental duty back on the face of the Bill, and give a much clearer steer to the industry by giving their firm backing to—at the very least—the emissions targets we set in government. In addition, Ministers should reflect very carefully on the concerns that have been raised over the proposed transfer of security functions from the Department and ministerial control.

It is one thing for us to agree on a credible regulatory regime for the aviation industry—and I believe that over the course of the passage of this Bill we will be able to agree these issues—but what the industry desperately needs is for us all to agree a credible long-term strategy for the sector, which will last across Parliaments and will not become a political football again at the next general election as it was at the last. So let us work together on the right way, consistent with the need to tackle emissions and the threat of climate change, to provide the capacity that the industry needs.

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. To accommodate as many Members as possible, a 10-minute limit on Back-Bench contributions has been introduced, but the usual rules apply to interventions, in that injury time will be added on. However, the usual rules will also apply to any maiden speeches that might be made during this Second Reading, which means that no interventions should be allowed.

17:19

[Henry Smith (Crawley) (Con)]

I am grateful for the opportunity to take part in this important Second Reading. I commend the Government for introducing this much needed Bill in the first Session of this Parliament. I waited with bated breath to find out Labour party policy on the future of aviation in this country. I thought that the hon. Member for Garston and Halewood (Maria Eagle) was about to announce an Eagle island airport, but it seems we will have to wait a little longer for that. As my right hon. Friend the Secretary of State said in her introductory remarks, it has been more than a quarter of a century since legislation in the area has been properly reviewed. During that quarter of a century, the airline and airport industries have changed massively.

In 1986, when the then British Airports Authority was privatised and became BAA plc, BAA nearly dominated the market in airports—certainly in London, the south-east and Scotland. At the time, the mix of airlines was different. At Gatwick, we now see the orange tailfins of easyJet, the largest operator from that airport and indeed the country’s largest airline. The new terminal 5 at Heathrow airport—I say “new”; it is some years old now—is a hub for British Airways. Virgin Atlantic, headquartered in my constituency, has developed significantly and is now a successful British brand representing the country abroad.

Our airport sector has developed considerably. In 2008, the competition authorities said—rightly, in my view—that BAA needed to divest itself of one of its airports. Gatwick was sold to Global Infrastructure Partners in December 2009. Already, in that short period, there has been significant development at Gatwick airport. I pay tribute to the chief executive of Gatwick airport, Stewart Wingate, and his management team, and to the many thousands of my constituents employed by Gatwick airport and the ancillary industries in the aviation sector locally, for the significant contribution that they have made to transforming the airport over those two short years.

More than £1 billion-worth of investment goes into Gatwick airport. I know that my right hon. Friend the Secretary of State went there recently to witness some of the works. They involve not only upgrades to the fabric of the north and south terminals but the introduction of state-of-the-art security facilities that make passenger travel through the airport more efficient and secure. The investment also includes more than £50 million to upgrade the station at Gatwick. Again, that involves not just the fabric but increased signalling and platform capacity, so that more direct trains can run from the airport to central London, and through London to Bedford and down to the south coast. A lot has happened in the aviation and airport sectors over the past quarter of a century. That has been the experience particularly at my local airport, Gatwick.

In the limited time that I have, I will refer to a few questions and clarifications on some of the Bill’s clauses. Clause 5 discusses competition between different parts of an airport. The Bill makes it possible for an airport terminal to be operated by a different company from the one that operates the runway and taxiway—something that we are more familiar with in countries such as the United States. I welcome the possibility of increased competition, which could improve the passenger experience, but I would be grateful if Ministers clarified whether the CAA will have a power to force the sale or lease of parts of an airport, or whether that will remain subject to the competition authorities under the Enterprise Act 2002.

As my right hon. Friend said, clause 6, on the so-called “market power test”, outlines a series of tests that must be met if an airport is to be regulated. To determine whether an airport should be regulated, the substantial market power test is to be applied. If an airport is to be so regulated, what would the dominance test be, and would it come under competition law or be decided by the CAA? I would be grateful for clarification.

Clause 12, on the regulation of possible future market power, gives the CAA the power to decide whether regulation is needed in the light of possible future developments at an airport. Again, that power is fine, but will there be any possibility of a review if those events do not take place? It would be strange to regulate for something that does not happen.

I welcome clause 25, on the scope of the right of appeal, because it is important for the airlines that use Gatwick airport and other airports around the country, but I would be interested to know whether there will be any way of preventing vexatious appeals. Furthermore, how rigorous, transparent and fair will the appeals process be?

Clauses 83 and 84, in chapter 2, part 2 of the Bill, deal with information on performance of services at airports. Again, the provision is welcome and will help to enhance the passenger experience as much as possible, but I wonder whether the power of that performance test should be extended to other organisations and agencies operating within an airport. Mention was made earlier of agencies such as the UK Border Agency and of the transparency and efficiency of the UKBA. That point could be applied to other agencies, such as Her Majesty’s Revenue and Customs.

In what little time I have left, I would like to highlight one concern. I broadly welcome the CAA being given these powers—it is the agency best suited to have them—but being an important public body it, too, should be subject to the rigour of the National Audit Office. We are asking the CAA to regulate the performance of others, and it is important that, as a regulator itself, it should face the rigour of scrutiny as well.

I warmly welcome the Bill. It is overdue, and I am grateful to the Government for introducing it so early on. Most importantly, it will improve the passenger experience, but it will also provide for a fair and transparent system for our airport operators and airlines. As was rightly said earlier, as a trading nation we rely on a strong aviation sector, and the Bill does a lot to enhance that.

17:29

[Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)]

This is an important Bill. Civil aviation is a vital part of our economy. Regulation must support the industry to operate in the public interest. The call for a new look at regulation has been long standing. Indeed, the Select Committee on Transport in the last Parliament called for a review of the Civil Aviation Authority in November 2006. It has taken a long time to bring this Bill forward.

I am pleased that the Committee had the opportunity for pre-legislative scrutiny, but it was disappointing that the time for consultation was so severely curtailed. Indeed, our response to the draft Bill was published on the morning of the publication of the Bill itself. It is important that the Government should give an assurance that they will consider the points of concern that our report identifies. Our consideration was helped by the evidence of the Minister of State, the right hon. Member for Chipping Barnet (Mrs Villiers). I regret that she is not able to be here today and wish her a speedy recovery.

I should make it clear at the outset that there was general support for the regulatory aspects of the Bill, in particular the flexible licensing system and the focus on passengers. However, we have concerns, including in areas where there was little or no consultation before the Bill was published. First, there is a need for clarity on the definition of the key part of the Bill, the focus on the passenger’s interest. There needs to be a clearer definition of “users of air transport services”. We recommend that this be clarified to read: “passengers and shippers of cargo, both present and future”. We considered the representations made by airlines, and recommend that the position of airlines should be recognised as a secondary duty.

There was support for light-touch regulation. Licensing conditions and their associated costs must be proportionate to the benefits gained, which means that impact assessments are required. We were told in evidence from the aviation industry that the impact of the Bill on an airport handling 10 million passengers a year could be £200,000 a year, a significant amount in these difficult economic times. The emphasis in the Bill on the needs of passengers is welcome. This requirement must be reflected in the licences and the conditions imposed by the CAA. It is important that the requirement for information on the passenger experience, together with the environmental implications, should be clear, relevant and useable. Costs should relate to benefits.

There are two areas of concern and possible omission. First, passport control and immigration are identified by passengers as areas of key concern, yet they are handled by the UK Border Agency, not the Department for Transport. A way must be found to include those aspects when considering the passenger experience under the Bill. Baggage handling was another area of concern identified by passengers, yet it is often provided by private companies on behalf of airlines. A way must be found to include that, too. We were also concerned about an omission in relation to passenger welfare—in particular, in relation to plans to deal with disruption, such as when adverse weather caused major disruption at Heathrow. Although the CAA has spoken about the need to insist on plans to deal with passenger disruption and look after passengers when disruption occurs, there does not seem to be a requirement for that in the Bill. It is important that that, too, should be looked at. We also questioned witnesses about the aviation consumer advocacy panel, which is due to replace the Air Transport Users Council. It was unclear how that panel, representing the interests of passengers, would work or whether its interests would cover cargo as well as passengers. We need much more clarification on that.

There are two areas where powers were introduced after we were able to consider the Bill in draft form. We have questions about both. First, the ATOL––air travel organisers’ licence—scheme, first introduced in the 1970s, deals with financial protection for consumers who have purchased air package holidays in the event of a company going into insolvency. The Transport Committee has looked at the operation of ATOL, and at its inadequacies, and we have called for greater clarity in the information available to travellers, so that they can be sure whether they are covered by such insurance, and in the extent of the scheme, so that it is clear which passengers are covered. A power to address this is included in the Bill, but we have not yet looked in detail at the Government’s proposals. We hope to remedy that tomorrow, when the Committee will look specifically at the Government’s plans for ATOL and at the industry’s view of them.

[Mr Donohoe]

I commend the work of the Transport Committee on the Bill. One area of concern is the effect that the changes will have on the industry and on the economy. Will the Committee investigate that element of the proposals? It seems that only the Minister has shown any optimism about economic growth, and I hope that the Select Committee will look again at that subject when it revisits the Bill.

[Mrs Ellman]

Economic growth is indeed an important area and, while the Minister stated that it was an objective, it was not made clear how the changes would actually operate. So, yes, we would certainly like to look into that matter further.

Another area of concern relates to the proposed changes to responsibility for security in aviation. Transec was set up in 1991, following the Lockerbie disaster. Aviation security is a matter of prime importance, and aviation terrorism remains a magnet for terrorists who wish to inflict mass loss of life as well as economic disruption. It is a matter of concern that changes are being proposed in the area of responsibility for aviation security without a full consultation on how they will work.

It is proposed that the Secretary of State remain responsible for aviation security policy, with the CAA adopting new responsibilities that would include conducting a review of the aviation security directive, giving advice and assistance to the industry on security measures, monitoring and enforcing compliance with EU and domestic requirements, and carrying out national security vetting on individuals. The changes are linked with a change of approach from “direct and inspect” to an outcome-focused, risk-based approach.

These are major, substantial issues. The changes will involve a £5 million a year transfer of payments from the taxpayer to the aviation industry and passengers. Of greater importance, however, is the fact that they will result in divided responsibilities for aviation security. That is a matter of prime concern, and we call on the Department to be more explicit about exactly how the new system will operate, and to reassure passengers that their safety will still be a matter of supreme importance.

[Kelvin Hopkins (Luton North) (Lab)]

I am grateful to my hon. Friend for giving way, and I apologise for missing the first part of her speech. Airport security has suffered from an ongoing problem of a division of funding, with local authorities having to fund their security. Does she accept that airport security should be funded not only adequately but nationally, as it is a national concern? It should not place a burden on local police forces.

[Mrs Ellman]

As the bill for security mounts, it is important to give full consideration to how it is to be footed. Passenger security is a matter of prime importance, and it needs to be assessed in an international context as well as in national and regional contexts.

The Transport Committee gives its general support to the Bill, but the areas of concern that we have identified are important ones, and I seek an assurance that the Minister will consider them as the Bill proceeds, so that civil aviation can be promoted to benefit the economy and to enhance the passenger experience.

17:39

[Mike Freer (Finchley and Golders Green) (Con)]

I welcome the Bill, which puts the passenger at the heart of airport regulation and operations. Previously, the airlines were the customer, so the new responsibility to make consideration of the needs of passengers the primary duty is an important step, but it remains important, too, to look at how the Civil Aviation Authority will balance the competing demands of passengers. Indeed, which passengers carry the most clout? Leisure passengers are by far the biggest users of our airports, so are they the most important because of their volume? Business passengers are lucrative and economically vital to our airports, but they lack the clout of volume, so which passengers will have the most pull?

Business and leisure passengers have competing needs at the airport. One may want a quick and slick process; the other may want more services while waiting to depart. More retail and more seating means less space for security screening: one generates income, one incurs expenditure, so how will the regulator balance those competing demands?

What about the airlines? The passenger may be the end-user of the airport, but the airlines have the operational interface with the airport infrastructure, so a secondary duty to have regard to the airlines is important—indeed, crucial. It remains unclear how the regulator would balance those needs against those of the passenger. For instance, a budget airline might choose to use steps and buses because it is cheaper than using air bridges, but in terms of passenger experience air bridges are far more popular, so which wins out—the passenger or the airline? These competing demands will, I hope, become clearer as the Bill proceeds.

Passenger experience is key, but one aspect of it that the Bill does not address is the experience of inbound passengers at immigration operated by the UK Border Agency. I do not believe that any Bill dealing with passenger experience can choose to ignore that part of the welcome to the UK—for British or external citizens. I appreciate that the UK Border Agency is a Home Office responsibility, while airport regulation is a Department for Transport function, but we need to ensure that customer experience during one section of the journey is not destroyed by poor service at the end of the journey. As the Bill proceeds, it should be possible to ensure that there is no departmental turf war. It is time for the UK Border Agency to become more transparent on behalf of customers and the airlines.

The current UKBA target is to clear 95% of non-European economic area passengers within 45 minutes. The measurement of this target is based on sampling, with queues sampled at various times of the day. The latest figures I saw for the first half of 2011 showed that 95% cleared in 45 minutes, but that is completely misleading for the customer experience. In fact, terminal 4 is by far the worst, with queues averaging more than 45 minutes 17 times a week—about three times a day. If we are to talk about civil aviation and UK passenger experience, it is important that UKBA immigration is brought into the picture.

Transparency must be dealt with as the Bill proceeds. It must be possible to force the UKBA and the unions to address rostering flexibility and the redeployment of staff across terminals to match the passenger volume information provided by the airlines. Airlines provide passenger loading information 48 or 24 hours—sometimes even two weeks—before a landing, yet the UKBA seems incapable of rostering and redeploying people across the terminals appropriately.

Let me move on to deal with the issue of regulated and unregulated airports. The decision rests with the CAA, but the danger is that Heathrow will end up as the only regulated airport, which could place it at a disadvantage, especially if there continue to be more flights to the BRIC economies—Brazil, Russia, India and China—from Frankfurt and Schiphol than from Heathrow. The list of regulated airports needs continuously to reflect competitive forces between airports—not just market influence and not just within the UK markets.

Let me deal with one particular example of customer experience that needs to be looked at as the Bill proceeds. I refer to the impact on security. I think it right for the proposed regime to involve risk-based outcomes, and if risk-based outcomes lead to different screening regimes, we must accept that. The risk profile of a pensioner from East Finchley returning from a package holiday on the Costa Brava is very different from that of someone returning from a terrorist hotspot elsewhere in the world, and that person will need to be screened differently.

We need to work with our European partners to establish a Europe-wide procedure that reflects risk. For example, a passenger leaving New York is heavily screened, and is virtually strip-searched before entering a plane departing from the United States. When that passenger lands at Heathrow, an equally strict security regime applies. We force him virtually to leave the airport and check in again, undergoing all the necessary security procedures. That not only worsens the customer experience of the transit passenger, but lengthens the queues of people seeking to undergo the normal security checks. I realise that there are Schengen rules that need to be dealt with, but I do not believe that it is beyond the wit of the Department for Transport to deal with them.

[Kelvin Hopkins]

I have travelled through Heathrow many times, and have often seen queues unstaffed. More staff could mean more queues and a more rapid experience for passengers. It would be helpful to spend a little more on the UK Border Agency, would it not?

[Mike Freer]

That is a good point. However, this is about not just staffing but the use of technology and the deployment of staff. Airline representatives tell me that there can be a quiet arrival hall in one terminal and a packed arrival hall in another, but that it is impossible to redeploy staff from one terminal to the other quickly. It is not merely a question of the number of people manning the desks; it is a question of how the UKBA and the unions choose to deploy them.

We must work with our European partners to dovetail changes to Schengen in at least the major European airports, so that those who have already passed through highly screened areas are not forced to be screened again, and we can improve customer service and relieve the pressure on domestic passengers. The customer must be an integral part of civil aviation, and penalties for poor performance are crucial.

The Bill takes a significant step to protect airline-based holidays for the customer, and I welcome it.

17:47

[Mr Tom Harris (Glasgow South) (Lab)]

Thank you for giving me an opportunity to contribute to the debate, Mr Deputy Speaker. Let me begin by offering my best wishes for the speedy recovery of the Minister of State, Department for Transport, the right hon. Member for Chipping Barnet (Mrs Villiers). I trust that when she returns to her duties after that speedy recovery, she will use her ministerial car rather more often and her push bike rather less often.

[Fiona Mactaggart (Slough) (Lab)]

Why?

[Mr Harris]

I would never suggest that any Minister should do anything other than what I did when I was a Minister.

Too often in these environmentally conscious days, those in the airline industry are seen as the bad guys. I see a parallel with the car industry and car ownership. Although I do not consider myself to be a class warrior, I observe some class consciousness in the debate. Car ownership was initially seen as a good thing that improved the quality of the lives of those who could afford it, but as cars became cheaper and more ordinary working people could afford to own one, they suddenly became a threat to the environment. I see the same happening with air travel. It was a wonderful thing that made every corner of the globe accessible; but then ordinary people had the damned cheek to afford to use it regularly. Fares were reduced, and suddenly it too was a threat to the environment—what a surprise—rather than the opportunity that it used to be. My own view, which I hope is shared throughout the House, is that a healthy, expanding airline industry is essential to any successful nation, and if the Bill contributes to that end, I welcome it.

[Mark Lazarowicz]

Does my hon. Friend agree that it is also important for the aircraft industry to try to produce more environmentally friendly and environmentally efficient aeroplanes, and that the absence of measures to encourage that is regrettable?

[Mr Harris]

I entirely agree, and that is precisely what is happening in the airline industry. It is acutely aware of its responsibilities in this respect, which is why I do not see it as the enemy of the environment.

I note that my party’s Front-Bench team has accepted the Government’s decision not to go ahead with the third runway at Heathrow; indeed, the shadow Secretary of State said that in today’s debate. I trust that that acceptance is based on the parliamentary arithmetic—on the fact that the Members who support the third runway are outnumbered by those who do not—rather than on agreement with the Government’s arguments. The real reason the Conservative party opposed the third runway when in opposition was votes. It was concerned about seats to the west of London, not the health of the UK economy and the airline industry on which we depend. It was seats that were uppermost in the Conservative party’s mind when it chose to oppose the previous Government’s support for Heathrow.

[Fiona Mactaggart]

My hon. Friend refers to seats to the west of London. Does he accept that many of those seats depend hugely on Heathrow for local employment?

[Mr Harris]

I entirely agree. In 2009, I spoke twice in support of the Government’s plans to build a third runway, and I did so with jobs and the economy in mind, along with the conviction that the Conservative party’s stance at that time was based on cynical electoral calculation rather than any concern for the environment.

I look forward to hearing the contribution of the hon. Member for Spelthorne (Kwasi Kwarteng). I believe that, like me, he supports the third runway—although he might wish to correct that. His predecessor in this House also supported it; he courageously stood against his party’s line, and it is a pity that he chose to retire at the last election—although I am, of course, delighted that the current hon. Member for Spelthorne is now a Member of this House.

The hon. Member for Perth and North Perthshire (Pete Wishart) referred to the sale of British Midland International and the impact on Scottish air services. Those of us who supported—and still support—Heathrow’s third runway pointed out the blindingly obvious fact that a continued squeeze on capacity at Heathrow would inevitably lead to the withdrawal of domestic slots in favour of more profitable international slots. Earlier this month, BAA chief executive Colin Matthews warned:

“Capacity constraints are damaging the UK economy today when the country can least afford it.”

The Conservatives may have won the vote on the third runway, but they have certainly not won the argument.

[Kelvin Hopkins]

May I point out both that our party has also accepted that there will be no third runway at Heathrow and that one way of relieving capacity at Heathrow would be by shifting some medium-haul and short-haul flights to Luton?

[Mr Harris]

My hon. Friend makes a perfectly understandable constituency point, which I am sure will not have gone unnoticed by the Luton Observer, or whatever his local paper is called.

The provision of security is of great concern to all our constituents. The Government’s policy paper that was published at the same time as the Bill in November claimed that the transfer of aviation security regulations functions would save the taxpayer £24.6 million over 10 years. However, it also stated that the CAA would incur costs of £5 million each year, more than double the level of savings to the Department for Transport. Will the Minister explain either in summing up or in Committee why this transfer of powers appears to result in a net annual cost increase of £2.5 million? If that is because we can expect a more secure airport experience, I welcome the move, but if there are to be higher costs but no improvement in security, I will be concerned, particularly if that extra cost is to be passed on to the travelling public, which I understand is the case.

I welcome this Bill, however, and, without wishing to second-guess the great wisdom of the Labour Whips Office, may I say that I look forward to scrutinising it in Committee in the weeks ahead?

17:54

[Kwasi Kwarteng (Spelthorne) (Con)]

I had prepared some introductory remarks, but in view of the kind comments of the hon. Member for Glasgow South (Mr Harris), I should perhaps clarify my view on the third runway. In the course of my brief parliamentary career, I have never explicitly come out in favour of the third runway, but those who know me know that I am very partial to it, even though I am not necessarily saying it is the only solution to the aviation capacity problem the country faces. It is, however, vital for the economic future of our country that we solve this problem, especially given the stagnant growth here and in the eurozone. Too often in our post-war history we have adopted short-term policies that have impeded our long-term growth. I hope that our future aviation policies will not impede our future growth, however. The question of aviation capacity in the south-east is very important. We have debated it in the House before, and I have written about it.

I turn now to the Bill itself, which is a slightly different subject. The Bill is to be welcomed for a number of reasons. Most notably, our current civil aviation rules were framed almost three decades ago in the 1980s, and the Bill makes laudable attempts to modernise the regulation of this important industry. The broad thrust of the Bill is to place the customer at the centre of any considerations, and that should be supported. Its measures will establish as the Civil Aviation Authority’s primary focus the promotion of the interests of the passenger, and the entire industry accepts that that should be the case.

There is, however, a wider question, which was raised by the Select Committee, of which I am privileged to be a member. We found in our pre-legislative scrutiny report that the CAA should have as a secondary duty the need to take account of the reasonable interests of the airlines. Some might say that the airlines are very good at looking after themselves as they are quite well financed and have good lobbyists. When addressing aviation issues, however, we must consider all the participants, including airports and airlines as well as passengers. It is a commonly held belief that in the field of competitive air transport the needs of the airlines are closely aligned with those of the passengers, and I agree. As their interests are generally aligned rather than in conflict, we must consider including this secondary duty in the Bill. As this is to a considerable extent a co-operative industry, with airlines, airports and passengers all part of the mix, I strongly support the Bill’s providing for symmetrical rights of appeal, allowing airlines as well as airports to appeal to the Competition Commission.

The Bill’s provisions granting publication duties to the CAA in respect of all airports is also welcome. These days, transparency is essential; customers rightly want it, and airlines should welcome it too. The CAA must promote better information on customer service and environmental effects. No one disputes that the airline industry stands on the front line in the war against carbon emissions, but we must recognise the achievements of the industry in our country: the airline industry in Britain is at the forefront of addressing climate change and environmental protection. In that regard, it is better than any airline industry in any other country. Before we burden our industry with yet more regulation, we must pause to acknowledge its achievements in this field. Naturally, the information about airlines should be comparable and fair, but the move to transparency is certainly a step in the right direction.

I think that the transfering of security regulation from the Department for Transport to the CAA is a good thing. Obviously, details will have to be refined and clarified and in many cases things will have to evolve, such as how the structure will work, but it is quite right that a Government who have made decentralisation one of their guiding principles should delegate responsibility in this regard. There is a view that such a move is simply a way of reducing Government costs, but in my view it is quite right so to empower the CAA, although more details will have to be supplied.

Clearly, this is only Second Reading, so I am happy to support the Bill at this stage, but there are wider issues of concern. The CAA is the only major economic regulator for which the National Audit Office has no real remit, as has been mentioned, so there should be an explicit duty for the CAA to act in an efficient manner. That, indeed, was what the Transport Committee found.

More broadly, we must be very careful as regulation in civil aviation throws up the important issue of regulatory costs. If Britain’s aviation industry is to thrive, it is clear that we should not impose too many or too onerous burdens on our businesses that operate in the field. Not only are financial burdens onerous, but a more complex regulatory environment can pose its own problems. The CAA already charges airports a small levy for every arriving passenger, from which source of finance it seeks to undertake its functions. Those charges are set to increase by a third in April 2012 and it is apparent that the provisions in the Bill might add to it costs for airports. Given the increase in air passenger duty, we are in danger of burdening the industry with ever more costs, impeding its ability to drive the economic growth we all keenly anticipate.

This is Second Reading, however, and I am quite happy to support the Government at this stage. I only hope that more details can be thrashed out and considered in Committee and on Report.

18:02

[Phil Wilson (Sedgefield) (Lab)]

Aviation makes a major contribution to the UK economy: the industry makes up £19 billion to £20 billion a year of our gross domestic product and employs 600,000 to 700,000 people. My concern tonight, in the context of this Bill, is the future of regional airports and the connectivity they offer between the regions they serve and the rest of the world.

In 1995, Heathrow served 21 domestic destinations and today it serves only six, only two of which are in England. Durham Tees Valley airport in County Durham, which is in my constituency and has part of its runway in the Stockton North and Stockton South constituencies, was once connected to Heathrow, but in February 2009 British Midland International—bmi—withdrew its service. Durham Tees Valley still has a twice daily flight to Schiphol airport in Amsterdam, and Schiphol and Charles de Gaulle airport in Paris now serve more regional airports in the UK than does Heathrow. I understand that bmi withdrew its slots from Durham Tees Valley to Heathrow as it wanted to use them for more lucrative long-haul flights into the capital, but those slots have yet to be filled. Although it might make sense to have the long-haul flights, there is a problem for connectivity between the regions, economic development and the global economy.

BAA bills Heathrow as our global gateway, but that cannot be true if only two regional airports in England have access to the international links through that airport to the rest of the world. The route to Schiphol from Durham Tees Valley is excellent and serves the Tees valley well.

Let me tell hon. Members something about the Tees valley and why it is so important that we maintain the connectivity between the airport and the rest of the world. It has to do with the size of the industry in the area. The economy of the Tees valley is based on the largest integrated process industrial complex in the UK. It contains industries specialising in petrochemicals, energy, renewable energy, biofuel and steel making. It has the third largest port in the UK and there is also a world-class advanced engineering industry based on the design, construction and maintenance of petrochemical plants, power stations and major infrastructure such as bridges. In addition, the region has the Wilton centre, which is Europe’s largest non-military private sector research centre. The petrochemical industry alone contributes £3.5 billion to the UK economy and 70,000 UK jobs depend on it. On top of that, Hitachi Rail Europe is coming to Newton Aycliffe, which is in my constituency and about 12 miles to the west of the airport. Again, a worldwide industry has been attracted to the region.

Although we have the link to Schiphol, I understand that it does not provide a connection with Australia and that the number of flights that connect to the middle east and north America have reduced in recent years. That is why the routes into Heathrow are so important. As the bmi slots into Heathrow have yet to be filled, I want the Government to consider some kind of public service obligation so that the slots remain reserved for flights from Durham Tees Valley into Heathrow. I have been pressing for that for several years, even before 2010, when Labour was in power. I would like to have the opportunity to discuss the matter with the Minister, in a meeting if possible, to see whether we can make progress. At the moment, there are about three PSOs in the UK: two in Scotland and one in Wales. In Europe, however, there are about 250, and they keep regional airports connected to international hubs.

That proposal is important for Durham Tees Valley airport, especially today. As we know in the north-east, the airport is being put up for sale by Vancouver Airport Services and Peel Airports Ltd.

[Alex Cunningham (Stockton North) (Lab)]

My hon. Friend and neighbour has proved to be a great champion for our local airport, which, as he said, is up for sale. Does he agree that when considering the future of Durham Tees Valley airport, as well as taking into account all the points he has made, the directors must seriously consider all offers to secure an expert company that is interested in providing the widest range of services at the airport rather than potential owners who are simply interested in serving the interests of shareholders and are not committed to a long-term viable future for the airport?

[Phil Wilson]

My hon. Friend makes a very important point. Transparency is very important when it comes to the sale and I know that the board is meeting every week at the moment to ensure that everything is out in the open. It is vital that whoever takes over the airport ensures it is there for the benefit of all the region, not just the shareholders.

Five or six years ago, approximately 900,000 passengers a year used the airport, but that figure is now down to 180,000 or 190,000. The largest part of those passenger numbers comes from the KLM flights between Durham Tees Valley and Schiphol. It is important that in the sale of the airport we ensure we get someone who will invest in the facility.

The airport has a proud history. It was originally known as Goosepool airport and then as RAF Middleton St George, and it was an RAF Bomber Command station during world war two. The airfield began its life as Royal Air Force Station Goosepool and in 1941 became RAF Middleton St George. The aerodrome opened as a Bomber Command station in that same year and, after the war, it served various squadrons. In 1964 it was sold and became Teesside International airport and, in 2004, it became Durham Tees Valley airport.

I understand that there are several prospective buyers for the facility at Durham Tees Valley, and I want to make sure that, whatever happens, it remains a commercial airport. If that is not to be the case, I want to make sure that it still has an aviation purpose for the north-east, whether as a general aviation facility, a cargo facility or a commercial operation. It is vital that there is a future for some kind of aviation in the Tees valley in whatever guise, because the business is needed—as I have said, it is a massive industrial complex—the tourism is needed, and investment in the facility by whoever buys it is needed.

I want to see an aviation future for Durham Tees Valley because connectivity is very important to an area with such a huge and internationally important industrial base. It is important to keep a commercial airport, but there is also a great need for the wider aviation facility. There has been criticism of the airport in the local press, but now is not the time for criticising Durham Tees Valley—we should be supporting its sale. I want the airport to have a viable aviation future that will benefit the whole region, as it is an important economic asset. The time for criticism, celebration or both is after the sale period, which I understand will be in the next week or so. In the spirit of the cross-party consensus this Bill has secured, I hope that the cross-party consensus among Tees valley MPs will also continue.

Finally, I should like to ask a question about the Bill. I understand that some of the inspections that the CAA currently undertakes will continue but that their cost will be transferred to regional airports and ultimately, I should think, to the customer. To avoid placing unnecessary burdens on regional airports and customers, will the Minister look at this issue again and let us know in today’s debate whether that is case? In an age in which greater connectivity and globalisation are bringing the world closer together, regional airports and the regions they serve deserve to be part of that economic growth, connectivity and globalisation and the economic wealth they can bring.

18:12

[Dr Julian Huppert (Cambridge) (LD)]

I do not want to disappoint the House but I am not going to speak in great detail about Cambridge international airport and the wonderful services it provides. Hon. Members can come on some other occasion to hear about that.

Changes to the regulatory framework of civil aviation are long overdue and the changes in the Bill are broadly welcome. The Bill builds on the findings of the 2008 Pilling review, which noted in particular the need to bring the legislative framework up to date. Work on the proposals began under the previous Administration and is being carried forward by the coalition, so the measures clearly have cross-party support, which I welcome. We in the Liberal Democrats particularly welcome the Government’s aspiration to put passengers at the heart of airport operations and the sections of the Bill that help to accomplish that. For too long, transport policy has been based on the top-down, central control of large systems. An effective transport system, whether for airports, trains or anything else, should be passenger-focused and should be viewed from the bottom up, so the new duty on the CAA to focus on end users is extremely welcome. Having said that, I would like to see more in the Bill about environmental considerations and I would be interested to hear whether a duty to consider such issues could be put into clauses 1 and 2, because the environmental performance of the aviation industry matters.

I should also like to know a bit more from Ministers about the measure that puts a duty on the CAA regarding

“the need to secure that all reasonable demands for airport operation services are met”.

I should particularly like to know what is reasonable. Is it reasonable for me to expect there to be flights from Cambridge international airport to any destination I choose? I presume not, but what would be a reasonable expectation?

I welcome the reforms to the air travel organisers’ licensing regime, which was put in place back in 1982. Since then, the way in which we buy holidays, and what those holidays involve, has changed dramatically. It is entirely appropriate for the Secretary of State to have the power to extend the scope of ATOL to give passengers the assurances they deserve, and it is clearly absurd that only a small proportion of holidays are covered currently and that many consumers are simply unaware whether they are protected or not. However, I am concerned that some organisations might still be excluded under the proposed changes, and I hope that it might be possible to consider going somewhat further. I believe that the Transport Committee is talking to ATOL tomorrow—

[Iain Stewart (Milton Keynes South) (Con)]

indicated assent.

[Dr Huppert]

I am grateful to see the hon. Gentleman nodding, and I hope that some of the information the Committee produces can be taken into account in the Bill.

There are some welcome provisions in the Bill that will open up Government data concerning airports. Having open public data is a key aim of the Liberal Democrats and of the coalition’s programme for Government. The CAA will be given the power to enable airports to publish data to assist passengers or potential passengers in making informed choices. The best way in which the Government can drive up standards is by empowering individuals to make informed choices, and that is what these measures will achieve. The new power for the CAA to publish information about the environmental impact of aviation is also welcome. The real costs of airplane emissions are often hidden, and the Government have a duty to make them known as a first step towards making sure that something can be done to reduce them.

Most of the changes in the Bill have been subject to extensive consultation over the many years of its gestation. Papers from the previous Administration and the coalition Government have generally had positive feedback and the recent draft Bill was broadly welcomed by the industry. However, there are some aspects of the Bill that I hope will be considered in more detail in Committee. First, it seems slightly odd that there are new powers for information regarding the environmental impact of aviation to be published but that there is no commensurate duty for the CAA to do anything about the issue after publishing that information. The CAA will have a new power to publish information to benefit passengers and a duty to work in their interests. I therefore think that the power to publish information about the environment should be matched by a duty to act on that information.

[Mark Lazarowicz]

Is it not more serious than that? The Bill will allow licensed conditions to be imposed, based on certain criteria, but those conditions will not include environmental ones, so it seems that the CAA will not be able to include environmental considerations in the licences it grants.

[Dr Huppert]

The hon. Gentleman makes a fair point and I am sure that this issue will form a significant part of our discussions in Committee.

Clause 84(2) says that the CAA

“may publish guidance and advice with a view to reducing, controlling or mitigating the adverse environmental effects of civil aviation in the UK.”

I think the wording could be stronger and say that it “must” do so and, hopefully, take that further. Aviation accounts for a significant and growing proportion of our carbon emissions and it also has a significant noise impact, which we must take into account. The body that regulates aviation must have regard to these facts and bear some responsibility.

[Mr Donohoe (Central Ayrshire) (Lab)]

Will the hon. Gentleman at least concede that the airline business has improved its environmental impact greatly in the past 10 or 20 years?

[Dr Huppert]

Indeed, it has, and I have had discussions with Rolls-Royce, which makes a number of new engines that perform significantly better in that regard, but there is still a long way to go. It is certainly true that emissions per passenger have declined, but the number of passengers has gone up and there is a complex factor relating the two. We need to go further in making sure that planes are fully utilised. We have had discussions in the Chamber about trying to change from a per passenger duty to a per plane duty, and I hope we will be able to go further and resolve the anomalies regarding the Chicago convention that prevent that change.

The Bill provides the Secretary of State with the power to ensure that information is published but does not go as far as requiring the CAA and airports to do so. It could go slightly further in that direction to ensure that passengers are provided with the information to which they are entitled rather than leaving it to the whim of whichever Secretary of State happens to be in charge. I am not suggesting that any Secretary of State in the current Government would be so foolish as not to go the full way in that regard, but one can never know what a future Government or Secretary of State might do. Of course, environmental information should be provided as a matter of course, and I hope, for clarity, that clause 84(2) will explicitly include carbon dioxide emissions and other greenhouse gases.

I should also like to understand a little more about how the penalties in the Bill were arrived at. Obviously, we hope never to have to use any of the penalties for failure to comply or to provide information, but they are somewhat complex. Clauses 44 and 45 have a complex formula based on turnover, clause 51 has fixed amounts, clause 52 has unlimited ones, clause 86 has very low penalties and clause 87 goes back to unlimited ones. I hope that the Minister can give us some clarity as to exactly how those penalties were decided.

Clause 104 deals with the disclosure of medical information, which requires proper scrutiny and some clarification. The clause allows the CAA to disclose medical information relating to flight crew and air traffic controllers in an anonymised form for the purposes of medical research. I can absolutely see how that would be beneficial and why we should want to introduce it, but I am concerned that in a small airline it might be possible to identify an individual using a combination of the information provided and data that are publicly available on the internet. That could pose a serious threat to privacy. This clause requires close scrutiny to ensure that de-anonymisation of data is not possible. I am aware of academic work that has been done on data that were about to be released by the Ministry of Justice. A group was challenged with trying to de-anonymise information from anonymised data and it turned out to be worryingly easy to do in a number of cases. I hope that Ministers will look at that issue.

[Mark Lazarowicz]

Will the hon. Gentleman give way?

[Dr Huppert]

A number of people still wish to speak, so I shall not give way again.

The Select Committee on Transport made some sensible recommendations to the Government, which I am sure will be given due consideration. For example, it noted that the aviation industry has concerns about the way in which the CAA will implement the new provisions, given the difficult business conditions that many regional airports face. It also noted, as have many hon. Members today, that the CAA is the only economic regulator that does not fall under the remit of the National Audit Office, and it recommended that an explicit efficiency duty for the CAA be inserted in the Bill or, indeed, we could make the NAO responsible for supervising the operation of the CAA. The Government have not yet provided a full response to the Committee’s recommendations, but I hope that they will do so as soon as possible and look at those sensible ideas.

Overall, the Bill offers crucial modernisation for civil aviation regulation, and it will help to promote success and competition in aviation. The Liberal Democrats welcome the focus on passengers, the reform of ATOL, the sensible framework for economic regulation and the opening up of public data. I hope that in Committee we can ensure that the Bill properly delivers the Government’s aims and creates a sustainable future for civil aviation in this country based on open data, proper regulation, sustainable transport and passenger-led reforms.

18:20

[Gavin Shuker (Luton South) (Lab/Co-op)]

I am extremely grateful for the opportunity to speak in this important debate, and to follow the hon. Member for Cambridge (Dr Huppert). I am disappointed that he did not spend more time discussing his airport, of which I am a great fan, as I flew from there when I was in the Air Training Corps. However, there is an airport slightly closer to my heart now, given that I represent Luton South.

Many hon. Members have said that aviation is crucial if we are to achieve economic growth and change—a green economy—in future. I do not dissent from that view, as aviation has an important role to play. There are pressures on capacity in the south-east, for example, that I should like to discuss, but first I shall turn to the Bill. I was a member of the Select Committee on Transport when it examined the woeful performance of BAA in the winter weather of 2010. It was clear that there were major, extensive problems at Heathrow, and our report, which was quite authoritative, if I say so myself, underlined the way in which regulatory issues ended up affecting BAA’s performance.

I shall give an anecdote that stuck out for me when we took evidence on the inquiry. When Heathrow published its monthly performance figures in December 2010, it passed 56 of the 60-odd measures proposed at the time, because they did not measure what was important to passengers: the ability to leave the gate on time, and the conditions in which they were looked after. It is crazy, given the fact that there were delays of up to 72 hours for many passengers—we saw the scenes on our screens—that the performance measures that were taken into account did not show the problems at the airport.

It is not just Heathrow that is a problem, as the issue is on everyone’s mind. It is also about how the wider industry relates to the CAA, and how we hold the CAA to account. In that regard, the Bill is extremely welcome. The role of the CAA in taking on security is a welcome measure, as is the CAA having more flexibility and setting the licensing scheme for UK airports. However, airlines too are customers of airports; it is not just the end passenger who is buying a ticket. Indeed, as a user of airlines, I put my primary faith and expectation that everything will work in the airline’s hands: whether it is easyJet, BA, Virgin Atlantic or Ryanair, I would want to hold them to account. Sadly, when there are failings in airport operation, customers and passengers go to the airline in question, and the Bill could do more. I therefore support the introduction of a secondary duty for the CAA. The primary duty to the 210 million or so passengers is important, but there should be a secondary duty to ensure that airlines are served effectively by the CAA.

The CAA believes that its adoption of security functions will impose an additional £5 million charge on the industry, but there is little in the Bill about how scrutiny will be enhanced for the CAA. As my hon. Friend the Member for Poplar and Limehouse (Jim Fitzpatrick) pointed out, we will seek to be helpful in Committee and amend the Bill. The NAO has a role to play in holding that major economic regulator to account.

On the wider issue of aviation, the Bill is extremely welcome, as it does many sensible things in a sensible way. However, it does not serve to fill the vacuum of aviation policy in this Parliament. We face a major capacity issue in the south-east, and there are broader environmental and economic concerns—we all accept that. However, the policy vacuum on capacity, particularly in the south-east, is not answered by the measures. In my own patch, London Luton airport can do much to assist with the solution to those problems.

[Mr Donohoe]

Given that it is rumoured that the Ministry of Defence is proposing to sell off RAF Northolt, does my hon. Friend believe that it is feasible that that could be part of the equation in overcoming the problem of congestion in the south-east?

[Gavin Shuker]

My hon. Friend makes an extremely strong case. I have looked at those proposals, and that airport is only a few miles from Heathrow.

[Mr Donohoe]

Four miles.

[Gavin Shuker]

Indeed, but I am not qualified to make that assessment.

My hon. Friend does, however, make the point that no options should be off the table. We have said, despite the fact that we made a manifesto commitment to a third runway at Heathrow, that we are willing to take that off the table if it enables us to enter into cross-party talks. These are long-term decisions taken for the country’s future, and that is a statesmanlike approach by our Front-Bench transport team. Failure to do anything is not an option. The capacity challenge in the south-east can be tackled if Luton airport increases its capacity from 10 million passengers to 18 million over a period. That is part of the answer, but it does not answer the broader question of how we establish a serious hub airport that can compete with other airports, particularly in Europe, on level ground.

In Luton, we can achieve 18 million passengers without significant ground works, and without extending the runway or building a second runway, which is welcome. We are 25 minutes from St Pancras—practically zone 3 on the London underground. We are one of the big four airports that, I believe, we are seeking to expand. Luton ultimately can absorb only a small amount of the additional capacity that is required, and we have heard different suggestions from different people in recent weeks. The expansion of Heathrow is not on the table, and we understand why the Secretary of State holds her personal convictions. An additional runway at Stansted has been ruled out. We have heard about the plans for “Heathwick”, linking Heathrow and Gatwick, although I am not sure exactly what those proposals would achieve. In the past fortnight, we have heard about “Boris island”, but whatever option we choose, we must find a long-term solution to the problem of capacity. If the Government are unwilling to do so while they are in power, we will have to face up to those problems when we are in government.

[Mark Lazarowicz]

Does my hon. Friend not agree that one of the drawbacks of “Boris island” or, indeed, any other plan for the Thames estuary is that it would set at naught all the ideas about linking high-speed rail to Heathrow airport if, at the end of the day, that airport moved somewhere 30 miles east?

[Gavin Shuker]

My hon. Friend makes a good point about high-speed rail, which is not a substitute for additional air passenger transport movements. It may be excellent at linking, for example, Birmingham and Heathrow, and our Front-Bench team has suggested proposals about how better to do so. This is a real issue of capacity that affects our economy. We cannot leave it to future generations to solve the long-term problems that we must face up to ourselves.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. Members have shown amazing self-discipline in the length of their speeches, so I am able to increase the time limit to 12 minutes.

18:29

[Fiona Bruce (Congleton) (Con)]

I welcome the Bill and propose to speak chiefly to clause 94, which amends section 71 of the Civil Aviation Act 1982 and improves ATOL protection for consumers, as I believe that these are the provisions that are of most interest to my constituents. To clarify why the proposals are so welcome, I will briefly outline the current ATOL scheme’s inadequacies that require remedying in order to meet the requirements of passengers in the 21st century.

The ATOL scheme, which was introduced in the ’70s, provides financial protection for consumers who purchase air package holidays in the event of a travel company going into insolvency. Affected passengers are entitled to a full refund if they are yet to travel or repatriation after completing their holiday if they have already reached their destination. However, the current ATOL scheme does not apply to airlines that are specifically excluded under legislation or to airline agents where airline tickets or a similar airline booking confirmation has been issued, which means that a booking made directly with an airline just for a flight on an aircraft they operate, for example by using their website, is not covered by ATOL. Airlines can sell flights and flight plus without providing financial protection, flight plus being a booking for a flight that is sold together with accommodation and/or car hire at the same time or within a day of each other. Many consumers are totally unaware that they have no financial protection for such bookings.

However, confusingly for consumers, under the 1990 EU package travel directive airlines are now required to provide financial protection for the sale of package holidays. In practice, some airlines sell package holidays with ATOL protection, but other airlines sell only flight plus without any statutory financial protection at all. Even more confusingly for the consumer, although the ATOL logo on websites and in brochures signifies that the business in question holds an ATOL licence and thus meets the CAA’s financial fitness criteria, that does not mean that every holiday the business sells is ATOL protected. The ATOL licence holder may sell holidays and travel arrangements that are not ATOL protected since they fall outside the legal scope of the current scheme. In effect, it is left to the consumer to check whether their holiday arrangements are covered by ATOL, but how many would know how to do that?

The last decade has seen important changes in the UK market for holidays and flights, particularly a move away from traditional package holidays in favour of independent travel. This has been facilitated by the emergence of low-cost, no-frills airlines and the use of the internet. Holidays are often created by consumers buying the various components from a range of flight, accommodation and other options. This might involve purchasing from a single provider or, in many instances, from linked websites. For instance, an airline website might contain a link to an accommodation provider’s site. Holidays created and sold in this way are often referred to as dynamic packaging, mix-and-match holidays, DIY packages or tailor-made holidays. This development could not have been foreseen when the ATOL scheme was introduced 40 years ago or when the package travel directive was agreed more than 20 years ago. Indeed, the proportion of ATOL protected holidays has dropped from 97% of all leisure flights in 1997 to less than 50% in 2010 and, if action is not taken, will undoubtedly decrease further.

There is therefore a strong case for reforming the ATOL scheme to reflect better today’s holiday market and so that consumers can be clear when their holiday is protected. The CAA agrees and has stated that

“ATOL needs reform… to remove the risk of increasing financial detriment to consumers.”

This is particularly so in the current economic climate, when significant sums from a household’s annual budget are spent on such transactions.

In addition, holidays purchased on an “agent for the consumer” basis are also in many respects outside the current ATOL scheme. Traditionally, travel agents act as agents for the supplier and sell holidays to customers on behalf of travel trade suppliers, but they can also sometimes act as agents for the customer and technically buy the holiday on their behalf. This is an important distinction. Agents for the consumer are not legally making flight accommodation available and so are currently not required to have an ATOL licence or to provide any other form of financial protection for holidays.

However, it can be difficult, if not impossible, for consumers to know in what capacity a travel agent is acting, which can create considerable detriment and uncertainty. In practical terms, the distinction is completely irrelevant for a consumer until they need to claim for cover and might find cover non-existent. Then it becomes very relevant indeed. Even some travel companies are not fully aware of what acting as “agent for the consumer” entails or their obligations to explain to consumers the implications for ATOL protection. In short, the current ATOL scheme no longer fulfils its intended purpose.

Clause 94, by greatly broadening consumer protection and bringing airlines and “agent for the consumer” transactions into the scope of the ATOL scheme, effectively brings the scheme into the 21st century. Following appropriate consultation, the Bill will enable the Secretary of State to make regulations requiring airlines to hold and act in accordance with an ATOL licence when making available flight accommodation, except where they are doing so on a flight-only basis on aircraft that they operate. For the purposes of the clause, flight accommodation is taken to mean accommodation for the transport of persons on flights in any part of the world. In effect, all airline package holiday and flight-plus sales are to be ATOL protected. Having said that, some exceptions remain, and I welcome the discussions, which have been referred to, between ATOL and representatives from the Transport Committee on the possibility of ATOL cover being widened even further. I very much welcome the Bill and the effect it will have in providing additional consumer protection.

Before concluding my remarks, I want to touch on another point relating to passenger protection: pilot fatigue. Although perhaps peripheral to the Bill’s main aims, this issue is vital to the many pilots in my constituency who work out of Manchester airport and, in turn, to their passengers’ welfare. I have spoken with a number of pilots about the matter and attended briefings, in the House and elsewhere, where it has been raised with great concern. Pilots in my constituency are extremely concerned that any relaxation of this country’s current restrictions on permitted crew flight hours could push pilot fatigue to intolerable levels and seriously affect passenger safety. The issue was raised in the other place only last week by the noble Lord Monks, who is president of the British Airline Pilots Association.

Pressure on crew and aircraft for turnarounds is increasing as demand for air travel rises, and this is reflected in the requirements that airlines are putting on pilots. The European Aviation Safety Agency has made proposals that would reduce the current UK standards on flight time limitations. The Government spokesperson in the other place replied to the noble Lord Monks that the Government would support the proposed requirements only if the CAA determines that they provide an appropriate level of protection against crew fatigue. That was a welcome comment pointing in the right direction.

[Mark Lazarowicz]

I have been contacted by many of my constituents who work in the aviation industry, including pilots, and who are extremely concerned about the proposals. I am sure that the whole House is with the hon. Lady in wanting to see the Government and the European authorities ensure that no danger to safety is brought about by the proposed changes.

[Fiona Bruce]

I thank the hon. Gentleman for that intervention.

In responding to the debate, will the Minister clarify how in practice such an important determination will be made in light of the delegated powers that are going to be passed to the CAA under the revised regulatory regime and the fact that when introducing the debate the Secretary of State said that CAA decisions should be “guided by the needs of customers” and that the safety of customers was of “key importance”, and, finally, bearing in mind that the Secretary of State remains ultimately responsible for aviation safety and security?

I welcome the Bill.

18:39

[Julie Hilling (Bolton West) (Lab)]

First, I add my voice to those who have expressed concerns about the Bill having been rushed. As a member of the Transport Committee, I was part of the pre-legislative scrutiny process, but as has been said on several occasions, only tomorrow will we have our session on ATOL. The Government therefore have not had the chance to take on our concerns; even more than that, airports have expressed huge concern that they have not had time to consider the proposals and to make recommendations.

Secondly, the Government have missed an opportunity to include environmental measures in the Bill. People living near airports had been hoping for stronger regulation on noise and pollution controls, and I appreciate that the Bill’s purpose is primarily economic regulation, but it has already been widened to include ATOL and security. Aviation Bills do not arrive every day, so this one should have included environmental duties, and I really hope that it will be amended in Committee to include them.

The industry has generally welcomed the Bill, but some proposals have created much consternation. The cost of regulation is certainly a problem for airports such as Manchester. Currently, the regulation charge is 95p for every arriving passenger, but with no consultation the charge is going up in April to £1.26 per passenger. The airport expects that the additional charges for security and enforcement will be another 4p, and, although that does not sound a great deal, it estimates that it will have to find an additional £274,000.

Airports are not in a position to pass on those charges to airlines. The only way of doing so would be to increase landing charges, but because of competition between regional airports, airlines would simply go elsewhere. Airports cannot agree to fix landing charges, as they would fall foul of competition rules. I can understand why the Government believe that the user should pay, but why is the charge being levied only against the airport? Why cannot part of it be levied directly against airlines, and why can it not be phased in to give airports a chance to build it into their budgets?

The Bill also allows an airport to be compelled to hand over a terminal to another operator, but there is no industry demand for that, and it has been said that it is an “idea without merit”. I have been told that the measure has been included just in case in future someone, somewhere decides that it is a good idea, but it would only ever be a good idea if we wanted to increase the employment opportunities for accountants and solicitors.

Currently, the airport operator plans for the whole airport. It has to deal with its neighbours, take account of environmental concerns, work out how to get people to and from the airport, invest in transport infrastructure, invest in improvements to the terminal and so on. What will happen to all that if there is more than one operator? Manchester airport is investing £50 million to bring the Metrolink system to the airport, and it has recently made a large investment in the airport’s railway station. Would that have happened if there were two or more operators at the airport? What if one operator does not want to invest in infrastructure? We have only to look at what happened with rail privatisation: a huge increase in transactional costs and the use of accountants and solicitors, hours and money wasted on deciding who is to blame for any incident and who owes whom money, and a waste of taxpayers’ valuable money.

Transferring an airport terminal to another operator would hugely increase transactional costs, and a great deal of time and money would be wasted on commercial negotiations and agreements. The cost-benefits of one efficient operator would diminish, and one contract and, therefore, good deals with Smiths Group, SSP and the Compass Group and with brands such as Costa Coffee and Burger King would disappear. Bean counters would have to spend time working out how they split things such as car park fees, and each operator would have to have headroom, thereby diminishing overall capacity. The proposal makes no sense, it will not improve the passenger experience and it should be removed from the Bill—or, at the very least, apply only to regulated airports.

I have some concerns about security transferring to the CAA and regulations now being based on an outcome-focused security regime. I accept that it is unnecessary to insist on screening by a certain machine at every airport, but as we know, terrorists only have to be lucky once, and we must ensure that we have no weak links in our airport security. It was also worrying when the trade unions reported to the Transport Committee that many people would not want to transfer from the civil service to the CAA and, therefore, that expertise would be lost.

A major issue was pensions. The Minister of State told the Committee that the CAA and civil service pensions are under review, but will transferring staff be given an equivalent pension? Have Ministers also considered other employment models, such as staff remaining employed as civil servants but seconded to the CAA? Security is not an area where we can take risks, and we must not lose the expertise of current staff, so do the Government have any proposals for retaining them?

ATOL reforms are badly needed, as the hon. Member for Congleton (Fiona Bruce) said just a moment ago, but I am frustrated that the Transport Committee is going to look at the details of such reform only after Second Reading. Most people believe that they are already ATOL-protected when they book a holiday, and that if the operator goes bust someone will get them home or, if they have not yet travelled, refund the cost of their holiday. It is ludicrous that a holiday booked through an airline—a holiday that looks and feels like a package holiday—is not treated as one. I welcome the inclusion of such holidays in the ATOL scheme, and the removal of the distinction between travel agents acting as agents for suppliers and as agents for consumers—a definition so unclear that even travel companies are confused about the distinction. I welcome also the proposal that customers be issued with a certificate to inform them that they are ATOL-protected, but as the legislation will not protect everyone, customers should be issued with a certificate that makes it clear when they are not protected, just as they are issued with one when they are protected.

The time frame for buying components of a holiday in order to qualify for protection is too short, as customers will be protected only if they buy the components within 24 hours. There are situations in which people book flights immediately to ensure that they reserve a seat but agree the rest of the package only later, when the travel agent has sorted out their itinerary. A package is still a package, and therefore the time limit should be longer than 24 hours. In 1997, 97% of all leisure flights were ATOL-protected; now it is less than 50%. This new legislation is timely, but let us use the opportunity to ensure that it protects the maximum number of people.

I look forward to further discussion on the Bill and hope that this time the Government will be open to amendments to improve it.

18:47

[Christopher Pincher (Tamworth) (Con)]

I am pleased to speak after the hon. Member for Bolton West (Julie Hilling), some of whose points I agree with, but I am also intrigued and somewhat amused by her introductory remarks and by those of the hon. Member for Garston and Halewood (Maria Eagle), who said that there was an elephant in the room and that the Bill has been in gestation for six years. Such gestation would bring tears to the eyes of the biggest elephant, and if the Opposition believe that this Bill is being rushed they would do well to remember that they had six years in which to bring a Bill forward and to make it an Act. Clearly, however, they had other things on their mind at the time.

[Gavin Shuker]

Will the hon. Gentleman give way?

[Christopher Pincher]

I am prepared to give way to the doughty defender of Luton South.

[Gavin Shuker]

I am grateful to the hon. Gentleman, but I fear that he is being slightly disingenuous in mixing up what Opposition Members have said. The Bill was clearly designed to be introduced in the next Session, but it has been brought forward in this Session, because there is no legislation—because many Bills from this Session are at the other end of the corridor, in the other place.

[Christopher Pincher]

I am grateful for that intervention. The hon. Gentleman clearly intends to carry on for Luton South where Lorraine Chase left off; we have brought forward this Bill, and we have heard what the Secretary of State had to say.

I welcome the Bill, which is timely, because we all know that aviation is an industry that is as important to Britain as it is maligned. It is important because it employs 1 million people throughout the country, sustains a tourist industry employing 2.6 million people and generates about £9 billion of Treasury receipts every year, plus all the Treasury receipts that it generates by making our economy work more effectively and better.

There is no doubt in the minds of operators that they want better regulation. We want regulation that puts passengers first. We want regulation that ensures that security in the age of the terrorist with trainers is sharpened and honed. We want to ensure that transparency at the Department for Transport, at the CAA, among operators and at airlines is the best that it can be. However, we do not want regulation that loads unnecessary bureaucracy on to airport operators or that drives up costs that are of no benefit to the travelling public or to operators that simply want to make a fair buck by doing better and more efficient business.

Birmingham is the airport in my neck of the woods. It has one runway and carries 8.6 million people a year. It could double its capacity without changing its infrastructure in any way. It has a plan to extend its runway so that it can carry bigger planes with more passengers, more fuel and more baggage for longer distances, as far as the far east. That could extend its carriage capacity by up to 27 million passengers a year. At that point, it would begin to compete with airports such as Gatwick.

[Bob Stewart (Beckenham) (Con)]

Presumably, the high-speed link from London will work in reverse and people will be able to get up to Birmingham and increase the airport’s capacity, making it a south-east England airport.

[Christopher Pincher]

My hon. Friend is trying to draw me into the trap of discussing High Speed 2. Birmingham airport carries only 40% of the passengers in its catchment area, so it could extend capacity without picking up passengers from the south-east or elsewhere.

The operators are concerned—the hon. Member for Bolton West touched on this—about changes that might allow the CAA to increase costs by a third on undesignated airports such as Birmingham. In designated airports such as Heathrow and Gatwick, those costs can easily be passed on to airlines. In undesignated airports, they cannot. That places a burden on those airports as they develop their plans of expansion and as they try to build the regional economy, such as that of the west midlands.

It is striking that Britain, with a population of 60 million, has only one formal hub airport, whereas Germany, with a population of more than 80 million, has five hub airports and plans to expand that to six. It seems that the Germans recognise the importance of aviation in building their regional economies. I hope that we will do the same. As we take the Bill through Parliament, as the Secretary of State and Ministers consider it and as it goes through the Public Bill Committee, we must ensure that the clauses do not disadvantage regional airports, which can be so important in building our regional economies.

I will make two more points, thanks to the injury time that has been granted to me. The first relates to environmental protections and reports. We all agree about the importance of demonstrating the effects that aviation can have on carbon emissions and about ensuring that proper environmental reporting is built into the Bill. I ask those on the Treasury Bench to ensure that the information that they wish airports to develop and deliver is not already available through the Department of Energy and Climate Change or reports that are produced by the Department for Transport. We do not want to overburden airports or demand that they duplicate information that is produced already.

My final point relates to the levy, which has already been touched on. Operators are worried that demanding 10% in penalty clauses because of events that are outside their control can place a significant burden on the airport. They say, and I agree with them, that when there are extreme weather conditions or when planes are grounded, the decision on safety is also made by the airlines. Should the airlines not, therefore, also be responsible for carrying some of the penalty clause that is imposed? If that is not appropriate or possible because airlines can choose whether to take slots and can go elsewhere—it is much more difficult for airports to move—is it not possible to reduce or abolish the penalty, so that we do not place undue burdens on our airports?

My hon. Friend the Member for Crawley (Henry Smith) said that we are a trading nation. Of course, we are an island trading nation. Aviation is therefore all the more important to our competitiveness in Europe. It provides the quickest and best connections to markets for our goods and services. I hope that when the Government further consider the Bill and when it goes through the Public Bill Committee, we will place front and centre the importance of balancing and regionalising our economy, and ensure that aviation plays a part in that. We must protect and promote our regional airports. I look forward to the Minister, in winding up, saying that we will.

18:56

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

Those of us who emphasise the importance of ensuring that the environmental consequences of aviation are at the heart of our policy are in no sense anti-aviation. We recognise the importance of the industry to the UK and to our economy but simply want to emphasise the fact that unchecked and uncontrolled, the growth in aviation will lead to increasing CO₂ emissions in the UK and internationally. It is therefore important to encourage the kind of measures that will ensure that that growth can be controlled. That means encouraging more environmentally friendly forms of travel where possible and encouraging the industry to be environmentally efficient in the development of new aircraft and in the way that airports operate.

The way to achieve that direction of policy is to put in place measures that will encourage it. It is right to say that there should be tough emissions controls at European and international level to encourage more efficient aircraft. A lot has happened in that area—I recognise and welcome that. Without those measures in place, we will not get the changes that we want. That is why, as the shadow Secretary of State said, we need to put environmental and planning considerations in the Bill.

I made the point in my intervention on the hon. Member for Cambridge (Dr Huppert) that the Bill allows the CAA to put conditions in licences on a number of grounds, but only if they come within the specifications in clause 1. Clause 1 does not allow environmental and planning considerations to be taken into account, so the CAA will not be able to put conditions on such matters in the licences of particular airports. I hope that the Bill is improved in Committee so that it takes account of environmental and planning concerns over airport developments and aviation more generally.

[Bob Stewart]

Environmental considerations include noise pollution. As more and more aeroplanes circulate around London, the noise gets greater, even in my leafy constituency in Kent. I hope that environmental considerations will be taken into account and that the noise made by Rolls-Royce engines, for example, will be reduced even more.

[Mark Lazarowicz]

The hon. Gentleman makes an important point. As I understand it, the Bill does not specifically encourage such measures, but it could be changed to allow them. I hope that he will support such a change.

My second point is about the consumer interest. It can certainly be promoted by encouraging competition, which I welcome, but the Secretary of State referred to the possibility of passengers choosing between Heathrow, Gatwick and other airports. People in the south-east of England can do that, as they have four, five or six airports to choose from, but in other parts of the UK there is not that option. That is why it is important that the Bill should put in place not just competition measures but other provisions to recognise the consumer interest. If people have a long wait at an airport and are queuing for a plane, they want something to be done pretty quickly rather than having to wait until a new franchise or licence is granted some years hence. The Bill needs to be strengthened to provide for the consumer interest in that way as well.

I want to say something about the proposed sale of British Midland International to International Airlines Group. Like every MP from Scotland, I am very concerned about the effect of that sale not just on competition on routes between Scotland and Heathrow but, as my hon. Friend the Member for Garston and Halewood (Maria Eagle) said, on people’s ability to change flights at Heathrow and access all parts of Scotland. That will affect Scotland’s ability to attract tourism and business. The sale of BMI would also have consequences for its other routes—for example those to Brussels, Copenhagen, Zurich and so on, which are important for business and tourism in Scotland. Although that matter does not specifically fall within the terms of the Bill’s competition provisions, it certainly concerns us now that the future of BMI and its routes is up for grabs.

Another point that concerns many people in Scotland, and which my hon. Friend mentioned, is the cuts to the UK Border Agency. They are concerned that delays in entry to the UK could be made worse. At Edinburgh airport there are fairly regular complaints about the difficulties of passengers arriving late at night, who have to queue to get through the border formalities and even to get into the terminal. They have to wait behind locked doors for the appropriate staff to arrive. That is not a criticism of the staff, who of course do an excellent job, but they are already under pressure and if there are cuts to the UKBA there will no doubt be still further pressures on them and delays for passengers. It would certainly not be a good advert for people coming to Scotland or elsewhere in the UK if we had unnecessary delays because of cuts to border authority staff.

At a time when some Members propose the idea of independence for Scotland and the separation of Scotland and England, today’s debate emphasises the fact that there are many areas in which co-operation between England, Scotland and the rest of the UK is by far the best way of arranging things. I certainly cannot see how having a separate Scottish CAA, presumably with extra costs and extra demands on its resources, would improve airports and airlines in Scotland.

Earlier we had the somewhat amusing spectacle of Scottish National party Members, who I am sorry are not in the Chamber at the moment, demanding that the UK Government intervene to ensure that there is proper competition between the different airlines and other modes of transport in England and Scotland. Surely it cannot escape most people’s notice that without a UK Government to operate in such a way, there would be no reason for such competition to be encouraged. In the absence of SNP Members, I will not pursue that point. Clearly we may be able to do so at a later stage.

My final point is that the airline industry is important to many of our constituents and requires people to be confident in its safety. That was why I was glad to be able to intervene on the hon. Member for Congleton (Fiona Bruce) to mention concerns about extra pressure on pilots due to the proposed changes to regulations. Once again, I hope that the Government will ensure that no such changes are made, as they would jeopardise both the perception and, I fear, the reality of passenger safety. I am glad that there has so far been unanimity throughout the House about that, and I hope that the Minister will say something about it in his closing remarks as it is concerning people who work in the industry and passengers.

19:05

[Iain Stewart (Milton Keynes South) (Con)]

I draw the House’s attention to my entry in the Register of Members’ Financial Interests.

I welcome the chance to contribute to the debate. As a member of the Transport Committee, I was involved in the pre-legislative scrutiny of the Bill. I warmly welcome it and agree with the overall objective of overhauling and modernising the system of economic regulation, which is too rigid and in need of reform. Other Members have spoken about that in detail, and I will not repeat the points that have been made, but I particularly welcome the fact that the interests of passengers will be the top priority of the CAA. It is very important to stress that point.

I wish to focus my comments on part 2 of the Bill, and specifically the clauses that will give the CAA the power to require all airports to publish information for the benefit of passengers. I strongly support that and believe that it is vital, in the interests of competition, that the correct information is easily available to passengers. As well as weighing up the performance of airlines on the convenience of flight times and on price, they should be able to weigh up the performance of airports when they make their decision about which mode of transport to choose and which airport to use.

I fully appreciate that not all air passengers have freedom of choice about which airport to use, because their geographic location may restrict them to one particular airport or their destination may be served by only one realistically close airport. However, a large number of passengers have a choice of which airport they go to.

I offer the example of Milton Keynes to illustrate that point. It does not have a local airport as such, but if I choose to visit family in Scotland, I can either choose to drive up, get the train or fly from four or five airports that are within easy travelling distance. I can use Birmingham, Luton, Heathrow or East Midlands, and even London City is not a huge travelling time away. I have used all those airports to fly up to Scotland, and their performance has varied enormously. I have had some very good experiences and some fairly hellish ones, and I found out about the airports’ performance by trial and error.

I will not name and shame the airport that was poor —[Hon. Members: “Go on!”] I shall resist the temptation, but let us just say that there was a song about it a few years ago. I do not know whether the bad experience I had was just on an off-day for the airport or whether it was part of a longer-term performance issue. Proper information should be available about the performance of an airport over time—for instance the time it takes to get through security and the time it takes passengers flying in to get through passport control. Scottish National party Members are not in their place, but I very much hope that flights from Scotland will not require passport control, as they wish. There should also be information on other issues, such as airport charges that contribute to the cost of a ticket and charges affecting passengers using the airport. Some airports levy a charge on those simply dropping travellers off at the front gate, and some charge for the little plastic bag we must put our liquids in, whereas others give them out for free. Information on such things is valuable for passengers when they are evaluating which airport to use.

Other information that should be included are airports’ records on dealing with things going wrong, be that bad weather or strikes. Airports perform differently, and passengers booking some time in advance wish for some reassurance that their interests will be looked after if things go wrong.

The requirement to publish environmental information is important, and I am glad to see it in the Bill. I am open minded about whether there should be a specific duty on environmental performance, but it is important that information on environmental performance is published so that people can choose to weigh it up when deciding how they will travel and from which airport. Transparency is the best guarantor of the objectives we want, and it is incredibly healthy to promote competition.

I am aware that different organisations have responsibility for delivering the different aspects I have described. Some aspects are the responsibility of the airports and some are the responsibility of the airlines. Different Government Departments have different duties: immigration and passport control is the duty not of the Department for Transport but of the Home Office. Due weight should be given in the published information to which part of the airline industry is responsible for providing the different services. I support the Transport Committee recommendations on those points.

As valuable as that information is, it should not be over-bureaucratic and it should not impose too great a burden on airlines or airports. I would make one suggestion: the new aviation consumer advocate panel, the role and remit of which are a little unclear at the minute, could decide what information was relevant to the interests of the passenger and what imposed too much bureaucracy and cost on airlines and airports.

I shall share one further concern: the balance of needs between current and future passengers. For all the reasons I have explained, it is important that information is available to passengers. However, it is clearly in the interests of passengers in the long term for an airport to invest heavily in new infrastructure, even if there is a short-term cost in disruption. Any information that is published should be value added in some way to show performance over a long period, not just as a snapshot.

The Bill is a good one and I welcome it. I hope the Government reflect on my suggestions as the Bill progresses through the House, but I am happy today to give it my full support.

19:13

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

I should like to begin by thanking right hon. and hon. Members on both sides of the House for their warm welcome since my election in December. Little can prepare people for stepping into the Chamber for the first time, and for the overwhelming sense of history that has unfolded on these green Benches.

I am proud to be able to represent the area where I grew up. Before moving to Bedfont, we lived above my parents’ shop in Osterley—a community shop that sold school uniforms along with imported crafts and jewellery from India. I attended Heston infants and junior school, where my mother was a teacher for nearly 20 years. The school has transformed now, being one of the 4,000 schools built or refurbished by Labour since 1997—investment that is still making a difference to the education of young people across the country.

I am the first member of my family to be active in politics. I remember taking part in my school elections at Heston junior school in 1983, when, as a 10-year-old, I pretended to be Michael Foot and argued for better pensions for the elderly. It would not surprise the House—with children often voting as their parents might—that in 1983, Labour came second in our school elections. However, we remained ambitious for our future.

My predecessor, Alan Keen, is a great loss to this House and to my constituency, where prior to becoming an MP he served as a councillor in Hounslow West. He was one of the first MPs I ever knew. The Guardian described him as “charming, amiable” and “kindly”. His passion and forte was sport, music, arts and leisure. The House will remember him as a long-standing member of the Select Committee on Culture, Media and Sport and chairman of the all-party parliamentary group on football.

He was a scout for his favourite club, Middlesbrough, for almost 20 years, where, working with Jack Charlton, he spotted footballers including Graeme Souness. He remained friends with both throughout his life. An active football player and manager of the House of Commons football team, even at age of 73, he was an inspiration to all, so much so that the House of Commons chefs and catering staff have dedicated an annual football tournament in his name.

Many will be aware of how he bravely fought cancer. Members will remember how he carried on his duties as long as he could. Our thoughts go out to his family and to his wife Ann, whom many of us in this House know and know well, and who nursed Alan through his illness.

Before and during my campaign, I heard many personal stories from people Alan helped—stories that are still being shared in mail I receive every week. It is an honour to continue his work for the people of Feltham and Heston. He was without doubt a committed constituency MP. Alan was loved, and on more than one side of this House.

I want to share a little about Feltham and Heston. My constituency is the gateway from Heathrow to London, and a powerful symbol of our nation’s diversity and of hope for the future. Hounslow has rivers, canals, nature reserves and open spaces including an urban farm near the hamlet of Hatton, by Heathrow, and the award winning Bedfont Lakes country park.

More than 140 languages are spoken in the borough of Hounslow, with a third of the population being from ethnic minorities. With our strong faith communities and inter-faith work, it is truly an example of where the global meets the local. Our multi-faith community has many active churches, temples, mosques and gurdwaras, but they are not just places of worship: the community work that volunteers lead on education, information and advice, and health and well-being, often in partnership with public agencies, is a major service to the whole community.

My constituency is supported by strong local media. The Hounslow Chronicle leads the way as the local newspaper, with ethnic minority media including Des Pardes newspaper, Maya News, Jang News, Janomot, Asian Voice, Eastern Eye—you have probably heard of them all, Mr Speaker—Sangat TV, ARY Digital, Midlands Asian Television, Channel S—

[Stephen Pound (Ealing North) (Lab)]

The Irish Post?

[Seema Malhotra]

Yes—and the Irish Post, plus radio stations such as Sunrise, Desi radio, Panjab radio and Kismat. All play their vital part in ensuring that we reach our diverse communities.

An overwhelming message from the election was that my constituents are concerned about their jobs, their cost of living and their public services. The youth claimant count last year in my constituency rose 25.2%. The long-term claimant count for the over-50s saw a rise of 48%. Both statistics are more than twice the UK average. Increased investment in Feltham and Heston and support for local businesses will be vital for the parents I met last week who are worried about the future for their children.

Like Alan in his maiden speech, and our predecessors as Feltham and Heston MPs, Russell Kerr and Patrick Ground, I want to talk about the vital contribution of Heathrow to my constituency and to the nation. My constituency borders Heathrow and has a long history of contributing to aviation. London’s first airport was in my constituency, in what is now Hanworth air park. The world’s first air passenger terminal was at Heston aerodrome in Heston West ward—it is where Prime Minister Neville Chamberlain arrived with his famous “Peace in our time” agreement from Hitler in 1938.

Today, Heathrow is the third busiest airport in the world, but it is more than just an airport. It is a hub for manufacturing for Britain and for the whole of Europe. Its success has been its proximity to London, to our motorway and rail networks and to the support that successive Governments have given to its development, acknowledging its continuing, core importance to our economy.

The operation of Heathrow airport supports well over 110,000 local jobs—approximately 22% of total local employment, and adds a gross value added of £5.3 billion. As the world’s entrance to the Olympics, it is set to be even busier this summer, with 13 August predicted to be the busiest day in its 66-year history. My constituents fly the planes, run the air traffic control, drive the trains and buses, feed the passengers, shift the air freight, police the UK border and produce and deliver British manufactured products all over the world, all from Heathrow airport. We have a huge and diverse skills base that has developed to serve the needs of the aviation industry.

Recently, there has been increasing talk of a new airport near the Thames estuary, with the vision as it stands threatening the future of Heathrow. Heathrow needs to continue to be an integral part of our future national transport strategy. A successful, thriving aviation sector is crucial for our economic competitiveness. I support the call to work together on a cross-party basis to agree a long-term strategy for aviation. Confusion about our aviation future will put jobs and growth at risk, with investors being unclear about whether to invest for the long term in Heathrow. Any strategy going forward must make the best use of existing runways and airports.

I look forward to the development of the High Speed 2 line to Heathrow. A direct link would transform accessibility from the midlands and the north, bringing Leeds and Manchester within 75 and 70 minutes respectively of Heathrow.

The Civil Aviation Bill we are debating today is designed to modernise the regulatory framework for civil aviation, which there is a pressing need to do. The Bill is welcome as it brings greater flexibility in how airports are regulated. However, there also needs to be greater clarity about how environmental impacts will be regulated. This is a key concern for my constituents and the wider west London population who are the most impacted by noise and emissions. It is important to ensure that the aviation industry is fully involved as plans for the new Civil Aviation Authority develop, to help provide greater understanding and certainty about how new regulations may be implemented.

My constituency is a place that is brimming with ambition—of families for themselves and the next generation, and of businesses for growth. It is a place where young people, such as the young men I met at Feltham skills centre training to become mechanics and engineers, want the chance to prove what they can do and create a better life for themselves and their families; where the woman I met on Feltham high street wants the help to set up her own business; and where the graduate I met in Cranford wants a chance to do more than just short-term temporary contracts. It is a place where mums and dads such as those I met at Southville community and children’s centre want to know that streets are safe for their children to play on, and that they and their daughters can walk home safely at night. It is a place where older people want to play their part in the community too, as mentors and support for the new generation coming through, but with the confidence that their needs too will be supported.

My constituency is also a place where the community spirit is strong. I am proud to carry on Alan’s Co-operative and union relationships and to join the group of Labour and Co-operative Members of Parliament, especially in the UN international year of the co-operative.

After a 15-year career in professional services, working with industry and Government Departments, it is indeed a privilege and an honour to be elected as the new Member of Parliament for Feltham and Heston, and to follow my predecessor Alan Keen in fighting for fairness and progress for a place that has so long been my home, and that has given me so much.

19:25

[Damian Collins (Folkestone and Hythe) (Con)]

It is a great pleasure to follow the maiden speech from the hon. Member for Feltham and Heston (Seema Malhotra), who gave such an eloquent, thoughtful and intelligent speech, much of which I could agree with. I shall come on to the substance of her remarks about airports and Heathrow in a moment. I am also grateful for the opportunity to echo her tribute to Alan Keen.

I had the privilege of serving for just over a year on the Culture, Media and Sport Committee with Alan Keen. He was a great colleague on the Committee and continued its work as best he could, right through last summer, including taking part in our questioning of the Murdochs and the phone hacking inquiry. He was, of course, present for the launch of the Committee’s report on football governance, a topic that was a lifelong passion of his. He is sorely missed, not only by hon. Members on both sides of the House, but by members of the Committee.

The hon. Lady demonstrated in her speech that communities that live alongside and around airports are vibrant and have a strong affinity to those airports as a great source of wealth, jobs, income, skills and training for the local economy. Communities that live alongside airports are by no means blighted, but can benefit an awful lot from them. My constituency has a somewhat smaller—in fact, much smaller—airport than Heathrow at Lydd, which works under the name London Ashford airport. It is applying for an extended runway so that it can offer more local and regional services. But the arguments that people in Romney Marsh in my constituency would make about why they support the expansion of that airport are very similar to the hon. Lady’s remarks about Heathrow. The economic benefits of that investment in aviation and having a vibrant airport in the locality are good for the local economy and create jobs, rather than turning people away. That is appreciated by many of the hon. Members who have spoken in this debate so far, whose constituencies either contain an airport or are within the economic hinterland of one.

I welcome the thrust of the Bill, in particular the remit of the Civil Aviation Authority to focus on the consumer experience and passengers as its primary motivation. That will help the regulation and support of airports. I am especially drawn to clause 1 of the Bill, which sets the CAA’s general duty. Subsection 1 provides that it

“must carry out its functions…in a manner which it considers will further the interests of users of air transport services”.

Subsection 2 adds a duty to promote competition. I am sure that people will have amendments and ideas that will be discussed in Committee, but I wonder whether those two points may be combined into one, so that the CAA should consider promoting competition as part of supporting and furthering the interests of air transport services, rather than as a separate point. Many of us would see that those two things can be combined, because competition helps to improve the level of quality and service.

I have in mind especially issues of capacity, which may be at the heart of the concerns that many air transport users face. It was mentioned earlier in the debate that one of the particular issues that air transport passengers might face is the time delays caused by flights being required to stack because they do not have a landing slot. In my constituency in Kent, that is a particular cause of noise and environmental pollution. One of the best ways to clean up the aviation industry and reduce its carbon footprint would be to reduce the amount of time planes spend in the air unnecessarily. Much of that happens simply waiting for a landing slot.

[Bob Stewart]

Stacking causes a lot of noise in my constituency and I just want to endorse what my hon. Friend says. There is increasing stacking over Beckenham and we are getting fed up with it.

[Damian Collins]

My hon. Friend’s constituency is 30 miles or so from mine. I am sure that his constituents and mine share that concern.

Extra runway capacity in the south-east of England is a way to manage aviation much more effectively and reduce planes’ stacking time. Although some might say that increasing aviation capacity might lead to environmental pollution, much better management of planes in the air would significantly reduce it. It is a serious point, and the CAA should think of it when considering the air passenger experience.

[Mark Tami (Alyn and Deeside) (Lab)]

The hon. Gentleman is making a powerful case. Does he accept that the argument made by some that we should just manage things differently, rather than having more runways, does not make sense? We need more runway capacity.

[Damian Collins]

The hon. Gentleman has anticipated my next point. Extra runway capacity helps deal with issues such as stacking. It is also increasingly important to ensure that the UK economy is connected to the world. I am concerned by the fact that numerous economic centres in emerging economies around the world, such as India, Brazil and particularly China, do not have direct flight connections to the UK and London. That must be cause for concern, and extra runway capacity would help manage it better. It would also help us to deal with some issues that hon. Members raised earlier, such as the fact that domestic flights are priced out of the major hub airports when more attractive international options become available. That reduces the number of options available to domestic aviation customers. The CAA should give particular consideration to that under the terms of the Bill.

Indeed, the CAA’s own report on aviation, published earlier this month, highlighted that the need for extra runway and aviation capacity, particularly in the south-east of England, was of primary concern. It should be a concern for all of us considering the future of aviation in this country and the need to connect our economy to the economies of the world.

As has also been discussed, some major European regional airports and hub airports have more connecting flights to UK airports than does Heathrow. We are all aware of the number of UK regional airports that now have direct flights to Amsterdam and Frankfurt, and from there to the rest of the world. Indeed, the people who own Lydd airport in my constituency might see that as a model for sustaining the business case of smaller regional airports like theirs, which could offer flights to other hubs with connecting flights to the rest of the world.

We cannot ignore the fact that well-connected hubs are at the heart of a thriving aviation system. Our major hub, which will always be near London, will need to be connected to major points around the world. We must also ensure that there is extra capacity that our regional airports can use as well. That is of primary importance. The Government have said that they want to consider where future aviation capacity might come from. I welcome that step, and I think that we should consider it wherever it might be, but it means that the UK will have to plan for a major, substantial hub airport that will serve us and our economy well for many years to come.

Planning and environmental concerns have been raised, particularly their impact on small regional airports. I have been frustrated by the process that Lydd airport in my constituency has gone through. I appreciate that the expansion of airports is always controversial, particularly for local communities, and often divides opinion. I know that some people feel strongly against it. I believe that it would be good for the local economy, as do many people who live in proximity to the airport. After the decision is taken—in the case of Lydd airport, the district council has voted clearly to approve expansion—it is frustrating when that decision is called in and there is a further time delay of some years so that a public inquiry can consider the application. It is certainly frustrating when that happens at the end of a process that involved a previous public inquiry and public debates.

In the planning system, if we believe that we need extra runway capacity, particularly in the south-east of England where demand is very high, and if communities and the Civil Aviation Authority are prepared to support it, we should consider how such projects can be delivered efficiently and in a timely fashion, to support not only the greater needs of the aviation industry in our country but the needs of local economies. It is of fundamental importance if the community are on board and want the decision to be taken.

I support the thrust of the Bill. I believe that its objectives are to give this country a more efficient aviation network and improve and streamline the system of regulation. However, I will make one final point. In considering the role of Heathrow airport, which, as other hon. Members have said, might be the only airport facing a price cap given its dominance of the UK market, we should ensure that it competes and will continue to compete not only with airports in the UK but with major hubs in Europe. In many ways, Heathrow’s natural competitors are not Gatwick, Birmingham and Manchester but Amsterdam and Frankfurt. As a trading economy, we must ensure that our major hub airport is at the centre of the aviation world, not in the siding.

19:34

[Kelvin Hopkins (Luton North) (Lab)]

It is my privilege and great pleasure to be the first member of my party to congratulate my hon. Friend the Member for Feltham and Heston (Seema Malhotra) on her maiden speech. It was a superb speech of which she can be rightly proud. I am sure that members of her family who heard it will be equally proud. She mentioned Russell Kerr as one of her predecessors. In the 1960s, when I was a student, Russell Kerr came to speak to our university Labour club, of which I was then president. I knew him well, and I know that were he alive today he would be equally delighted to have such a wonderful successor. She spoke very well and has a strong speaking voice. I am sure that she has a great future in the House.

I will speak briefly about aviation matters. It is nice to follow the hon. Member for Folkestone and Hythe (Damian Collins), because my first ever holiday flight was taken from Lydd airport in a Bristol 170, too many years ago to remember now. It was an interesting experience.

I support some of the previous speeches. My hon. Friend the Member for Luton South (Gavin Shuker) spoke for the town, as I hope to. My hon. Friend the Member for Bolton West (Julie Hilling) made a particularly strong speech, for which I commend her. I listened with great interest. The hon. Member for Tamworth (Christopher Pincher) made a point about developing the regions and building regional airports.

My first point involves security and immigration. We must ensure that the UK Border Agency and all security staff at our airports are sufficient to do the job, that all our airports are properly staffed, that staff are properly paid and that the whole system of immigration control and security at airports is adequately funded. We cannot cut corners in such matters.

I know from experience that we have not funded Luton airport as well as we should have done. I visited immigration staff there some 10 years ago, and they complained bitterly that there were not enough of them to do the job properly. They wanted to stop drugs coming in—from Amsterdam, for example—but they could not do a proper check on all passengers. We must ensure that airports are properly staffed and that, in these times when the Government have chosen to cut spending, those important matters are not underfunded.

Another important point was made about airport capacity, particularly in the south-east. I was one of those in our party who did not support building the third runway at Heathrow, and I am pleased that both our party and the Government have now accepted that it will not be built. I have always argued that we should make maximum use of existing capacity in the south-east in the first instance, and that we should ensure that we make greater use of regional airports.

Germany was mentioned, and it has several major airports in different parts of the country. We have focused too much on the south-east, and we have a lopsided geography; too much of our population and economy are in the south-east, and not enough are spread out into other areas. Although I represent the south-east, I appreciate that we need to do much more to develop the regions economically. That means serving those regions with long-haul flights so that they can be developed better.

Luton airport can make a significantly greater contribution to capacity in the south-east. We heard from my hon. Friend the Member for Luton South that we could take at least 7 million more passengers a year. At the moment, the airport cannot take the longest-haul flights, but new generations of aircraft are coming through, such as the Boeing Dreamliner, a composite-bodied aircraft that can fly longer distance with a higher payload and more efficient fuel usage. If the Dreamliner flew from Luton, it could serve the south Asian subcontinent, which would be significant for Luton, and the western seaboard of the USA. That generation of aircraft is coming, and I look forward to them flying from Luton.

In the meantime, however, we must maximise Luton for the use of medium and short-haul flights. Much of the traffic that goes to Heathrow could come to Luton. I have even argued that Luton could become a satellite airport for Heathrow—part of the south-eastern hub, in a sense—but we would need a rapid transit link between the two airports, which is possible. There is a railway track that diverges at Cricklewood on to the western region, so we could have a fast shuttle service from Luton Airport Parkway station direct to Heathrow, and it could act as a satellite to Heathrow in the longer term. Imaginative measures could be taken to enhance airport capacity in the south-east.

I will not say much more, as others wish to speak. I hope, however, that the Bill will be improved as it passes through the House, and that the important points made, in particular by my hon. Friend the Member for Bolton West, will be taken into account and acted on.

19:40

[Nigel Mills (Amber Valley) (Con)]

It is a pleasure to follow the hon. Member for Luton North (Kelvin Hopkins) and to have witnessed the maiden speech of the hon. Member for Feltham and Heston (Seema Malhotra). Having visited her constituency several times a couple of months ago, I can understand why she chose to speak in this debate—I have never seen planes fly so low, except at an airport, and at one point I could almost see what passengers were eating for their lunch. It is obviously an important part of her area’s local economy.

I cannot claim to live in or represent a constituency quite so close to an airport, my nearest one being East Midlands airport, which is about 20 miles away—I know that number well because I use East Midlands Parkway station to travel down to London. It is one of those deceptive airport parkway stations in that it is not possible to get to East Midlands airport from it without catching a bus—except that the bus has been cancelled because no one used it. It is a bit confusing, therefore, for someone arriving from abroad at East Midlands airport, thinking that they can catch a train but finding that they need to get a taxi or some other form of transport to get there. Perhaps, in the long run, HS2 might rectify that, and we might actually get a rail station on the site of the airport.

I join other Members in recognising the Bill as a sensible way of improving the regulation of airports. It is right to start by acknowledging how important airports are to the economic growth of their local areas and of the country as a whole. Many Members will know that East Midlands airport has the distinction of being one of the biggest freight hubs in the country, employing a substantial number of people. Not everyone living under the flight path and who gets to experience night-time freight planes, which sadly do not tend to be the most modern or quietest of planes, will share that enthusiasm, but the effects of the serious number of jobs created ripple out to nearby constituencies, including mine, which is home to the UPS depot in Somercotes.

There are issues, however, with changing any regulatory regime and the possibility of introducing an economic regulator. When I saw the Bill, I feared that these regulators might decide that regulating only three airports was not enough and that they might want to expand their remit to cover a few more, including, for example, Birmingham or Manchester—two airports that my constituents would use regularly, being only about 55 to 60 miles apart—so I welcome the fact that the Bill introduces no real change to how new airports can be brought under that regulatory regime. I do not see the need for economic regulation, given the amount of airport competition in the wider midlands area. I carried out some research to see how many airports I could get to in a 60-mile drive. In addition to East Midlands airport, there were Birmingham, Coventry, Doncaster, Sheffield and Manchester. That is a lot of choice for people booking a holiday, and the number of destinations available from all those airports provides plenty of choice for both scheduled and packaged flights.

My hon. Friend the Member for Tamworth (Christopher Pincher) said that even with so many airports in the area, many people still have to use Heathrow for long-haul flights. Those of us who, to our shame, do not always holiday in the UK know, from comparing flights and prices, how often we can fly only from Heathrow—unless we fancy a couple of changes at Paris or Amsterdam, for example. We need to spread out to the rest of the country some of that capacity and some of those direct flights to the most important trading countries and holiday destinations.

I have touched on the environmental impacts of airports. It is strange that we are producing a Bill setting out how airports can be licensed under an economic regulatory regime, because most of our constituents would think that, when looking to license an airport or impose conditions, the possible environmental damage would be taken into account. The main consideration that people raise is probably the noise for surrounding houses. There must be some link between that and regulation, because it would be strange if a licence could not be removed from a company that was blatantly and flagrantly flouting those regulations—although I accept that we do not want multiple regulators regulating the same things, and I recognise that those noise issues are best addressed elsewhere.

The one issue in the Bill that will get the attention of consumers and passengers is the welcome extension of the ATOL rules. I speak as someone who keenly looks at the price of flights and holidays—I check out the various travel agents and airlines, and pick the cheapest one—but it is always difficult to find out whether something is covered by ATOL. That problem is not helped by the reality of how people book holidays. Everyone knows that package holidays are covered. Twenty years ago, 97% of holidays were package holidays, but it is now less than 50% and falling. The concern is that people do not realise that they do not have ATOL protection. Some might say, “Well, we should all have travel insurance, and surely airline failure is covered in my travel insurance policy,” but actually people have to check their travel insurance carefully to find out whether they are covered—many do cover it but some do not or put a limit on how much can be claimed.

If I book a flight with a cheap airline—let us take Ryanair as an example, although they are all much the same—I will probably appreciate that it is a point-to-point flight and that the airline does not take responsibility for delays or anything else that might impact on me. When I get my ticket confirmation, however, I might get an advert reading, “Do you want cheap car hire?”—through a separate car hire company—or, “Do you want one of these cheap hotels we’ve found?” To what extent does that become a package that would come under the flight-plus rules, or are those completely separate bookings that I choose to make through the hotel and car hire providers? It is not entirely clear whether that would be a package in the way that I might understand a Virgin Holidays package, with a flight and hotel, to be.

It is important to tease this out and ensure that when we make this change we make things clearer for the consumer, and that we do not lead more people to think, “I’m definitely safe and covered now,” when, actually, they have bought the flight separate from the car hire company or hotel. One option would be to make everything covered by ATOL. That would ensure complete clarity and freedom of competition between travel agents and airliners. I accept that there is the risk that if I book my flight through the Dutch KLM website, rather than the UK one, I might get it for £2.50 less because I would not have to pay for the ATOL cover, but we are not talking about a huge material amount on the price of the flight. It would, however, get us the clarity that we are rightly seeking.

Overall, I strongly welcome the Bill as a simplification of the regulatory regime for airports. Everyone wants all our airports to offer the biggest range of destinations and airlines, and to be as cheap as possible so that we can get the cheapest flights. The Bill will take us some way in that direction. I welcome the clauses requiring airports to publish full passenger service information, and I agree that it should include the whole passenger experience, from arriving at the airport to the annoying behaviour of some airports that prevent us from dropping people off without paying for parking or make us drop them off so far from the airport that they have to lug suitcases around—not to mention those trolley charges that result in us carrying three suitcases around the airport just to save £1. All those costs should be clearly published, so that I can compare what my full journey costs will be and ensure that I do not need a taxi from somewhere or have to pay all those little hidden costs, and so that I can also understand and fully appreciate what the cost and quality of my full airport experience will be.

Otherwise, this Bill will be a great step forward, and I strongly welcome it.

19:49

[James Wharton (Stockton South) (Con)]

It is a pleasure to follow my hon. Friend the Member for Amber Valley (Nigel Mills), who spoke eloquently about a range of subjects and touched on the licensing issues arising from this Bill, which I, too, hope to speak about. It is also a pleasure and an honour to follow the hon. Member for Feltham and Heston (Seema Malhotra), who spoke so clearly and persuasively about her constituency. Having visited Feltham and Heston only quite recently, and given its close proximity to Heathrow, I have no doubt that she will take a long-standing interest in aviation matters.

I welcome this Bill, which is a long overdue measure to tackle some of the problems arising from outdated regulation that our aviation industry faces. There are a number of good measures in the Bill. In such a monopolistic market, it is important that the Government should set out a clear set of regulations to ensure that passengers get the best deal. This Bill goes a long way towards delivering that, notwithstanding the range of comments made by Members from across the House this evening.

For me, one of the most interesting parts of the Bill is the commentary on, and the rules set out for, the role of the Civil Aviation Authority. Clause 1, chapter 1—one of the first things in the legislation—says:

“The CAA must carry out its functions under this Chapter in a manner which it considers will further the interests of users of air transport services regarding the range, availability, continuity, cost and quality of airport operation services.”

We are presented in this Bill with an opportunity to look at how we deliver aviation services right across the country and, in particular, what might be done to secure the future of some of our regional airports. In their comments on the draft legislation, members of the Transport Committee raised concern that regional airports do not always feature as highly or prominently as they perhaps should. They are a vital part of our economy. They produce an extremely important economic boost for the areas in which they are based, but they are also important for transport right across the UK.

[Julian Sturdy (York Outer) (Con)]

My hon. Friend is making some powerful points about regional airports. He is absolutely right that we need to encourage investment in regional airports to get our economy growing. Does he not also think that investment in regional airports in the north is probably more important than investment in regional airports in the south-east, in moving us away from the north-south divide, which is having an impact on our economy in the north?

[James Wharton]

My hon. Friend, who is a member of the Transport Committee, has, in true expert fashion, predicted much of what I want to say. Later I will touch on some of the points that he eloquently raises.

The regional issue, which is so important for those of us in the north, as well as those in the south-west—indeed, it is important for those in any part of the country that is that much further from the capital—should not and will not go away. My constituency is served by Teesside airport, which covers three constituencies: Sedgefield—I see the hon. Member for Sedgefield (Phil Wilson) in the Chamber—Stockton North and my constituency of Stockton South. Teesside airport has quite a long and interesting history, which I will not dwell on, although the recent history, which is relevant to what I want to say, sadly shows a certain level of decline. In 2006, around 1 million passengers went through the airport; in 2011, the figure was fewer than 200,000.

When I say Teesside airport, some hon. Members look at me with a little confusion, because they will have heard it referred to as Durham Tees Valley airport. A few years ago the name was changed, against much local opposition and amid much local concern. As far as I can tell, whether by looking at maps or historical records, Tees valley as a geographical area does not exist, and Durham is rather a long way away from the airport. None the less, Teesside international airport was officially renamed Durham Tees Valley airport. As a local MP, I raised the issue over the summer. Indeed, I was involved in a campaign to change the name back to Teesside airport, because I know that the issue concerns many of my constituents and those in surrounding areas. Indeed, the Evening Gazette, an excellent local daily newspaper, ran the campaign quite prominently and, certainly recently, it was the second most subscribed to and commented on campaign that it had run. The campaign sparked off a great deal of comment and contributions from local people, because it goes to the heart of some of the challenges we face in that sub-region of the north-east, the strength of identity in Teesside and the value that local people place on it. However, a name alone would not change the future trajectory of an airport or its business or economic success.

[Nigel Mills]

I rise to give my hon. Friend some hope for his campaign. A few years ago, East Midlands airport changed its name to Nottingham East Midlands airport, in the face of huge opposition in Derbyshire and Leicestershire, which jointly fund the airport. The name was eventually changed back to East Midlands airport, so such campaigns can be successful.

[James Wharton]

I thank my hon. Friend, and I hope that in the fullness of time that is exactly what will happen. However, there is a more pressing issue, which is relevant to today, than simply the name of the airport, important as that is: the airport has recently been put up for sale.

Again, I will not go through too much of the detail of how the airport got into that position—the hon. Member for Sedgefield recounted much of the recent history earlier—but I can say with absolute certainty that the fact that it has been put up for sale is a cause of great concern for many of my constituents. We know—I know, as a local person and a local MP, and my constituents know—that only recently Teesside airport was vibrant and successful. It was a highly successful sub-regional transport hub that provided not only international flights, but quick and easy domestic flights down to London Heathrow. Those flights were provided by BMI—British Midland International—and when that service was withdrawn, that had a serious detrimental impact on what has proved to be the airport’s long-term future.

The issue was raised, at some length and on a number of occasions, by the right hon. Member for Newcastle upon Tyne East (Mr Brown) when he was Regional Minister, under the last Government. He campaigned diligently to have Heathrow slots reinstated for Teesside, on the basis that it was an important domestic route that would put passenger flow through the airport and play an important part in providing an economic transport boost to that part of the north-east. He campaigned hard, although sadly unsuccessfully. This is a cross-party issue, with, I believe, cross-party support.

That brings me to some of the specific parts of the Bill before us today. Subsection (1)(b) of clause 18, which deals with what the CAA has to take into account in putting conditions on an airport’s licence, refers to

“such other conditions as the CAA considers necessary or expedient having regard to the CAA’s duties under section 1,”

which I have already mentioned, and which include those relating to the continuity and range of airport services that passengers must be able to enjoy. In addition, clause 1(3) says:

“In performing its duties under subsections (1)…the CAA must have regard to…(d) any guidance issued to the CAA by the Secretary of State for the purposes of this Chapter”.

It is my contention that this Bill opens the door for the Secretary of State to instruct the CAA, through the guidance issued, that it must give proper attention and pay heed to the overall economic needs of the sub-region in the north-east.

I accept that this issue has been visited before. As I have mentioned, the right hon. Member for Newcastle upon Tyne East raised it a number of times when he was Regional Minister on behalf of the region as a whole. However, there is a new factor that should now be taken into account: the Government’s recent announcement—a welcome announcement for the economy in the north—that High Speed 2 is to go ahead. At the moment, HS2 goes up as far as Leeds. It will provide some travel time benefits for those travelling down from the north-east, but it does not yet reach stations in the north-east of England. I am sure that in the fulness of time it will do so. Indeed, I and other hon. Members—on a cross-party basis and across the north-east—will no doubt be making the case for investment to bring high-speed rail as far north as is necessary for our constituents to benefit from the economic opportunities that it provides.

None the less, in the foreseeable future, high-speed will not come up as far as Teesside, Newcastle or the north-east region at all. Therefore, although the Government have recognised, through their investment in HS2, the value of cutting journey times to the capital and ensuring that our country—and our nation—is as interconnected as possible, with high quality, high-speed journeys from north to south, they have not yet come up with a proposal that would help to bridge the gap that little bit further north, in the areas and communities that I and so many colleagues across the House represent.

HS2 therefore provides an opportunity for the Secretary of State to consider whether provision should be made for Teesside airport to be given particular weighting to ensure that it has a slot at Heathrow. Teesside will feel the benefits that HS2 will bring to the north, but not quite as acutely as those living in Leeds, for example, or in places from which they can travel to the stations that it will serve directly. Those benefits have been recognised by the Government, and the Bill provides the Secretary of State with the opportunity to set criteria that would allow the CAA to take into account the need for faster travel times from Teesside airport and from that part of the north-east that I represent.

This is both my appeal and my question to the Minister. My appeal is that the Department consider whether the guidance that will be issued under the Bill should take special account of Teesside’s unique position, just outside the envelope of HS2, so that it could benefit from regular, high-speed connectivity with the capital. My question is whether that interpretation of the Bill is accurate, and whether that option would be open to the Secretary of State if the proposals should become law. If it is not, I urge the Government to consider amending the Bill. If it is accurate, I am sure that colleagues across Teesside and the north-east will join me in urging the Secretary of State to ensure that the provisions are used to maximum effect to take into account the needs and views of individuals and businesses in my constituency and in the surrounding communities. They have used Teesside airport over many years and they have been well served by an excellent, local, well-managed service on their doorstep and offered a range of flights. Sadly, however, that service has gone into what I hope is a short-term decline in recent years. I ask for action to be taken, and for the Government to deliver the Heathrow route that would bring great benefit to the people whom I am proud to represent.

20:01

[Jackie Doyle-Price (Thurrock) (Con)]

I should like to associate myself with the comments made by colleagues following the maiden speech of the hon. Member for Feltham and Heston (Seema Malhotra). She gave the most powerful exposition of Heathrow’s economic contribution that I have ever heard. When so many people are calling for a brand new hub in the Thames estuary, it is worth bearing in mind that for every person who finds that overhead air traffic disturbs the ambience when they are enjoying a gin and tonic, there are many others, including her constituents, who depend on Heathrow for their livelihood. I hope that as we consider the future capacity of aviation, we will be able to have a mature debate on the economic consequences of moving an airport and of airport expansion, as well as on the environmental consequences.

The Bill has been a long time coming, and I was slightly amused by Opposition Members’ complaints about the so-called lack of scrutiny, given that it has had a gestation period of some six years. It contains some new measures, but we shall have plenty of time to consider them in detail during its passage through the House. They lend themselves to being added to the Bill, and many have already been fully considered by the previous Government as well as this one. It is also worth noting that although a number of airlines have raised concerns about the Bill, the industry generally supports this package of reforms.

The Bill will put the regulation of civil aviation on a modern footing. A great deal of effort is often put into drawing up systems of regulation that are fit for purpose at the time, but they generally get parked and are not looked at again until something goes wrong. In this case, nothing has gone wrong, but it has become patently obvious that this system of regulation is not fit for purpose, as it is the best part of 30 years old. It was drawn up at a time when the aviation industry was rather different from the one we have now. In the intervening period, we have witnessed massive growth in the number of airlines, a greater propensity to fly among business travellers and consumers alike, and the emergence of an industry characterised by much more aggressive competition. Those changes in the marketplace have created a need for a different kind of regulator from the one provided by the current regime.

A key aspect of the existing system is the duty to secure adequate provision of services, but that task is clearly redundant, given the amount of competition that now exists in the industry. Better and more efficient regulation means removing those responsibilities, which will not deliver the efficient marketplace that we need, and ensuring that the regulator focuses instead on those duties that will do so. Putting the interests of the air passenger first will achieve that, as it will ensure that the market works effectively and not to the disadvantage of consumers.

I welcome the fact that at the heart of the Bill are reforms of the duties of the Civil Aviation Authority to ensure that protecting the interests of the air passenger will become its primary purpose. This amounts to a simplification of the previous regulatory structure, which was much more about economic regulation. At the core of the new regulator’s functions is the need to ensure that the market works effectively and to the benefit of all passengers.

By focusing on outcomes for passengers, rather than on the provision of services, the Bill provides a framework that is more likely to deliver a better customer experience. I speak as someone with a background in regulation from a consumer perspective. Many other methods of regulation could learn from this model. It has always been my view that if we get the focus on the consumer right, many other benefits will follow. That is not to say that we should throw away all models of economic regulation, because the structure of the market must obviously be taken into account, and regulatory action is still required to ensure that providers do not act as cartels. However, we need to look at the consumer’s experience from start to finish.

Central to the Civil Aviation Authority’s new consumer focus will be its duty to promote better public information. I reiterate the point made by other colleagues that information is all, and that transparency is the best way to empower consumers to look after their own interests. The provisions will give consumers a one-stop shop where they can find information and compare airlines and airport providers, enabling them to make a more informed choice.

My hon. Friend the Member for Amber Valley (Nigel Mills) talked about booking his holidays, and I have to say that I have had similar experiences. People tend to look at the headline price, but that does not always tell us the whole story. The most obvious example of that is Ryanair, but of course we all know that we are going to get screwed over when we fly with Ryanair. The reality is, however, that we need to bear in mind the cost of parking the car, the cost of dropping off and the cost of travelling to the airport. When we do a straightforward search to book our airline tickets, we are never going to get the whole picture.

We need as much information as possible to be presented to us in a user-friendly way, although it will be a challenge for the CAA to provide it in as user-friendly and easily navigable a form as possible. A similar example is the Financial Services Authority, which draws up massive amounts of consumer information. It provides comparative tables allowing us to compare 400 types of mortgage or 1,000 insurance products, but almost no one knows that they exist, and very few people access them. The new duty on the regulator is welcome and will be valuable to consumers, but it will be of use only if consumers know how to access it and navigate their way round it.

Shifting the focus on to consumers will make the experience of passing through an airport much more enjoyable. The speed with which consumers can disembark, collect their baggage and get through passport control makes a great deal of difference, and I hope that that kind of information will also be properly communicated by the regulator. It goes without saying that if someone knows that their experience in a particular airport or with a particular airline will be easy, they are much more likely to choose that option. As the hon. Member for Poplar and Limehouse (Jim Fitzpatrick) will know, using London City airport is a delightful experience. People can turn up within 10 minutes of their flight, get through the airport, get on the plane and take their baggage with them. It is a much more user-friendly experience than at any other airport. People will pay more for that advantage, even though they might not get the best quality aeroplanes. Information is very important for helping people to make an informed choice.

As for the tools and penalties the regulator will need to perform the job, we have already talked about information, but that will get us only so far. When the regulator has to intervene because the service is not good, it needs to have appropriate tools and penalties. I see that the Bill will mean the transfer of some powers from the Secretary of State and from the Competition Commission. That is welcome, but in this new system of regulation it is important that all players understand their own obligations.

As we have seen elsewhere, when multiple bodies are involved in regulation, there is often some overlap and, indeed, some underlap, as it is not quite clear where the buck stops. We saw that happen with catastrophic consequences in the financial services industry and in health. I hope that the Department for Transport will provide much more clarity on who should act, when, why and how so that it is absolutely clear where the buck stops for each part of the responsibility under the new system.

Serving the customer is central, and I have already mentioned information issues. I welcome the provisions for the CAA to produce more information about the environmental consequences of aviation. As I said, this will become more important as we look at the options for future airport capacity. It is clear that there is a need for expansion to serve London and the south-east. When so much noise is being made about the potential for a new hub airport in the Thames, I hope that the CAA will pay due regard to the environmental consequences of such a development, as well as to the economic consequences for airports such as Heathrow. I am glad to see the hon. Member for Feltham and Heston back in her place.

On behalf of colleagues in north Kent and south Essex, I have to say that the case made so far for a Thames estuary airport is weak. The only strong argument I have heard is that it is beyond the boundary of Greater London. For me, that is not sufficient justification for the creation of a new airport hub.

I am pleased that the new CAA will have to consider the health and safety impacts, as well as measures taken with a view to reducing, controlling and mitigating the adverse environmental effects of civil aviation across the UK. Once it takes forward these responsibilities, we may end up being able to have a much more mature debate about these issues than the present one, which frankly tends to bring out the worst nimbyish tendencies in all of us.

Finally, I would like to say something about the provisions that will transfer the security regulation powers from the Government to the CAA. I strongly believe that the CAA is better placed than the Department to ensure that airlines and airports are discharging their responsibilities effectively, although it is of course important that Ministers retain responsibility for overall policy. This move clearly makes financial sense, as I believe it will save the taxpayer some £25 million. That cost will ultimately be borne by consumers, but as it works out at 2p per user, I think it is one that the consumer can afford to absorb.

To summarise and conclude, aviation policy and provision are essential ingredients in the competitiveness of a 21st century economy, and it is clear that some of our competitors are making more progress than the UK in this regard. If we get our aviation policy right, there will be clear advantages for jobs and growth. An appropriate system of regulation fit for the 21st century is central, so I am pleased to support the Bill.

20:14

[Priti Patel (Witham) (Con)]

I start as others have done by paying tribute to the hon. Member for Feltham and Heston (Seema Malhotra) for her maiden speech. All Members who visited her constituency during the by-election campaign recognised and appreciated the economic significance of Heathrow airport to her constituents. For me, it was a complete reality check to recognise how closely her constituents experience the airport through the flight paths and the low-flying aeroplanes that travel down in proximity to the runway. That was a real eye-opener for many of us, but we recognised at the same time that many of her constituents were employed by the airport. I for one maintain that Heathrow is a massive economic hub, not just for London and the south-east but for our country. I have been a frequent traveller through Heathrow.

[Chris Heaton-Harris (Daventry) (Con)]

I am listening to my hon. Friend’s comments. I had assumed that when people were coming in to land, they normally wanted to be in close proximity to a runway.

[Priti Patel]

I welcome my hon. Friend’s intervention, and make the observation that that is indeed very true; it really is!

I welcome the Bill and the emphasis it places on furthering the interests of passengers and the modernisation of the Civil Aviation Authority. I suspect that many of my remarks will already have been made, but there is no doubt that reforming the existing framework to slash back the rigid regulation and the burdensome bureaucracy currently in place is a positive step. Granting the CAA greater independence from the Government will take important aspects of aviation regulation—the designation of airports for price capping, for example—out of the political sphere, while enabling the CAA to take on the responsibility to enforce competition law will help empower passengers and cargo owners.

The future of aviation in this country and the economic benefits derived from air travel that we have heard about in the debate will no doubt depend heavily on this legislation and subsequent actions from the CAA. I hope that the CAA will utilise its new powers wisely and act in a way that promotes competition to make our airports competitive and strong.

We should remember that our airports are not just places where passengers and cargo are transported across the world, as they are vital economic hubs essential to jobs and growth in our economy across the country—not just in London and the south-east. As we have heard from many colleagues, regional significance is key. Ministers and the CAA must be mindful that while this Bill will support competition between airports in the UK, our airports need a regulatory framework that, importantly, lets them attract investment so that they can compete with their global rivals.

Anyone who has travelled regularly overseas on business will recognise and acknowledge the improvements that many other countries have made to their airports. As we have heard, whether it be Amsterdam, Frankfurt, Hong Kong, Shanghai, Dubai and the Gulf or India, amazing things are being done with their airports. This brings us back to the point about consumer experience, but also the experience of business travellers. This is not about convenience alone, but about making sure that these are vital economic and competitive hubs.

Many of the airports are impressive. They have expanded their capacity. Dubai, for example, built another airport in next to no time. Such developments make these cities and countries much more attractive for business and leisure purposes. Passengers who travel to various destinations are stopping off at these airports, which have incredible facilities—new runways and terminals, for example. This frees up capacity and enables our economic rivals to develop airport hubs. We need to wake up to this and learn from their experiences. We need to look at what has worked and what has not worked. It is amazing that some countries seem capable of building these airports overnight. We talk about being open for business, but if we want to be an economic powerhouse, we have to get some insights from these other countries.

These rival airports offer ever-increasing numbers of destinations to fly to, so we have to face the challenges of capacity—not just at Heathrow, as the regional airports are also important. I do not want to see our airports becoming the end-point for global aviation travel rather than being an important hub. We must facilitate this hub issue and link up to worldwide destinations. I certainly do not want to see the UK losing out to other hubs, including European hubs. At a time when we need to ensure that Britain is open for business, if we do not act swiftly enough to come up with the right kind of aviation approach and strategy, we will lose out on international competitiveness. I hope the Minister will assure me that, observing their duties as set out in clauses 1 and 2, the CAA and the Secretary of State will further the interests of users of air transport services, will take all necessary steps to ensure that our airports are the most attractive places for passengers to visit, and will offer passengers more choice.

As consumers, passengers want not just the best possible price but a good travelling experience. Over the years terminal 5 has overcome its initial major teething troubles, but I remember what it used to be like there for people travelling with families. Nothing can be worse than a dreadful airport experience, particularly for those travelling with young children. Such experiences can be really off-putting, especially when airlines are not co-operative in informing people about what they can and cannot take on board, and I hope that there will be some improvement in that regard.

Innovation and investment are also key issues. I think that we can do more to increase business travel, and to help our regional airports. We in Essex have Stansted airport, which is not far from my constituency: it is 15 minutes’ drive up the A120. Stansted has had an interesting time over the past few years, partly because it has expanded to become a hub for new airlines servicing the United States and Asia. That initially represented something of a trial for the airport. It started at what was a bad time for the global economy, when there was a lack of business passengers. I believe that the Bill can help to empower Stansted and other regional airports, so that they can innovate and invest in accordance with their own regional growth strategies at a time when enterprise zones are coming on stream.

[Mark Reckless (Rochester and Strood) (Con)]

My hon. Friend has mentioned regional airports, airports in Essex, and innovation and investment. Is she aware of the work that has been done at Southend airport, which has received considerable support to enable it to expand and provide the area with a real economic boon?

[Priti Patel]

I know about that work. I also know how hard organisations such as Essex chamber of commerce and other business partners and stakeholders are working to assess viability and sustainability and attract investment to Essex and the south-east.

Stansted serves more than 18 million passengers each year, and is the third busiest airport in the United Kingdom in terms of passenger numbers. In that respect, it ranks only slightly below Heathrow and Gatwick. Its planes fly to 150 destinations, and it offers many scheduled flights to European airports as well as flights on low-cost airlines. My hon. Friend the Member for Thurrock (Jackie Doyle-Price) mentioned one of those. Members have also mentioned the environment. Stansted has a great record of mitigating environmental problems, minimising the disruption caused by noise by ensuring that 99% its of aircraft stick to their flight paths. Half the number of passengers travelling to Stansted use public transport.

I have mentioned Stansted for economic reasons. It is a vital catalyst for regional and national growth, it is a cargo hub, and it employs more than 10,000 people. One in six of those jobs is filled from my constituency and the wider district of Braintree. Such airports—Heathrow was mentioned in this context by the hon. Member for Feltham and Heston—are vital in providing our constituencies and regions with employment and investment.

It is essential for Ministers and the CAA to bear in mind that increasing airport capacity is not an unreasonable objective. Environmental concerns have been mentioned, but above all we should consider the interests of passengers and the need to demonstrate to the world that the United Kingdom is open for business. This is not just about airports in the south-east; it is about UK plc. I touched on the role of enterprise zones earlier. They will be central to the facilitation of inward investment, and I think that they should be complemented by a great and robust aviation strategy for the United Kingdom.

20:25

[Chris Heaton-Harris (Daventry) (Con)]

It is a pleasure to take part in a debate that has featured a sparkling maiden speech from the hon. Member for Feltham and Heston (Seema Malhotra). I spent a great deal of time in what is now her constituency, trying to ensure that she did not get the job. My wife lived there when we were courting, and I know it reasonably well. I know, too, how important the biggest airport in the country is to the constituency, and how many people work there. I know that she will be a very good champion of all her constituents, and I congratulate her again on her maiden speech.

It is also a pleasure to follow the hon. Member for Witham (Priti Patel), who reminded us of the importance of runways in the context of aviation. There was an incident not so along ago when a jet coming into Heathrow did not quite make it, and that proved that runways are all-important.

Let me record my sympathy for the Minister of State, Department for Transport, my right hon. Friend the Member for Chipping Barnet (Mrs Villiers), who was to have responded to the debate. I hope that I am correct in describing her as a right hon. Member. If she is not one, she should be, for she is excellent. Unfortunately, in a bid to become road safety Minister, she was injured in a cycling accident and is undergoing surgery.

As we have heard from Members on both sides of the House, including the hon. Member for Feltham and Heston and my hon. Friend the Member for Tamworth (Christopher Pincher), aviation plays a critical role in UK plc. My constituency, which is in the heart of the midlands, near junctions 15 to 19 of the M1—anyone who remembers seeing the old Rugby radio mast while driving up the M1 will know where it is—is now typified by a number of jobs that rely on the aviation industry. It is a hub for all the cargo that is shipped up from Heathrow, down from East Midlands airport and across from Birmingham. It is because so many jobs in my constituency rely on the aviation industry that I wanted to speak in the debate.

However, aviation is important to the economy in many other ways. I was recently lucky enough to travel to Kazakhstan, Azerbaijan and Georgia. All the people whom I met in those growing economies had this in common: they were desperate to come to the city of London, and, if they had any money, they wanted to spend it here. We need a gateway that can accept all those fantastic consumers of the future, and can welcome those who wish to do business with us and invest in us.

The experience at Heathrow airport is very different, however; it is a shopping centre with a couple of runways attached. For the Heaton-Harris family, getting to a gate at Heathrow airport involves an awkward shopping experience. The last flight I caught out of there cost me only a couple of hundred pounds, but the shopping experience almost trebled that. I know only too well, therefore, how much business comes from airport shops.

I have an airport in my constituency. The wonderful airport of Sywell has a rich history and an interesting and controversial present, which is why that is the only comment I shall make about it.

Turning to our country’s larger airports, much of our aviation regulation is governed by 1980s-style legislation, which is one of the reasons this Bill has been introduced. This Government and the last Government both realised it needed to be updated.

[Mark Reckless]

My hon. Friend talks of 1980s-style legislation as if it were a bad thing. Does he not remember who our Prime Minister was at that time, and might he therefore like to reconsider that remark?

[Chris Heaton-Harris]

I am suddenly enamoured with 1980s-style legislation. Indeed, I had the haircut to go with the music of that era—I had some follicles back then.

The Bill offers a package of reforms to make regulation and the sanctions that support it flexible, proportionate, targeted and effective. It proposes removing unnecessary regulation and intervention by central Government and devolving more responsibility to the independent specialist regulator, the CAA. It also seeks to make the CAA accountable and to ensure that it weighs both the costs and benefits of its decisions. Further, it proposes that some of the costs of regulating aviation should be moved from general taxation to the aviation industry, so that the people who use it, pay for it. That is the right way forward.

Above all, the Bill puts the consumer first, and I am all in favour of that. I am a regular customer of the aviation industry—although I would like to be a more regular customer—and when booked on a Ryanair flight I become the Michelin man, as I will wear all my clothes because I do not want to pay the excess sum for booking in a suitcase. I am also the man who has to repack his “smalls” in front of the waiting British Airways passenger queue because my baggage weight has exceeded the limit and the lady at the check-in desk has said, “23 kilos and a few extra grams is too much.” I am all for more deregulation and common sense in the aviation industry, therefore. It is very important that the consumer is put first in respect of the regulation of airports, which have substantial market power. The CAA’s primary duty should be to consumers. Passengers and, importantly, the owners of cargo must have a greater say.

The Bill also gives the CAA a role in promoting better public information about airline and airport performance. I support the clauses that provide that. Transparency and greater information are essential. As a consumer, I like to be able to look at relevant information and choose my airport and carrier. In that regard, the more transparency, the better.

[Sarah Newton (Truro and Falmouth) (Con)]

I agree about the need to reform regulation. Does my hon. Friend agree that we also need a proportionate approach? Newquay airport is in a neighbouring constituency to mine, and it serves all of west Cornwall. It is vital for connecting Cornwall with the rest of the UK and beyond for business and other purposes. We must bear in mind the importance of such small and remote airports that may not—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. Members must make brief interventions, not speeches. I have been very lenient. I also ask Members to face the Chair when intervening.

[Chris Heaton-Harris]

I agree with my hon. Friend. I used Newquay airport once, and it is small but perfectly formed. The small airports around our country serve as important regional hubs. Because they serve the regions so well, they become very important to the local business community, such as in respect of inward investment. My hon. Friend is right to stress the need for a proportionate approach.

The environmental impact of aviation gets the juices of the hon. Member for Cambridge (Dr Huppert) flowing; indeed, the bulk of his speech was about that subject. Measures to be taken to mitigate adverse effects are relatively well addressed in this Bill, and I am sure they will be fleshed out in Committee.

The Transport Committee raised a handful of concerns during its pre-legislative scrutiny of the Bill. It agreed with just about every Member in the Chamber that the UK needs a healthy, competitive and sustainable aviation industry that includes the very important regional airports, as we have heard, and air services. There are some questions, however, that have yet to be completely answered about the transfer of safety and security to the CAA. There are concerns that the Government are proposing to transfer that important area without proper planning and consultation just to reduce costs. I do not believe for one second that that is the case, but it would be very useful if the Minister outlined exactly what consultation and planning went into the decision. Indeed, there might be some reason to return to these matters in Committee. It also remains unclear how far the Department for Transport will go towards a more efficient outcome-based approach to such regulation. This is an important area of regulation, as the security and safety of aviation is possibly the most emotive part of security and safety.

The Bill also proposes to permit the Secretary of State to change the CAA’s remit through secondary legislation, which, in itself, creates a certain amount of uncertainty. One never knows what will come around the corner next. The Select Committee also found that the division of responsibilities between the Government and the CAA was slightly unclear. I would like to think that the Government will ensure that all uncertainties in that area are completely cleared up as we go through Committee.

The main themes of the Bill are very important: growth and competition, consumer benefits, better regulation, the “user pays” principle and the need to reduce the role of central Government. Very few people could argue with those main themes. Indeed, under the “user pays” principle, the savings for the taxpayer as regards aviation security should be about £4 million a year. It is important, obviously, that we get this exactly right.

I broadly support the Bill—and the industry supports many of its measures—but it is important to secure buy-in for all the measures and ensure that they are all properly implemented. It is also important to listen to the industry when making the laws that relate directly to it. When we give power to its regulator in such a way, it is vital that there is, as I said, complete buy-in. Indeed, I know a number of Members received numerous pieces of correspondence from different airlines. The latest to hit my inbox was from British Airways—not that I hope that by mentioning it I will get the black card for the invitation-only lounge, although I know that the other Deputy Speaker was very keen to receive that—[Interruption.] And, of course, he would have declared it, in any event. I mention that company because it is vital that the views of the big players in the industry are taken into account. I do not think I will ever be called to make another speech, so I am going to enjoy the next two minutes and fifty five seconds.

Too often, laws have been made and those directly affected by them have not had their views taken into account. Who is directly affected in this case? It is airlines and, most importantly, the consumers. That is why I welcome the emphasis.

I am also wary about the cost of regulation. Using the “polluter pays” principle, we are passing a huge amount of cost away from the taxpayer, which is a very good thing, to the people who use the businesses.

I welcome the theme that runs through the Bill of reducing Government intervention in the regulation of industry. I listened with great interest to the hon. Member for Bolton West (Julie Hilling), who was greatly concerned about the competitiveness of airports and passing down the costs. Past events show why it is important for the CAA to be able to respond, which is not something that many Members have been able to talk about because the Bill is so important and so big. The industry and the regulator must be able to respond in real time to emerging issues, such as the snow of last year and the ash cloud that we all remember from when we were campaigning in the 2010 general election. That is when I realised that the constituency I hoped to represent was relatively prosperous—when I went to villages in its northern part and found the people had all been stranded abroad because of the ash cloud. I am very pleased that the Bill emphasises the need to give the CAA the chance to respond quickly to the kind of awkward situation that we in the United Kingdom have not always been able to respond to properly before.

I conclude by broadly welcoming the Bill. I hope that, as my hon. Friend the Member for Thurrock (Jackie Doyle-Price) said, when we talk about transparency we will have the consumer fully in our minds, because we certainly see no transparency in the fares that the aviation industry sticks out there when we try to find a flight at the advertised fare without any extra costs. There should probably be a call at some point for proper transparency to mean that the fare advertised should be the full, final fare and not much else.

20:40

[Mark Reckless (Rochester and Strood) (Con)]

It is a pleasure to follow my hon. Friend the Member for Daventry (Chris Heaton-Harris), who told us about his courting days under the Heathrow flight path. I am sure that colleagues were delighted to hear that he still regularly returns to Heathrow with his now wife. It is not clear whether they do this on their anniversary or not, but it seems that a certain amount of shopping at Heathrow is involved.

I am also pleased to follow my hon. Friend the Member for Witham (Priti Patel), who put the case for Essex very well and looked strongly after the interests of her constituency and Essex more widely in her remarks about Stansted, the strong progress on expansion and the strong economic role being performed at Southend. I know that the councils for Southend, Thurrock, Medway, Kent and Essex are working together as a local economic partnership on sensible proposals on aviation and alternative options to the Thames estuary option, which was so ably dismissed by my hon. Friend the Member for Thurrock (Jackie Doyle-Price). The Secretary of State was not in her place at that time, but I have every confidence that the Under-Secretary of State for Transport, the hon. Member for Lewes (Norman Baker) will pass on those very strong arguments in private as strongly as he does in public. Let me also take this opportunity to thank the Secretary of State for the very strong support she has shown for our area by holding back the increase in the Dartford tolls and in what she has done on train regulation and fares.

The debate has been largely non-partisan. Indeed, the regulation of aviation has been a non-partisan and technical area on which both parties have worked closely with Whitehall going back all the way to 1967 when the Edwards committee first looked at aviation regulation. It took a full two years to report, in 1969, to the then Secretary of State Anthony Crosland, and the report led to a White Paper from the then Labour Government. With the new Conservative Government in 1970 came the Civil Aviation Bill, which followed through on that preparatory work. There are clear parallels between that work and the way we are working together on these issues now.

It is worth noting that when the CAA was set up it was a pathbreaker for other regulators. The then Minister for Trade, Michael Noble, said, on introducing the Bill, that the CAA would be a “constitutional innovation.” He went on:

“The key point perhaps is that we are in this Bill hiving off a regulatory function. Ministers remain responsible to Parliament for policy, but detailed decision rests with the Authority.”—[Official Report, 29 March 1971; Vol. 814, c. 1173.]

That was new then, but we have since seen the development of regulators in many different contexts. The challenge between ministerial and parliamentary responsibility and expert opinion remains with us today and is core to this Bill.

A very positive development, in contrast with what we saw in the late 1960s and early 1970s, was the fact that the Pilling review of the Civil Aviation Authority was brought about by elected colleagues on the Transport Committee rather than by ministerial decision. That report was published in July 2008 and was followed up by Labour Ministers in the previous Government in a statement to the House and then in a consultation paper. The fact that that all came as a result of the Select Committee is new and is very much to be welcomed. When the previous Government engendered the proposals, the then Minister noted that

“as now, the CAA will only be able to act where it is reasonable and proportionate and where it has legal power to act.”

However, the CAA responded:

“The DfT’s proposals build on many activities already undertaken by the CAA, but give them a clear statutory basis”.

The then Minister did not explicitly accept that the CAA had been operating beyond its statutory remit, but the Bill is long overdue, as it will bring clarity to what the CAA does, and make sure that that is Parliament’s intention.

[Steve Baker]

Does my hon. Friend share my slight concern that more flexible regulation may result in greater uncertainty in major capital investments in airports? Has he considered whether the CAA will be able to provide the stability that investors need?

[Mark Reckless]

Our right hon. Friend the Prime Minister set out three clear principles on quangos and cases in which they might be justified. Conservatives are strongly against unaccountable quangos, but the three scenarios that the Prime Minister set out were, first, a precise technical function that needed to be performed to fulfil a ministerial mandate; secondly, a requirement for politically impartial decisions on public money in particular circumstances; and, thirdly, cases in which the facts needed to be transparently determined. The CAA fulfils the need for a precise technical function to be performed to fulfil a ministerial mandate.

I welcome the Bill. Although, as my hon. Friend the Member for Wycombe (Steve Baker) said, it provides more flexibility, it engenders far greater clarity. To date—and we have given this to the CAA—the authority has had four different objectives, but there is a lack of clarity about their order, so, inevitably, it has great discretion in how it chooses to balance those potentially competing objectives.

In the Bill, under the single duty that the Government propose giving to the CAA for consumers and their interests, it is much clearer where the authority is going. Regulation, while more flexible, should none the less be more predictable to people in the industry and to other stakeholders. That is broadly welcome. The same applies to appeals. If anyone is dissatisfied with a CAA decision, the only recourse is simply judicial review and the application of Wednesbury principles as to whether the decision has been properly made. The appeal process in the Bill is much improved, because a specialist competition tribunal will be introduced, and it will look at the objectives that have been set for the CAA by Parliament. It will assess in an expert yet judicial way whether or not they have been properly met. Ministers are not persuaded that there should be a right of appeal for the Secretary of State on licence conditions, but when regulations are extended to price cap anew or to remove a price cap, the Secretary of State may have the right to appeal. It is not clear from the explanatory notes whether that reflects the EU dimension or whether Ministers genuinely believe that that is a positive measure.

The cap application is significant. Manchester was de-designated, and Ministers made that decision—a statutory order was made—but the principles behind that de-designation were not clear, making investment difficult in some circumstances for the aviation industry. If we have a clear parliamentary test of when a price cap is needed, that should provide greater clarity for industry participants.

It would be difficult to have an environmental objective and a consumer objective, then look to an independent regulator to balance the two. The right approach for the greenest Government ever is for Ministers to make those decisions and to set a clear framework, whether in taxation or planning, for industry. That is the best way to balance those objectives.

A key issue is flexibility, and flexibility in the price cap is particularly valuable. The CAA currently has an opportunity to set the price cap only once every five years, and when circumstances change the price regime can be left looking inappropriate, but nothing can be done about it. For example, the CAA’s decision notice, published in March 2008, states that

“at Heathrow, the CAA has built into the price caps contingent funding for the costs of developing further”—

during the five-year period—

“the option to expand the capacity of the airport.”

The House of Commons Library has confirmed that that was a reference to the potential third runway at Heathrow, which of course did not happen and—Ministers are very clear—will not happen. None the less, Heathrow is still to be regulated on the basis of an RPI plus 7.5% a year increase in the overall landing charge revenue, but there is no opportunity to review that in the light of the decision not to develop a third runway at Heathrow.

The shadow Secretary of State, if I heard her correctly, said that the Government have a blanket ban on expansion at airports in the south-east. I believe that that is quite wrong. Look at what Luton airport is doing through its road show and expansion in capacity or, as my hon. Friend the Member for Witham explained, what Southend airport is doing. Last week I met representatives of Birmingham airport, who talked about expanding by 25 million passenger movements, the vast bulk of which would relieve pressure in the south-east. At Gatwick a significant increase in capacity is planned, even before the second runway restriction runs out in 2019.

The key criterion is the benefit to consumers of the regulation. However, there is something about aviation regulation that makes it different from other regulation, because in the middle there are the airlines. Sometimes their interests are the same as the consumer’s, but other times they are not. The landing charge at Heathrow is perhaps only £16 a passenger, compared with £50 to £80 for “Boris island”, and £16 or thereabouts is really not expensive. Given the economic benefits of using Heathrow, a huge amount of the benefit accrues to the airlines that happen to have slots there. The regulation in those slots is imperfect and has developed over time, but were the regulator to increase charges at Heathrow, it is not immediately obvious to me, as an economist, whether that would be passed on to consumers in the usual way. To the extent that Heathrow is almost at capacity and landing charges are so low, despite the high value of a slot, an economic analysis suggests that lower restrictions on landing charges might lead to a lower slot price and greater flexibility for the efficient allocation of slots, rather than that necessarily being passed on to the consumer. How the CAA will regulate this is therefore an important area of principle to consider.

The chairman, deputy chairman and non-executive directors of the CAA will be appointed by the Secretary of State, which is very sensible. It is difficult to see why the Secretary of State would also want to appoint all the executives, let alone determine their precise remuneration. We want to ensure proper accountability to Parliament. Some colleagues have mentioned the National Audit Office. I understand that the chief executive would be signed off by the Secretary of State as well, although the nomination would be made by the non-executive directors. I also hope that we would have appropriate parliamentary scrutiny of those appointments.

I am grateful to colleagues on the Transport Committee for the work they have done on this. It is excellent that everyone is working together and I look forward to hearing the Minister’s comments. It is certainly a strong positive for the regulation of the sector in this country.

20:55

[Jim Fitzpatrick (Poplar and Limehouse) (Lab)]

It is a pleasure to follow the hon. Member for Rochester and Strood (Mark Reckless) in what has been an interesting debate with many informative contributions. As my hon. Friend the Member for Garston and Halewood (Maria Eagle) said in her opening remarks, however, the Bill’s arrival is something of a surprise and seems to have more to do with the lack of Government business than with anything else. It is timely none the less, and we welcome it and look forward to it reaching Committee.

The Select Committee on Transport has, with its report published on 19 January, furnished us with a good start on the Bill, and the four proposed evidence sessions should mean that we are better informed when the Public Bill Committee begins its work in earnest. As we heard from its Chairman, my hon. Friend the Member for Liverpool, Riverside (Mrs Ellman), the Committee has made 12 different recommendations in its report and several other important points, and I am sure that the Bill Committee will want to see all those addressed, as well as the other points in the report which were not recommendations. They will be combined with the Library paper, the Department for Transport’s impact assessment, the explanatory notes, the Bill itself and the personal briefing last week from the Transport Minister of State and her officials, for which we were grateful. As my hon. Friend the Member for Garston and Halewood and others have said, we Opposition Members send our best wishes to the right hon. Member for Chipping Barnet (Mrs Villiers) for a successful operation and a speedy recovery. I am sure that the Under-Secretary of State for Transport, the hon. Member for Lewes (Norman Baker), also wishes to see her back in her place before Committee—otherwise he will be an aviation expert sooner than he might have suspected.

[Justine Greening]

I can report to the House that the Minister of State is watching the BBC Parliament channel in hospital at this very moment, so I am sure that she is following matters from afar.

[Jim Fitzpatrick]

I am sure that the House is grateful for that update and good news from the Secretary of State.

As I was about to say, we have a good idea about those aspects of the Bill that we will want to look at in particular, given all the background information, briefings and papers with which we have been supplied.

There have obviously been numerous briefings from industry stakeholders, community groups and others, mostly welcoming the Bill in general but asking for specific issues to be raised, and we will do our best to examine them; some we will be able to support, but all we will wish to look at more closely.

My hon. Friend spelt out several issues in some detail. There is a broad welcome for the general reform of the CAA and its role, but questions will need to be addressed about security, environmental duty, passenger welfare and protection, NATS and the role of the National Audit Office. As she said, we have interests in all those areas. She outlined our concern about security and the need for assurances that the proposed new arrangements will be able to respond quickly to events, and on the quality and experience of the staff who will have to be either transferred or recruited. There are also the questions of costs and ultimate decision making.

On the environment, there is a clear change of policy from that of the previous Government. The Transport Committee explored the issue with the Minister of State, and we will wish to return to it because, notwithstanding the fact that many airports are good neighbours to nearby residents, we want best practice to be adopted at all airports. It appears to us that a duty would have been the best way forward.

The passenger as customer needs to be assured that their position is protected at the airport and against companies failing, so we, like many hon. Members, welcome the ATOL changes. As my hon. Friend graphically recalled, however, her experience in the snow last year with the former Secretary of State was not a happy one for her, for him or, most importantly, for the passengers who were stranded, so we want safeguards against such situations. Passengers deserve the best protection against failure, but we recognise that airports are at the mercy of other forces outside their control.

The question about the role of airlines and secondary duties, which the Transport Committee raised, seems to be addressed in the Bill but warrants consideration, as do the various competition structures and appeal mechanisms outlined in the Bill and its schedules.

My hon. Friend raised several other issues, which the Bill Committee will I am sure be keen to discuss with Ministers, including how the aviation consumer advocacy panel will work, the lack of detail on the requirements to publish passenger welfare plans, the performance of the UK Border Agency and baggage handling, to mention just a few.

The Secretary of State opened the debate and clearly outlined the measures in the Bill: the greater accountability in the CAA reforms, the transfer of security and the extension of ATOL. I have mentioned the points that my hon. Friend the Member for Garston and Halewood made in reply. She welcomed the Bill but expressed the hope that we would improve it in Committee. She commended the Transport Committee, but expressed concern about the time it had been given to do its work. As I have mentioned, she covered comprehensively our concerns, especially on the security provisions.

The hon. Member for Crawley (Henry Smith), whose constituency covers Gatwick, is knowledgeable on aviation matters. He raised several relevant questions, including over the possible break-up of airports and the role of the CAA.

My hon. Friend the Member for Liverpool, Riverside, the Chair of the Transport Committee, made a useful and insightful contribution, in which she referred to a number of concerns that the Select Committee had registered. As I and other hon. Members have said, we will consider those concerns in the Public Bill Committee.

The hon. Member for Finchley and Golders Green (Mike Freer), who apologised that he would not be here for the winding-up speeches, spoke up for business travellers. He and my hon. Friend the Member for Garston and Halewood raised important questions about the UK Border Agency. He also spoke about regulation and security.

My former ministerial colleague at the Department for Transport, my hon. Friend the Member for Glasgow South (Mr Harris), made the case for ministerial cars strongly. He expanded on the need for a vibrant aviation industry. He argued that aviation need not be and is not the enemy of the environment. He also made a powerful case about the capacity constraints at Heathrow.

The hon. Member for Spelthorne (Kwasi Kwarteng), who I do not think is in his place, confused the Chamber about his position on the third runway. He seemed to make points both for and against it. I wish him well in maintaining the ability to articulate opposite positions. He is in good company in this place. Perhaps he could send me a copy of his press release on his speech, as I am sure that it will be worth reading. He also made good points about the industry and the Bill.

My hon. Friend the Member for Sedgefield (Phil Wilson) and other hon. Members spoke about regional airports and asked about their role and capacity. He spoke specifically about the future of Durham Tees Valley airport and the impact of the value of Heathrow’s slots on UK aviation. He made a strong case for the continuance of his local airport, as did others. He has been lobbying on that issue for a considerable time.

The hon. Member for Cambridge (Dr Huppert) raised a number of issues that he wanted to be raised in Committee. I am sure that they will be. He apologised to the House and hoped that we would not be disappointed at his brevity. I assure him that we would never be disappointed at his brevity. I cannot imagine how he arrived at that conclusion.

My hon. Friend the Member for Luton South (Gavin Shuker) is another member of the Transport Committee and also has an airport close to his constituency. He drew on both aspects to raise some key points, including capacity.

The hon. Member for Congleton (Fiona Bruce) raised a number of issues about the extension of the ATOL scheme and its weaknesses at present.

My hon. Friend the Member for Bolton West (Julie Hilling) raised questions about timing, the level of scrutiny, the absence of an environmental duty in the Bill and security.

The hon. Member for Tamworth (Christopher Pincher) did not seem to accept that the Bill has arrived earlier than expected. Perhaps his ministerial colleagues could clarify that for him and reassure him, as did my hon. Friend the Member for Luton South. The hon. Gentleman raised European comparisons and the critical role that aviation plays in the economy.

My hon. Friend the Member for Edinburgh North and Leith (Mark Lazarowicz) raised the need for environmental progress. He spoke about the environmental progress that has been made and about the absence of such a duty in the Bill. He raised the BMI takeover, as did a number of other colleagues.

The hon. Member for Milton Keynes South (Iain Stewart), another member of the Transport Committee, gave us the benefit of his examination of the key issues. He confirmed that Milton Keynes neither has nor needs its own airport.

My hon. Friend the Member for Feltham and Heston (Seema Malhotra) made her maiden speech. It was warmly received on both sides of the House, as maiden speeches generally are. Her contribution demonstrated a confidence and self-assurance that I am sure will serve her constituents well in the years ahead. Her description of her constituency and of the significance of Heathrow underpinned the relevance of her contributing to this debate. I hope that her mention of various local media outlets will ensure that her speech is covered well. I would be very surprised if it was not. She undoubtedly has the prospect of a long and distinguished time in this place. I look forward to watching her progress in the years ahead.

The hon. Member for Folkestone and Hythe (Damian Collins) was generous in his praise of my hon. Friend’s maiden speech and made a number of points, particularly about how to reduce the environmental impact of stacking by increasing capacity rather than constraining it. I strongly recommend that he talks to his party’s Front Benchers to suggest that they take up the offer of cross-party talks made by my hon. Friend the Member for Garston and Halewood. His contribution was very thoughtful and covered the role of his local airports, and I agreed with much of what he said.

In contrast, I disagreed with many of the points made by my hon. Friend the Member for Luton North (Kelvin Hopkins), who is not in his place. He spoke briefly about security and his opposition to increased capacity, and argued for more regional airport usage. His local airport is already very successful, and he argued that it could do more.

I have to report that, as the hon. Member for Amber Valley (Nigel Mills) rose, the batteries in my hearing aids ran out, and sadly the spare batteries were also flat. Some would say that that was good timing, but that would be very cruel. He is very softly spoken even with the amplification at the back of the Benches, but he spoke of the need, or rather lack of it, for regulated competition and of the five airports within 50 or 60 miles of his constituency. He raised questions about the ATOL provisions which I am sure will be asked in Committee, whether he is with us or not.

The hon. Member for Stockton South (James Wharton) mentioned Durham Tees Valley airport and powerfully supported my hon. Friend the Member for Sedgefield in the cross-party campaign for it to maintain its position. He was generous to my hon. Friend the Member for Feltham and Heston; in fact, I believe he was the first Conservative Back Bencher to own up to having been a recent visitor to Feltham and Heston. A number of colleagues repeated that afterwards.

The hon. Member for Thurrock (Jackie Doyle-Price) argued for less regulation and more market influence, and consequently a better deal for the passenger, but she also called for clarity in decision making and for a more mature debate—something that Labour has been offering and would very much like to take place.

The hon. Member for Witham (Priti Patel), another visitor to and admirer of Feltham and Heston and its new MP, accepted that she was making a number of points that had already been raised, but wanted to cover them again. She also raised the important point of investment in aviation across the globe and our falling behind our international competitors in developing our infrastructure.

The hon. Member for Daventry (Chris Heaton-Harris) explained how important aviation was to his constituency in particular, and agreed that the regulations covering the industry needed updating. He made a strong pitch for a British Airways business lounge pass, and I sure The Daily Telegraph will be very keen to report his progress. He might want to keep us all posted on how he gets on with that one.

The hon. Member for Rochester and Strood (Mark Reckless), who was the final Back-Bench speaker, raised the question of the fitness of the regulations for the 21st century.

As many Members have mentioned, the aerospace and aviation sectors are vital elements of the UK economy. Collectively, the industry is a major earner, manufacturer and exporter. Aviation’s role in connecting us with the rest of the world is key to growth, which has sadly been lacking in the Government’s economic performance since they came into office.

Aviation has made huge strides in addressing its environmental sustainability. At a recent aerospace reception here in the House, it was stated that the new A380 was 25% cleaner and quieter than its predecessors. In fact, it was said to be more fuel-efficient than a Toyota Prius. If someone drove it down the M4, they would not have to pay the London congestion charge.

Aviation is worth £11 billion to UK gross domestic product and employs 200,000 people directly and 600,000 indirectly. It is a critical industry, yet Government policy is in disarray. My hon. Friend the Member for Garston and Halewood offered cross-party talks to address the critical need for a national plan, and it is a very sad comment on the coalition that the Government did not respond positively. The offer still stands.

The CBI, London First, the British Chambers of Commerce, the TUC and industry stakeholders are seeking a plan—a strategy to map out how aviation will develop and contribute to our economic recovery. They will clearly have to wait for that, for as my hon. Friend pointed out, “better not bigger” is a slogan, not a policy. At least we have the Bill.

[Dr Huppert]

The shadow Secretary of State promised me some ideas in her speech. Has the hon. Gentleman had a chance to ask her what they are? If so, could he tell us, because she failed singularly to come up with any?

[Jim Fitzpatrick]

The hon. Gentleman was not listening. My hon. Friend held out the prospect of cross-party talks to see whether there is a way forward to develop a national plan. Labour proposed a third runway at Heathrow but lost the election. We recognise that it would be unrealistic to continue with that proposal. To demonstrate that there were no preconditions to cross-party talks, she said we are dropping the plan for the third runway, so let us talk about options, and about how we increase capacity and whether we need to do so.

As the treasurer of the all-party group on road passenger transport, my hon. Friend the Member for Central Ayrshire(Mr Donohoe) asked whether Northolt was the answer. Is the answer the Thames estuary, which has been raised by a number of colleagues, including the Mayor of London? Is it Gatwick? The Opposition, supported by industry, say that there is a capacity issue in the south-east that needs to be addressed. It is all well and good if we come up with a consensus, but let us sit down and talk about it. That is the invitation from my hon. Friend the Member for Garston and Halewood.

As I said, at least we have the Bill. We look forward to the Public Bill Committee and engaging with the Government to improve the Bill. We are happy to support it on Second Reading, and I look forward to the Minister’s reply.

21:11

[The Parliamentary Under-Secretary of State for Transport (Norman Baker)]

I welcome the kind comments from Members on both sides of the House in respect of my right hon. Friend the Minister for Transport—she is indeed my friend. If she is watching, she ought not to bother but get some rest.

I congratulate the hon. Member for Feltham and Heston (Seema Malhotra) on an excellent maiden speech, which the House enjoyed. She will be a powerful addition to the House in the years ahead.

I welcome the many constructive comments in the debate, and I am particularly grateful to the Transport Committee for expediting the process of pre-legislative scrutiny when this earlier slot became available for the Bill. The Committee found that both airlines and airports welcome the Bill.

The Bill process has been going on a very long time, as Opposition Members will know only too well. I accept that it would have been ideal to have slightly more time for scrutiny but, on the other hand, in the aviation industry if a slot becomes available, we must take it. It would not have served customers, passengers or the industry well to have let that slip while a number of months went by, because there is a great deal of Government business to fit in.

My right hon. Friend and I welcome the Transport Committee’s response and look forward to the comments of members of the Public Bill Committee. We will listen carefully to members on both sides of that Committee.

Many hon. Members have made the case for the continuing importance of our aviation sector. We have a vital, dynamic aviation industry. The continuing success of that industry is essential to our economic growth. Our reforms have been designed to allow competition to flourish and for our industry to innovate and thrive.

I shall do my best to respond to the many points made in the debate. A number of hon. Members spoke up for their local and regional airports, including Luton airport and Teesside—or is it Durham and Tees Valley?—airport. The hon. Member for Sedgefield (Phil Wilson) asked for a meeting about his particular situation. I am sure my right hon. Friend the Minister of State will be very pleased to see him and other hon. Members on a cross-party basis to discuss that situation when she is back in the saddle.

As the Secretary of State made clear in her opening remarks, most airports in this country are competitive and look after their passengers. Our reforms are designed to protect the interests of passengers, particularly at the small number of airports such as Heathrow that have substantial market power. For all other airports, the main change introduced by the Bill is that the CAA will be able to bring its expertise to the investigation and remedy of anti-competitive behaviour by having concurrent powers with the Office of Fair Trading.

The Bill replaces an inflexible, one-size-fits-all approach based on five-year price controls with a flexible regime under which regulation can be tailored to individual airports’ circumstances so that the CAA can reduce the scope of economic regulation while retaining essential protection for passengers.

At the heart of the new proposals is a single, clear, primary duty to further the interests of end users—passengers and freight owners, now and in the future. The passenger is centre stage. This will enable the CAA to undertake enforcement action in real time when this becomes necessary. The Chair of the Transport Committee, and the Committee’s report, asks whether we might have greater clarity in the Bill’s definition of users of air transport services and suggested the phrase

“passengers and shippers of cargo, both present and future.”

I draw to her attention clause 69, which defines air transport service as

“a service for the carriage by air of passengers or cargo to or from an airport in the United Kingdom”.

Users of air transport services are persons present and future who are or will be passengers carried by such services, and persons with a right in property carried by such services. This will not cover shippers of cargo, unless they have a right in property in that cargo, because we think it is more important to protect the interests of the owners of cargo, rather than the shippers—again, putting the customer at centre stage. I hope that the Chair of the Select Committee will recognise that the clarification she seeks is in that clause.

[Dr William McCrea (South Antrim) (DUP)]

I have the Belfast International airport in my constituency. Under this Bill, can the Minister assure me that Northern Ireland will soon have a proper aviation strategy, as that is essential for my constituency?

[Norman Baker]

I am happy to advise the hon. Gentleman that the Department for Transport is producing a comprehensive aviation strategy, which according to the Department’s business plan will be published in March. He will be able to look at that and see whether it deals with the Northern Ireland situation in which he is clearly interested.

The shadow Secretary of State referred to the issue of future passengers, as against present passengers. I recognise that that is an issue, and clause 1(5) empowers the CAA to determine how to fulfil its primary duty to promote the interests of users when conflicts arise. This is in line with affording requisite discretion to the regulator and taking politics out of regulation. In other words, it would not be helpful for the case the hon. Lady makes to be more specific about the CAA’s powers than the Bill currently is.

One or two hon. Members asked why the airline consultation supplementary duty has been dropped. Stakeholders, including airlines should be consulted by the CAA when it carries out its economic regulatory functions. There is an obligation to consult bodies representing airlines on licence conditions, licence modifications and penalties. Any airline is free to make representations, and we do not believe that the CAA would ignore any relevant representation. Furthermore, whenever a conflict arises between passengers’ interest and those of airlines, the CAA will be bound to act in passengers’ interests, given the primary duty in the Bill. A further secondary duty would not affect that position, which is why we came to that conclusion.

The shadow Secretary of State also asked about resilience. The implication of her comments was that since the former Secretary of State for Transport—with her, it appears—was out at Heathrow, nothing has happened, but nothing could be further from the truth. There have been extensive discussions between the Department and the owners and operators at Heathrow about winter resilience. This winter, I am happy to say that the major airports in London are much better prepared than they were last year. But when the CAA proposes full airport licences, it will of course be required to consult on the content of licences and any subsequent changes to them. It will have to take into account any representations during those consultations when setting conditions, and we will require it to include welfare plans if those are in current and future passengers’ interests. I hope that that gives the hon. Lady the satisfaction she was seeking on that point.

Several hon. Members referred, rightly, to the welcome proposals in the Bill on ATOL, especially my hon. Friend the Member for Cambridge (Dr Huppert). He wanted an assurance that consumers would know when a holiday was ATOL-protected, and I can assure him that that is a key objective of the Government in the changes we are proposing. We are also interested, of course, in the Transport Committee’s deliberations on this important issue.

The hon. Member for Amber Valley (Nigel Mills) asked whether the Ryanair holiday model would be covered by the ATOL reforms. The intention is to ensure as far as possible that any holiday booked with a flight is covered by the changes. The hon. Members for Bolton West (Julie Hilling) and for Congleton (Fiona Bruce) also raised issues relating to ATOL reform. I confirm that we consulted over the summer on proposals to improve clarity for consumers about the ATOL scheme’s coverage. I agree fully that the current situation can be unclear and misleading for consumers, which is why action is needed as soon as possible.

We propose to expand the ATOL scheme to include flight-plus holidays that work like packages but lie outside the narrow legal definition. We also propose that an ATOL certificate should be issued whenever consumers purchase an ATOL-protected flight or holiday, as a further means of providing clarity. We aim to announce a decision shortly on the reforms, which can be implemented by new regulations under existing powers. We are taking steps forward on that. The holiday industry has made strong representations that it is no longer clear whether holidays are ATOL-protected. As I said, we think we can deal with that problem by allowing for the addition of more flight-based holidays.

In her introductory comments, the Chair of the Select Committee referred to impact assessments. The Transport Committee stated that

“licence conditions, and their associated costs to airports, may not be proportionate to the benefits delivered”,

and that was the thrust of her point. Ultimately, where costs are associated with licence conditions, users of air transport services will pay those costs. Where the costs of a proposed licence condition are seen to outweigh the benefits to passengers, it will not be in passengers’ interests to impose the condition, so the CAA’s primary duty would not be met if it did so.

The Bill requires the CAA to consult on proposed licence conditions and states that a licence may not include conditions that differ significantly from those on which it has already consulted. It must set out the reasons for conditions included in the licence, how it has taken into account any representations made, and the reasons for any differences from the conditions initially proposed. I think that that makes the case for the approach that we are taking. The fact that putting the passenger centre stage is the CAA’s primary duty will we hope give the hon. Lady the reassurance that she rightly seeks. I will come to security issues in a moment.

The shadow Secretary of State referred to vexatious appeals. I do not think that they are likely to occur. The Government’s proposed regime has features to deter frivolous or vexatious appeals. In particular, in most cases the appeal will not suspend the licence condition’s coming into effect, although the appeal body will have the power to impose interim relief under circumstances. There is therefore limited incentive to appeal for the purpose of delaying the decision.

The shadow Secretary of State also referred to the consumer panel. We believe that it is a useful innovation in the Bill. As she might know, the successor body to the Air Transport Users Council is being consulted on. It was announced on 18 January this year. The CAA will set up the CAA consumer panel as soon as possible and will immediately seek a suitable chair.

Environmental issues were raised by several Members, including my hon. Friend the Member for Cambridge, who was concerned, as were some Opposition Members, about the absence from the Bill of an environmental duty. The matter has been considered carefully. One reason why the Bill does not include such a duty at the moment, although the Government fully accept the need to take the environment into account in aviation, as everywhere else, is that it is thought that economic regulation is not the appropriate vehicle for doing so, not least because it enables the CAA to address only airports with substantial market power and only where regulatory intervention is warranted. That currently includes only three airports, but environmental externalities are present at a wider range of airports and need to be factored in. That is why the Government decided to proceed by placing on the CAA an information and publication duty that is considered to be more concrete and of more practical benefit to the public than the previously proposed environmental objective. The CAA is under an obligation to publish such information and can also issue advice and guidance to airport operators.

[Dr Huppert]

I hear what my hon. Friend says. He is correct that information is helpful and that all airports have a role to play, but will he consider more carefully whether it would be a good idea to put that environmental duty in the Bill so that as many steps as possible can be taken to protect the environment?

[Norman Baker]

My hon. Friend makes a point that others have made. If he or others want to pursue it in Committee, they will need to demonstrate that there is information that needs to be provided or actions that need to be taken that would not be provided or taken under the regime in the Bill. If he can demonstrate that, I am sure that Ministers will have an open mind.

The hon. Member for Milton Keynes South (Iain Stewart) made an interesting point about the CAA’s new consumer panel, suggesting that it could help the CAA to decide how to use those powers and what information to collect. That sounds like a good idea, and we will encourage the CAA to consider it. I am grateful to him for his suggestion.

Members on both sides of the House mentioned the National Audit Office. The NAO’s role is to scrutinise public spending on behalf of Parliament, but the income that the CAA derives from the industry is not public spending, as Parliament recognised when it removed the NAO’s role in 1984. The issue of the CAA’s auditors was considered by Sir Joseph Pilling, as my right hon. Friend the Secretary of State mentioned, as part of his 2008 strategic review of the authority. He concluded that there was no need for the NAO to be involved directly with the CAA.

Many other points were raised in the debate, but I am conscious that I have taken much longer than the shadow Minister. I therefore do not have time to deal with the issue of the smalls raised by my hon. Friend the Member for Daventry (Chris Heaton-Harris)—he went on at some length about that—but I can assure Members that all comments will be taken onboard. If I have not answered any questions, I will ensure that a letter is sent from the Department.

I think that this is a useful Bill. I am grateful for the support of Members from across the House, and I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time.

Civil Aviation Bill (Programme)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Civil Aviation Bill:

Committal

1. The Bill shall be committed to a Public Bill Committee.

Proceedings in Public Bill Committee

2. Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Thursday 15 March 2012.

3. The Public Bill Committee shall have leave to sit twice on the first day on which it meets.

Consideration and Third Reading

4. Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.

5. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.

6. Standing Order No. 83B (Programming committees) shall not apply to proceedings on consideration and Third Reading.

Other proceedings

7. Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or on any further messages from the Lords) may be programmed.—(James Duddridge.)

Question agreed to.

Civil Aviation Bill (Money)

Queen’s recommendation signified.

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Civil Aviation Bill, it is expedient to authorise—

(1) the payment out of money provided by Parliament of any increase attributable to the Act in the sums payable under any other Act out of money so provided, and

(2) the payment of sums into the Consolidated Fund.—(James Duddridge.)

Question agreed to.

CIVIL AVIATION BILL (CARRY-OVER)

Motion made, and Question put forthwith (Standing Order No. 80A(1)(a)),

That if, at the conclusion of this Session of Parliament, proceedings on the Civil Aviation Bill have not been completed, they shall be resumed in the next Session.—(James Duddridge.)

Question agreed to.

Business without Debate

Monday 30th January 2012 Commons Chamber

PRIVACY AND INJUNCTIONS (JOINT COMMITTEE)

Resolved,

That this House concurs with the Lords Message of 25 January 2012 and that, notwithstanding the Resolution of this House of 14 July 2011, it be an instruction to the Joint Committee on Privacy and Injunctions that it should report by 15 March 2012.— (Mr Heath.)

FINANCE AND SERVICES

Ordered,

That Jonathan Reynolds be discharged from the Finance and Services Committee and Mr George Howarth be added.—(Geoffrey Clifton-Brown, on behalf of the Committee of Selection.)

Lidice Massacre

Monday 30th January 2012 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(James Duddridge.)

21:28

[Robert Flello (Stoke-on-Trent South) (Lab)]

Thank you, Mr Deputy Speaker, for giving me the opportunity to speak this evening about the Lidice massacre and the events that followed, which demonstrate that amidst even the worst evil something good can flourish. No one in the House will need reminding that last Friday was Holocaust memorial day, which marks the day 67 years ago when Auschwitz-Birkenau was liberated by Soviet troops and reminds us all of the atrocities committed by the Nazis.

We will never fully understand or come to terms with extermination on such a scale just a few generations ago, but thanks to the Holocaust Educational Trust and the many other organisations that work to tackle hatred and discrimination, I hope that we might go some way to preventing it from happening again, at least on such a scale. May I therefore take this opportunity to put on record my appreciation for those organisations and pay tribute to the Holocaust Educational Trust and others for their work?

Lidice is a village in the Czech Republic about 20 km west of Prague. The events that I will speak about in a moment were triggered on 27 May 1942 by the assassination of the Nazi Lieutenant-General and Deputy Reich-Protector of Bohemia and Moravia, Reinhard Heydrich, who is said to have been a close friend of Hitler. As Heydrich travelled through Prague, two Czech parachute agents carried out an attack on his transport vehicles. Although he was not mortally wounded by the blast, the attack led to an infection that killed him on 4 June 1942. Hitler is said to have been wild with rage, and wanted to make an example of the Czech people. He ordered the arrest and execution of thousands of Czechs and sanctioned the destruction of Lidice.

On 10 June 1942, just six days after Heydrich’s death, Nazi troops moved into the village of Lidice and rounded up all 173 of the men who were over 16 years of age. By the afternoon, all of them had been executed. The 203 women of the village were rounded up and, after the forced abortion of four pregnant women, were transported to various concentration camps. It is believed that three women died on the death march, and 49 women were subsequently tortured to death. A total of 105 children were separated from their mothers. On 2 July 1942, 82 of those children were gassed at Chelmno extermination camp on the orders of Eichmann. Only 17 of those 105 children survived the war. The village of Lidice was set on fire and the remains destroyed, so that no evidence of Lidice having ever existed could be found, albeit with the entire murderous attack being filmed by the SS.

[Dr Hywel Francis (Aberavon) (Lab)]

I warmly congratulate my hon. Friend on securing this Adjournment debate so near to Holocaust memorial day. I visited Lidice in 2007, along with my hon. Friend the Member for Swansea East (Mrs James), where we saw, not only at the memorial garden but in the museum, a film called “The Silent Village”, which depicts what happened. It was made in 1943, as a result of the remarkable co-operation between the South Wales Miners Federation and the Government’s Crown Film Unit. The film tells the story that my hon. Friend is now outlining. I use it for teaching purposes, to tell the story of what happened all over Europe in the 1930s and 1940s. Would my hon. Friend commend that film for educational purposes today?

[Robert Flello]

I am grateful to my hon. Friend for his intervention, because “The Silent Village” is indeed an extremely powerful film and I would recommend that it be viewed.

In all, only 170 of Lidice’s population of around 510 people survived the war. Similar reprisals were carried out across a large area of what was Czechoslovakia. It is estimated that in total around 1,300 people were killed. However, unlike with other Nazi murders, there was no attempt to hide what had taken place.

Almost as soon as the news reached Britain, Barnett Stross, a doctor and city councillor in Stoke-on-Trent, enlisted the help of local coal miners. Together they set to work on founding the “Lidice Shall Live” movement, a name created by Stross in response to Adolf Hitler’s order that “Lidice shall die for ever”. Stross invited the Czech President, the Soviet ambassador and the president of the miners federation to a launch event, which was attended by around 3,000 people. In the months ahead, donations were collected from miners and other workers to rebuild Lidice. In Barnett Stross’s words:

“The miner’s lamp dispels the shadows on the coalface. It can also send a ray of light across the sea to those who struggle in darkness”.

The link between Lidice and Stoke-on-Trent carried on after the war ended, with Barnett Stross elected in 1945 as Member of Parliament for the area now largely represented by my hon. Friend the Member for Stoke-on-Trent Central (Tristram Hunt), although parts are also in my constituency and that of my hon. Friend the Member for Stoke-on-Trent North (Joan Walley).

[Tristram Hunt (Stoke-on-Trent Central) (Lab)]

I congratulate my hon. Friend on securing this important debate and on representing the views of his constituents in Fenton and elsewhere. I agree with him about the heroic role played by Sir Barnett Stross. Does he agree that it is hugely important that Stoke-on-Trent pupils understand the heroic part that the city played in world war two, not only because of Sir Reginald Mitchell, who designed the Spitfire, but because of this story of internationalism and solidarity in a city that has, unfortunately, in the past been plagued by fascism and the British National party. This is a story of hope.

[Robert Flello]

I agree with my hon. Friend. Stoke-on-Trent is a city that has much to offer and fantastic potential. We need only to look back at its history and at the wonderful things that its people have achieved to see that its future is assured. It can rightly be proud of the positive things that it has done, although it needs to learn lessons about some of the negative things that have plagued it in recent years.

In 1947, Lidice began to be rebuilt, with the help of the £32,000 raised by people from the potteries. That is the equivalent of about £1 million in today’s money, which is not a bad feat for an impoverished community in north Staffordshire. In 1955, Barnett Stross led an initiative to construct the world’s largest rose garden, with 23,000 roses donated by numerous countries around the world. The rose garden formed a bridge between the site of the old Lidice and the new Lidice. In 1966, Barnett Stross initiated the new Lidice art collection.

Stross made numerous visits to the rebuilt Lidice, ultimately being awarded the highest state award possible by the Czechoslovak Government, as well as a British knighthood in 1964. Sadly, as we approach the 70th anniversary of the Lidice massacre, the events of June 1942 and the links between Stoke-on-Trent and Lidice have been largely forgotten. Unfortunately, few of my constituents were aware of the “Lidice Shall Live” campaign, or of the critical role that the people of their city played in helping the surviving residents of Lidice to return to their newly rebuilt village.

I am therefore delighted that, following initial work by Alan and Cheryl Gerard, a group of my constituents, businesses and councillors have come together to ensure that the tale of Lidice will live on. On Friday, the “Let Lidice Live” campaign was launched in Stoke-on-Trent, involving a partnership between that group, Staffordshire university and Stoke-on-Trent city council. Through the formalisation of links between Stoke-on-Trent and Lidice, a series of events to mark the 70th anniversary in both countries, and the continuation of the highly successful international children’s exhibition of fine arts, the campaign seeks to ensure that the story of the massacre, and of the heroic response, will live on, not just this year, but for years to come. It is worth noting that the children’s exhibition of fine arts, which was established in 1967 as a national event, became an international one in 1973 and has gone on to become well known among children and teachers, not only in the UK but all over the world.

[Dr Francis]

On the theme of art, education and internationalism, is my hon. Friend aware of the work of the Josef Herman Trust? The film, “The Silent Village”, was made in the village of Cwmgiedd, near Ystradgynlais in the Swansea valley. Josef Herman was a Polish artist who came to Ystradgynlais fleeing anti-Semitism in the late 1930s. Today, the secretary of the trust is one of the children who played a part in the film. I pay tribute to Betty Rae Watkins, who is now encouraging children to become engaged in art and, through that, to learn about the holocaust and about one of its survivors, the great Polish artist, Josef Herman.

[Robert Flello]

I am grateful to my hon. Friend for putting on record the fantastic work that has been done there.

In recent years, about 20,000 very good works of art have come regularly from the Czech and Slovak Republics, and from 50 or 60 other countries, to the Lidice children’s exhibition of fine arts.

The 70th anniversary will be marked by a Lidice exhibition at the European Parliament in Brussels, and there will be two new documentaries about the events in 1942 and the surviving children. There will be a commemoration on the anniversary of the day of the massacre, which will be attended by the Czech president. The city of Stoke-on-Trent has a great programme of events to mark the anniversary, with more being planned.

As time goes by and we lose first-hand accounts of Nazi atrocities, it becomes all the more important to educate future generations about the consequences of intolerance and prejudice, and about the atrocities carried out during the second world war and, sadly, since. Events such as Holocaust memorial day provide a crucial focal point, but at times it feels as though the sheer scale of the slaughter in the second world war can be too horrifying to comprehend, and the individual stories risk being lost. Lidice provides an illuminating light amidst one of the darkest periods of human history, with the generosity of the British people and the defiance of the residents of the village ensuring that Lidice did indeed live.

Sadly, as we have seen in Bosnia, Rwanda and Darfur in just the last 20 years, we have not seen the end to genocide or a limit to the suffering that we as humans are willing to inflict on our fellow man. It is my belief therefore that it remains vital that we never forget what happened in places like Lidice, and I hope that the Minister will join me in paying tribute to those who seek to ensure that Lidice shall live.

21:40

[The Minister of State, Department for Education (Mr Nick Gibb)]

I begin by congratulating the hon. Member for Stoke-on-Trent South (Robert Flello)on securing this debate, on doing the House a huge service by reminding us of the true horror of what happened in Lidice in 1942 and on illuminating for us the links with Stoke-on-Trent and the huge sum of money raised from miners to rebuild the village. We heard about the 3,000 miners who attended the public meeting called by one of the hon. Gentleman’s predecessors, Sir Barnett Stross. It is good to be reminded of these important parts of our history and European history, and he has done that at an appropriate time, with last Friday being Holocaust memorial day.

Holocaust memorial day gives us the opportunity to remember the victims of this most evil of periods in the world’s history, along with subsequent victims of genocide—as the hon. Gentleman reminded us, such evil does not go away—and atrocities during the war, such as the terrible massacre at Lidice. It also gives us time to reflect on the lessons of the past: genocide does not occur overnight; it is a gradual process and begins when the differences between us are used as a reason to exclude or marginalise, leading to prejudice and hate. We need to learn the lessons of the holocaust, so that future generations do not repeat the mistakes of the past. That is why it is important that young people are taught about the holocaust—to ensure that prejudice and discrimination are not allowed to take root in our society.

The Government firmly support holocaust education, which is why we have allocated £1.8 million this year to promote young people’s understanding of this period of history. About £1.5 million of this funding is for the Holocaust Educational Trust’s Lessons from Auschwitz project, in which I understand the hon. Gentleman has participated. I add my tribute to his for the work of the trust.

The Lessons from Auschwitz project gives the opportunity for two sixth formers in every school in the country to visit Auschwitz-Birkenau to learn the lessons of the holocaust, but the course is more than just a one-day visit to the former concentration camp, as students take part in seminars and hear first hand from a holocaust survivor. They not only deepen their knowledge of the holocaust, but learn what can happen when prejudice and racism gain a foothold in society. So far, more than 8,000 students and more than 2,000 teachers have taken part in the project in England. Crucially, when those students return to school, they are expected to pass on what they have learned to their peers at school and to their communities.

Effective teacher training is also fundamental to teaching about the holocaust. The Government recognise this, which is why as part of our £1.8 million for holocaust education funding we have allocated £250,000 for the Institute of Education’s holocaust education development programme. This programme helps to ensure that teachers are equipped with the training and resources they need to deliver effective holocaust education. The Lidice massacre is included in the teaching materials for this programme.

To date, some 550 teachers have benefited from this professional development programme, with two full days of workshops and online activities. A further 2,000 teachers have benefited from other forms of professional development on the holocaust, while a pilot group of 36 teachers has completed the country’s first taught master’s module in holocaust education. The level of teaching expertise in England’s schools on the holocaust is now higher than ever before—a welcome fact.

As the hon. Gentleman may know, the second world war and the holocaust are compulsory parts of the history curriculum at key stage 3. Schools can teach pupils about the Lidice massacre as part of their history curriculum, but they are free to design their own curriculums that will best meet the needs of their pupils. I hope we can all agree about the fundamental need for a greater emphasis on knowledge and content in the current national school curriculum, which was our reason for launching a review of the curriculum.

[Dr Julian Lewis (New Forest East) (Con)]

I thank the Minister for giving me an opportunity not only to express my admiration for the hon. Member for Stoke-on-Trent South (Robert Flello) for raising this subject, but to mention that I was at school myself when I read a remarkable book called “Seven Men at Daybreak” by Alan Burgess. It told the story of the seven Czech and Slovak parachutists who assassinated Heydrich, and, at the end, what happened to Lidice afterwards. I do not know what the copyright position is now, given that the book was written so long ago, but I think that, in the context of the educational project that both the hon. Gentleman and the Minister have in mind, a reprint of that book would probably have as profound an effect on the schoolchildren of the 21st century as it had on me some 40 or 50 years ago.

[Mr Gibb]

I am grateful to my hon. Friend for bringing his own personal history, and that book, to the attention of the House. I shall look into what he has said.

The new national curriculum will be based on a body of essential knowledge that children should be expected to acquire in key subjects during their school careers. It will embody, for all children, their cultural and scientific inheritance, will enhance their understanding of the world around them, and will expose them to the best that has been thought and written.

Our commitment to the importance of history is clear from its inclusion in the English baccalaureate. The national curriculum review will consider the extent to which history should be compulsory, and at which key stages. We are considering the recommendations of the expert panel, and will also listen to the views of others before making final decisions. If we conclude that history should remain a national curriculum subject, we will expect the programme of study to continue to include teaching about the second world war and the holocaust. Every young person needs to understand it, along with the lessons that it teaches and how it shaped the modern world.

It is of concern that some subjects, such as history, have been less popular choices at GCSE in recent years. For example, in 1995 more than 223,000 students, representing nearly 40% of pupils in schools, were taking history GCSE. By 2010 the figure had dropped by over 25,000, and only 31% of pupils—just under a third—are now taking the subject. The Government want to encourage more children to take up history beyond the age of 14. We introduced the English baccalaureate—which recognises the work of pupils who achieve a GCSE grade between A* and C GCSE in history or geography, as well as maths, English, science and a language—to encourage a more widespread take-up of a core of subjects that provide a sound basis for academic progress. The baccalaureate has already had a significant impact on the take-up of history. According to an independent survey of nearly 700 schools, 39% of pupils sitting GCSEs in 2013 will be taking history. That represents a rise of eight percentage points, and a return to the 1995 level. If more children study history for longer, that can only be a good thing, as it will give them a good grasp of the narrative of history.

[Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)]

I, too, congratulate my hon. Friend the Member for Stoke-on-Trent South (Robert Flello) on securing the debate. Does the Minister agree that it is all-important for pupils to hear the personal testimony of holocaust survivors, and that everything possible should be done to preserve that testimony even when survivors are no longer with us in person?

[Mr Gibb]

Of course I agree with the hon. Lady. That is why the visits to Auschwitz are so important. As part of those visits, pupils will meet a survivor. As she points out, however, as time passes fewer survivors will remain alive, so we need to do all that we can to record their experience. That is important, because it dispels and puts to rest the views of those who seek to say that these things did not occur, and provides a helpful personal history to record the events of the holocaust.

I hope that the hon. Member for Stoke-on-Trent South, and indeed all Members, agree that the Government’s continued commitment to holocaust education will ensure that future generations learn the important lessons of the holocaust and that no one in the country, or indeed the world, forgets the evil events of that awful period of world history.

Question put and agreed to.

21:49

House adjourned.

Petition

Monday 30th January 2012 Petitions

Monday 30 January 2012

NHS Services in Blackpool South

Monday 30th January 2012 Petitions

The Petition of residents of Blackpool South,

Declares that the Petitioners are concerned that the Government’s Health and Social Care Bill, with its proposed changes to the NHS, will adversely affect NHS services for residents across Blackpool South.

The Petitioners therefore request that the House of Commons urges the Government to amend the Health and Social Care Bill so as to secure existing levels of funding and service provision for NHS patients in Blackpool South.

And the Petitioners remain, etc.—[Presented by Mr Gordon Marsden, Official Report, 19 December 2011; Vol. 537, c. 1168.]

[P000994]

Observations from the Secretary of State for the Health Department:

The Government remain committed to ensuring that the funding for NHS services grows in real terms in each year of this Parliament. The Government have introduced the Health and Social Care Bill precisely to ensure that existing resources within the NHS are used better, with decisions being made by clinicians and their patients.

The decisions as to how resources are spent locally to provide services is, however, a matter for the local NHS, and my Department will bring the concerns raised in this petition to the attention of the NHS in Blackpool.

Written Ministerial Statements

Monday 30th January 2012 Written Statements

Monday 30 January 2012

Foreign Affairs Council

Monday 30th January 2012 Written Statements

[The Minister for Europe (Mr David Lidington)]

The Foreign Affairs Council (FAC) was held on 23 January in Brussels. My right hon. Friend the Foreign Secretary and I attended.

The FAC was chaired by the High Representative of the European Union for Foreign Affairs and Security Policy, Baroness Ashton of Upholland. A provisional report of the meeting and all conclusions adopted can be found at:

http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/EN/foraff/127480.pdf

The agenda items covered were as follows:

Iran

Ministers agreed an extensive package of sanctions and accompanying conclusions (see link above) focusing on Iran’s nuclear programme. The measures adopted include a phased embargo on Iranian oil; freezing the Central Bank of Iran’s assets; and sanctions on the petrochemical sector, gold and precious metal and dual-use goods.

Following the meeting, the Foreign Secretary said:

“Today’s action demonstrates the EU’s growing concern about Iran’s nuclear programme, and our determination to increase peaceful, legitimate pressure on Iran to return to negotiations.

It is action made necessary by Iran’s defiance of six UN Security Council resolutions and its refusal to enter negotiations over its nuclear programme. Iran’s recent decision to commence 20% enrichment at its underground site at Qom shows that it continues to choose a path of provocation. This is an enrichment programme that has no plausible civilian use, in a site that the Iranian authorities hoped to keep secret.

We call again on Iran to answer the serious questions raised by the International Atomic Energy Agency, to adhere to UN Security Council Resolutions and to suspend its enrichment programme in accordance with them. Iran has it in its power to end sanctions by changing course and addressing the concerns of the international community. We are ready to talk at any point if Iran puts aside its preconditions. Today’s sanctions show how serious EU member states are about preventing nuclear proliferation and pressing Iran to return to the negotiating table. We will urge other nations across the world to implement similar measures and to increase the impact of the measures the EU has adopted”.

The Prime Minister made a statement on the Iranian sanctions with President Sarkozy and Chancellor Merkel on 23 January—see link below

http://www.number10.gov.uk/news/iran-sanctions/

The Foreign Secretary made a response to an urgent question on Iran in Parliament on 24 January—see link below.

http://www.publications.parliament.uk/pa/cm201212/cmhansrd/cm120124/debtext/120124-0001.htm#12012451000004

Burma

EU Ministers agreed conclusions (see link above) recognising the recent progress in Burma and suspending visa bans against the President, members of the Cabinet and speakers of the Houses of Parliament.

Drawing from his recent visit, the Foreign Secretary highlighted the changes in Burma as justifying these first steps towards enhancing the EU’s engagement with the country. He stressed that the EU should only make any further responses following progress against our benchmarks: the release of remaining political prisoners, free and fair by-elections on 1 April, and credible steps towards resolving ethnic conflict.

Syria

Ministers agreed an 11th round of restrictive measures against Syria, which listed a further 22 individuals and eight entities. Ministers also agreed conclusions (see link above) which included expressions of concern over the Syrian Government’s brutal crackdown, and a welcome for the Arab League’s initiative to seek United Nations Security Council support for a political solution.

Speaking after the meeting, the Foreign Secretary said:

“I welcome today’s EU agreement to an 11th round of EU sanctions on Syria, targeting 22 individuals and 8 entities supporting the Syrian regime’s appalling campaign of violence and repression against its own people.

The UK has been a driving force behind these EU sanctions, working closely with other EU states. The sanctions demonstrate that the international community will identify and hold to account those responsible for abuses. Anyone involved in supporting the regime’s repression should carefully consider their actions.

The UK supports the Arab League’s leadership in seeking to resolve the current crisis. We welcome its call for President Assad to leave power and allow a political transition. Assad’s brutal repression means he has lost all legitimacy and should step aside, opening the way to the freedom demanded by the Syrian people. We will continue to increase the pressure on the Syrian regime in support of this goal.”

Serbia / Kosovo

Discussion focused on a possible decision on Serbia’s candidate status at the General Affairs Council on 27 February. I argued that the award of candidate status should be based on progress against the conditions agreed by the December European Council, in particular on regional co-operation.

Middle East Peace Process

Conclusions were agreed (see link above) supporting talks in Jordan, encouraging the parties to remain engaged and pressing Israel on settlements.

I briefed on President Abbas’s visit to London of 16-17 January, where he had meetings with the Prime Minister, Deputy Prime Minister and the Foreign Secretary.

Egypt

Ministers had a brief exchange on Egypt. On 22 January (the day before the FAC), the Foreign Secretary spoke about the historic change and opportunity following the opening of the Egyptian Parliament:

“2011 was a year of historic change and opportunity for Egypt. The world was inspired by the courage of the Egyptian people in the revolution which began on 25 January, as they demonstrated for their dignity, their freedom and their rights. What has followed has been a time of great hope and optimism, but also anxiety and uncertainty. Much has been achieved, but challenges remain. The historic elections for the People’s Assembly, now almost complete, are an important step in building a prosperous and stable future for the new Egypt.

Britain will continue to be a close friend and strong partner to the Egyptian people as they consolidate the country's transition to democracy.”

Belarus

Ministers agreed to broaden the criteria for subjecting persons and entities to targeted sanctions. This paves the way for the EU to impose travel bans and asset freezes on those responsible for any serious human rights violations or the repression of civil society and the democratic opposition, and on those people or entities supporting or benefiting from the current regime.

Sudan and South Sudan

Ministers agreed conclusions (see link above) expressing concern about the deteriorating and unpredictable situation between both countries.

Speaking on 22 January, the Foreign Secretary commented:

“I am gravely concerned at reports that South Sudan intends to shut down its oil production, and at Sudan’s earlier decision to seize South Sudanese oil and prevent oil tankers from leaving its ports. Unilateral actions do nothing to further the prospects of the people of either country. I remind both governments of the statesmanship they showed last year in allowing the people of South Sudan to determine their own future. I call on them to show that same statesmanship now, by refraining from dangerous and destabilising actions of this sort, and by continuing to work with President Mbeki and the AU High Level Implementation Panel to negotiate a fair settlement.”

Somalia

I updated Ministers on the forthcoming London conference on Somalia, and committed to follow up at a future FAC.

Religious Freedom

Italy initiated a short discussion about how the EU might update its approach to human rights and freedom of religion and beliefs in the context the recent bombings in Nigeria.

Common Security and Defence Policy

EU Ministers adopted without discussion conclusions on the activation of the EU Operations Centre for the horn of Africa (see link above).

I will continue to update Parliament on future Foreign and General Affairs Councils.

Police Remuneration and Conditions

Monday 30th January 2012 Written Statements

[The Secretary of State for the Home Department (Mrs Theresa May)]

This statement is about police pay and pensions. It provides the Government’s response to the Police Arbitration Tribunal’s findings on the recommendations in the part 1 report of Tom Winsor’s “Independent Review of Police Officer and Staff Remuneration and Conditions” and the consultation on the proposed increase in pension contributions for police officers. Both issues have the potential to affect police officer remuneration and so the Government have considered them in the round.

On 30 March 2011 I laid a statement to respond to Tom Winsor’s part 1 report of the review of remuneration and conditions of service for police officers and staff. I announced that I was directing the Police Negotiating Board and the Police Advisory Board for England and Wales to consider proposals within their remits for police officers in England and Wales as a matter of urgency.

The Police Negotiating Board was not able to reach agreement on several important proposals, and these were referred to the Police Arbitration Tribunal. The tribunal has now provided its recommendation and reasons, which I received on 9 January. The tribunal considered 18 recommendations from the Winsor part 1 report. The tribunal accepted 10 recommendations, modified five and made no award on three. I have today placed a copy of the Police Arbitration Tribunal report in the House of Commons Library.

I am grateful to the tribunal for its comprehensive and balanced consideration of these important issues. I have now considered its report thoroughly. I have decided to accept its recommendation and am minded to implement the package of reforms it has put forward in full.

I have also decided to accept the recommendation of the Police Negotiating Board on those recommendations that it agreed in principle, which were not referred to the PAT.

These reforms represent an important first step in modernising police pay and conditions so that they are fair to officers and to taxpayers. They include redistributing pay to officers who work unsocial hours, abolishing ineffective post-related payments (SPPs), suspending some elements of time-served pay and improving managers’ ability to manage shift arrangements. However, as a Government we remain committed to further reform and to the principles set out in the Winsor part 1 report. The PAT recommended that a small number of recommendations should be deferred until part 2 has made longer-term recommendations on pay structures. We will consider these matters along with part 2, in light of the review’s principles. In particular, the link between pay and skills remains a key principle and will be an important part of our consideration.

We have the best police service in the world, and these reforms will support the police in maintaining and improving the service that they give the public. In particular, they will support the objectives I set out in the review’s terms of reference to:

use remuneration and conditions of service to maximise officer and staff deployment to front-line roles where their powers and skills are required;

provide remuneration and conditions of service that are fair to, and reasonable for, both the public taxpayer and police officers and staff;

enable modern management practices in line with practices elsewhere in the public sector and the wider economy.

In reaching this decision, I have had regard to a number of vital considerations, including:

the review’s three key objectives as set out above;

the absolute necessity to reduce the fiscal deficit inherited from the previous Government and the part the police service must play in this and the role that changes to pay and conditions can play in protecting police jobs;

the need to maintain and improve the service provided to the public, taking account of a strong desire from the public to see more police officers and operational staff out on the front line of local policing and also recognising that there are less visible front-line roles that require policing powers and skills in order to protect the public;

the particular front-line role and nature of the Office of Constable, including the lack of a right to strike;

the Government’s wider objectives for police reform, including the introduction of police and crime commissioners, the reduction of police bureaucracy and collaboration between police forces and with other public services;

the Government’s wider policy of pay and pensions in the public sector;

the review’s analysis of the value of officers’ remuneration and conditions, as compared to other work forces;

parallel work by the police service to improve value for money, including collaboration with the private sector;

the impact of the recommendations on equality and diversity.

The service must be able to benefit from these reforms as soon as possible. I will therefore begin the necessary action to amend the Police Regulations 2003 and issue determinations under them shortly.

These reforms will make short-term improvements to police remuneration and conditions. Part 2 of the review will look at longer-term reform and is due to be published shortly.

Increases to police officer pension contributions

Turning now to police officer pensions, the Government want to ensure that public sector workers continue to have access to pension schemes that are among the very best available. However, reform is inevitable because people are living longer. Costs have risen by one third over the last 10 years to £32 billion. That is more than we spend on police, prison and the courts. These costs have generally fallen to the taxpayer. This is unfair and unaffordable, so it is also fair that we should ask public sector workers, including police officers, to contribute a bit more towards their pension.

That is why on 29 July 2011, I wrote to members of the Police Negotiating Board asking that they consider a proposal to increase police officer pension contribution rates. I am grateful to members of the Police Negotiating Board for considering the proposal and for the responses they provided.

Having considered the points raised alongside the recommendation from the recent Police Arbitration Tribunal, I have decided to implement the first year of increases in line with the proposal put to the Police Negotiating Board. This proposal meets the Government’s objectives of protecting lower earners, asking higher earners to pay more and, by reducing the burden on those in the first two years of their career, minimising the rate of opt out.

The Government are committed to securing in full the savings announced at spending review 2010 from increases in employee pension contributions for the unfunded schemes for 2013-14 and 2014-15. I will ask the Police Negotiating Board to consider the proposed increases for these years in line with other public service schemes.

Again, I will begin the necessary action to amend the relevant regulations in order that the changes take effect in April of this year.

Turks and Caicos Islands (Progress Report)

Monday 30th January 2012 Written Statements

[The Minister of State, Department for International Development (Mr Alan Duncan)]

Further to the written statement of the Under-Secretary of State for Foreign and Commonwealth Affairs, my hon. Friend the Member for North West Norfolk (Mr Bellingham) of 9 December 2010, Official Report, columns 40-41WS, setting out milestones that Ministers judged would have to be met before elections could take place in the Turks and Caicos Islands (TCI), my hon. Friend and I wish to update the House.

The Department for International Development and the Foreign and Commonwealth Office currently jointly assess progress towards achieving the milestones to be the following:

Implementation of a new Turks and Caicos Islands constitution order, in support of recommendations of the commission of inquiry, which underpins good governance and sound public financial management.

A new constitution order was laid before Parliament in July 2011. In due course it will be brought into force by the Governor, after which elections must take place within 30 days.

Introduction of a number of new ordinances, including those making provision for: (i) the electoral process and regulation of political parties; (ii) integrity and accountability in public life;(iii) public financial management.

A legislative drafting team is working on numerous ordinances (locally enacted laws) relating to TCI Government business, including public accountability and financial management. Ordinances relating to elections, conduct of political parties and the Integrity Commission are also all currently being drafted. It is expected that drafting of a number of these should be completed by the end of March.

Establishment of robust and transparent public financial management processes to provide a stable economic environment and a strengthening of the Turks and Caicos Islands Government’s capacity to manage their public finances.

Expenditure control has been largely re-established. Consolidated Government financial statements have been produced and submitted for audit for three of the past four years. Public reports on the state of the public finances are being issued quarterly. Rolling 13-week cash-flow forecasts are being produced. The Finance Ministry is being restructured to be more effective in managing the finances and newly appointed permanent secretaries will be firmly held to account for the sound management of finances in their Ministries.

Implementation of budget measures to put the Turks and Caicos Islands Government on track to achieve a fiscal surplus in the financial year ending March 2013.

New taxes and fee increases are expected to boost revenue by 20% compared to 2010-11, reaching US$164 million in 2011-12. But expenditure is expected to be higher than originally forecast leading to a budget deficit of US$26.8 million, which is considerably higher than the budgeted deficit of US$3 million. Additional revenue measures, a reduction in the size of the public service and revisions to the national health insurance plan have been put in place designed to bring the budget into surplus in 2012-13.

Implementation of a transparent and fair process for acquisition of belongership.

In November the TCI Consultative Forum launched a territory-wide consultation on the options for a new pathway to Turks and Caicos Islander status. The consultation process will finish in February. Initial reaction has been favourable. In the meantime, the backlog of permanent residence applications has been cleared.

Significant progress with the civil and criminal processes recommended by the Commission of Inquiry, and implementation of measures to enable these to continue unimpeded.

To date, over 900 acres of Crown land worth approximately US$150 million and US$2 million in cash has been recovered by the civil recovery team. In December 2011, 11 people, including four former Ministers, appeared in court to face criminal charges. They are due to appear before the Supreme Court in TCI in early February.

Implementation of a new Crown land policy.

Key decisions have been taken on this sensitive issue. A new policy to manage Crown land better in the future was announced in 2011 after discussion in the Consultative Forum and Advisory Council. The Crown land ordinance will be ready soon.

Substantial progress in the reform of the public service.

Plans have been drawn up to reduce the number of Ministries from nine to five by the end of March. Five new permanent secretaries have been recruited by rigorous open competition and have been appointed on fixed-term, performance-monitored contracts. Technical support to ensure the effectiveness of the new Ministries is under consideration. A voluntary severance scheme, which will reduce numbers in the public sector by 300-400, is due to be completed in February.

Summary

Much work has been done by the TCI Government and by the TCI public service, with the support of the United Kingdom Government. Assistance has also been provided by the European Union and Canada. Good progress is being made thanks to the commitment and hard work of the interim TCI Government and the people of TCI. However, there is much still to be done.

Finally, setbacks last year have adversely affected progress towards achieving a budget surplus. Our view remains that the UK Government will only be able to set a date for the elections when the milestones have been reached. It is not yet certain when we will be able to say that all of the milestones have been met, but the interim Government, with UK-financed technical assistance, is working hard to achieve them. We still hope that they will be met in time for elections to take place during 2012.

House of Lords

Monday 30th January 2012 Lords Chamber

Monday, 30 January 2012.

14:30

Prayers—read by the Lord Bishop of Norwich.

Hungary

Monday 30th January 2012 Lords Chamber

Question

14:36

Asked By

[Lord Teverson]

To ask Her Majesty’s Government what representations they have made to the Government of Hungary and to the European Union in regard to the introduction and extent of Hungary’s new constitution.

[The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford)]

My Lords, my honourable friend the Minister for Europe, David Lidington, has spoken to both his Hungarian counterpart, Ms Eniko Gyori, and to Commission President Barroso’s chief of staff, Johannes Laitenberger, about recent developments in Hungary. Mr Lidington outlined the UK position that we support the upholding of EU laws and encourage constructive Hungarian engagement to address any concerns raised as a result of the Commission’s analysis of recent legislative changes.

[Lord Teverson]

My Lords, I thank my noble friend for that encouraging reply. However, rather than just making technical changes to Hungarian legislation, as occurred when there was a problem with its media laws, can the European Union do something more substantial on these fundamental questions of democracy in Hungary to ensure that the principles of the European Union, and Hungary’s membership of it, are fortified rather than diluted?

[Lord Howell of Guildford]

I think that the intervention and the position taken by the Commission reflect some of that concern. As far as the UK is concerned, we urge the Hungarian authorities to be constructive and flexible and to honour their international obligations, as indeed we would urge any other fellow member of the European Union to do in similar circumstances.

[Baroness Bakewell]

Is the Minister aware of the degree to which the new Government in Hungary are already cracking down on free speech? The mayor of Budapest has sacked the director of the New Theatre there and appointed someone from the Jobbik party, and that same party is now challenging the country’s National Theatre. Some 70 figures in this country’s arts world have voiced their protest against such censorship. Will the Government back them?

[Lord Howell of Guildford]

We certainly recognise all the concerns that the noble Baroness has put forward, and it is right that we urge change. The European Commission released its analysis of the compatibility of Hungarian legislation with the EU treaty obligations on 17 January. The acute concerns that the noble Baroness has mentioned are valid. We submit that the Commission’s approach is a sensible and constructive handling of the situation. That is our position.

[Lord Hylton]

My Lords, Hungary is also a member of the Council of Europe. Do the Government consider that the new constitution is compatible with the European Convention on Human Rights, particularly as regards freedom of conscience and freedom of association?

[Lord Howell of Guildford]

That is an important matter to consider and we will consider it. Obviously, a number of processes are at work here. We are dealing partly with the European Union and the Commission and partly with the track that the noble Lord has outlined and pointed to. We will focus on that as well.

[Lord Tomlinson]

Does the noble Lord, following on from the last question, recognise that we in the United Kingdom are in a unique position at present as we hold the presidency of the Committee of Ministers of the Council of Europe? Does he share the views expressed last week in the plenary session of the Parliamentary Assembly by the Secretary-General, Mr Thorbjorn Jagland, who said that the situation in Hungary shames us all?

[Lord Howell of Guildford]

I certainly share the concerns, and I also share the hopes reflected in the noble Lord’s question—that in our chairmanship position we will be able to carry these concerns forward. The noble Lord is quite right to draw attention to that.

[Lord Hughes of Woodside]

My Lords, given that Hungary went through years of dictatorship under Nazi occupation and then through years of dictatorship under the Soviet regimes, would it not be surprising if the people of Hungary were not aware of that past and willing to fight very hard for their freedoms, and should we not assist them when they do?

[Lord Howell of Guildford]

Of course we should. Certainly speaking for myself, one of the turning points in my lifetime was when these countries, which were in effect enslaved under communism, came into freedom in the latter part of the last century. That was a wonderful thing. We played a good part in bringing it about and we must continue to fight for those freedoms. I agree with the noble Lord.

[Baroness Williams of Crosby]

My Lords, given that there are prospects for further enlargement of the European Union—we have had much discussion about Turkey and other countries—would it not be appropriate to take a very strong line indeed with Hungary? Its Prime Minister has, in fact, played games with nationalism and democracy for quite a few years now, even before he became Prime Minister, through his party. The more clearly that the Council of Europe can give an indication that this is not acceptable for a member of the European Union, the more likely it is that other countries will look very carefully at it before deciding whether to move towards membership.

[Lord Howell of Guildford]

My noble friend is right that there is concern here, and it is a matter that both aspiring and current members of the European Union should closely follow and be engaged in. Hungary is a nation of many virtues and has been through many difficulties. We want it to continue and prosper as a free nation and not to be constrained by undesirable and unsavoury laws. We recognise that, and we have to work very hard on that basis.

[Lord Sewel]

My Lords, although it is right and proper to be positive and constructive in our relationship with Hungary at this difficult time, ultimately, what sanctions are available to the EU?

[Lord Howell of Guildford]

The sanctions are those that are available to the European Union as an organisation which requires certain standards that we adhere to very strongly—standards of behaviour, and moral, legal and social standards—throughout the European Union. That is the sanction available on that side. The Council of Europe also has powers to censure, and, indeed, challenge the continued membership of organisations within it. These are powerful pressures that need to be used in a balanced way and with the right approach. That is the situation which we are now grappling with.

[Lord Stoddart of Swindon]

My Lords, is there not a problem here which has to be resolved? On the one hand, the people of Hungary have decided to have a Government and a new constitution that do not fit in with the rest of Europe. On the other hand, the European Union cannot possibly accept a Government of Hungary who have a constitution that is not in accordance with its views and background. How do we resolve the problem? Who is going to win in this—the electorate of Hungary or the European Union?

[Lord Howell of Guildford]

I do not quite see it in that sort of Manichean analysis between the European Union and Hungary. I see that there are certain objective standards of good government and free government, and the freedoms that we all fought for during all our lifetimes, and that these should be upheld. The European Union is a repository of those freedoms, as is the Council of Europe. When those standards are being departed from or flouted in any member state—indeed, we can extend this to organisations outside Europe, such as the Commonwealth—then all pressure should be brought to bear. It is not just a question of the European Union versus Hungary; it is a question of the proper rule of law, good governance, democracy and the core values and principles that we stand for and have fought for being adhered to in every possible way.

Energy: Tariffs

Monday 30th January 2012 Lords Chamber

Question

14:44

Asked by

[Baroness Smith of Basildon]

To ask Her Majesty’s Government what estimate they have made of the costs they will incur by appealing the court rulings on solar panel tariff payments.

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Lord Marland)]

My Lords, we estimate that the Government have incurred costs of approximately £66,400 to date. This includes the cost of the recent Appeal Court hearing. However, if the Supreme Court agrees to hear our case, we will incur more costs.

[Baroness Smith of Basildon]

My Lords, I am slightly thrown by that Answer from the Minister, because exactly the same Answer was given a week ago to my right honourable friend Caroline Flint in the other place. At that stage, the Government did not know that they had lost the appeal. They have now lost the appeal and have to pay the costs of the other side as well, and have incurred additional costs at the Supreme Court. My Question asked,

“what estimate they have made of the costs they will incur by appealing the court rulings”.

I think they will be significantly higher than the figure of £66,000 or so which the Minister has just given me.

Even at this late stage, does the Minister really think that it is good use of government money to keep chasing this merry-go-round of court decisions that the Government are losing? Would it not be better to sit down with the industry and negotiate a way forward? Everyone accepts that there need to be some cuts, everyone accepts that there need to be changes, but should we not try to do this in a way that does not cost jobs and that protects the industry?

[Lord Marland]

My Lords, I must admit that I was hoping that the noble Baroness would say well done on incurring only £66,400 of costs. It is a curious old world when we save the consumer £1.5 billion at a cost of £66,400 and are told that we should declare to the nearest penny. Let us look at what we are taking to court. This is one of the most ridiculous schemes that have ever been dreamt up. It is already going to cost the consumer £7 billion for £400 million of net present value.

[The Chancellor of the Duchy of Lancaster (Lord Strathclyde)]

Ridiculous!

[Lord Marland]

Exactly; it is ridiculous. That is on a product where you need electricity when the sun does not shine. It will produce 0.1 per cent of our electricity supply and it does not target the needy or consumers. This is one of the most ridiculous policies ever dreamt up. Guess who did it: yes, the dying embers of the Labour Government.

[Lord Strasburger]

My Lords, I should declare that I have recently sold some solar PV panels, but before the December deadline, so I have no financial interest in the current controversy. I have two questions for the Minister. Why did the Government show such contempt for the consultees by attempting to implement the tariff changes before the end of the consultation period, and then add insult to injury with this futile appeal? Secondly, why do the Government seem to be doing their very best to kill off the solar PV industry, an industry that generated 30,000 jobs over the past two years by first delaying and then botching the announcement of the new feed-in tariffs?

[Lord Marland]

My noble friend has a point. We are certainly not trying to kill off the solar PV industry. Only today, I received a letter with a cheque for £960 for the Government. That shows that it is alive and well. Perhaps I can help my noble friend by telling him that I received an e-mail on 18 January. I know I am not much good at anything, but—

[Noble Lords]

Addressed to you?

[Lord Marland]

Addressed to me. Thank you very much; you are warming to the theme. It read:

“Start a lucrative NEW career as a Solar Panel (PV) Installer ... At present there is BIG DEMAND for skilled Solar Panel Installers in the UK, there is a great opportunity for you to re-train and have a rewarding new career”.

[Lord Broers]

My Lords, I congratulate the Government on this outbreak of numeracy in their energy policy, but can the Minister reassure us that this might spread to offshore wind?

[Lord Marland]

I am not sure what I should be reassuring the noble Lord about—whether we should or should not carry on with offshore wind. However, we are committed to offshore wind, if that is the answer that he or anyone else wants. Our numeracy is still very much intact, and I am very grateful for his compliment.

[Baroness Farrington of Ribbleton]

My Lords, I missed the noble Lord explaining who had sent him the cheque and what reason they gave for sending it. I am sure it was not from redundancy money given to people who have been thrown out of work by the Government’s policy.

[Lord Marland]

I think the noble Baroness is being a little trite. It comes from a firm called Solar Fusion. No one has yet been made redundant from the solar panel industry, which is alive and well. We have sought to reduce the amount that the consumer pays to help people in the solar industry. For a panel costing £4,000, you can still generate a £500 feed-in tariff benefit—which is more than 10 per cent and in the current market is very good—and a reduction of £190 on your bill. I do not think that there will be redundancies. I think that more of these things will be sold, and that that is good for jobs.

[Lord Cormack]

My Lords, before my noble friend pursues this attractive alternative career, could he follow the advice of the noble Lord opposite when he is thinking of numeracy and have regard to onshore wind, which produces unpredictable amounts of energy at enormous cost and where the Government can save a very great deal of money?

[Lord Marland]

The noble Lord is right. We are considering the renewables obligation certificate that we are providing for onshore wind. We have finished our consultation and will announce and publish the results of our thinking on it on or before 9 February. I therefore ask the noble Lord to hold his breath until that date.

EU: Treaties

Monday 30th January 2012 Lords Chamber

Question

14:51

Asked By

[Lord Liddle]

To ask Her Majesty’s Government whether the intergovernmental treaty presently under negotiation in Brussels will eventually become part of the structure of the European Union treaties.

[The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford)]

My Lords, I think we can all cool down now. It is the prerogative of any member state to suggest additions to the European Union treaties. Any addition, including the proposed intergovernmental treaty, would need to have the agreement of all 27 member states.

[Lord Liddle]

I thank the Minister for doing his best in that reply. However, with all his experience of European matters stretching over five decades in politics, would he please explain to the House how the Prime Minister can one month take Britain out of the room, claiming that the proposed treaty is a threat to our vital national interests, and then the next month appear to want to wave it through, declaring that he does not mind at all if the intergovernmental treaty, of which we will not be part, makes full use of the EU institutional machinery? Is it not true, and does the Minister not agree, that really the only way to protect Britain’s vital national interests is always to be properly at the table in the room and not walk away, and that the only reason that the Prime Minister cannot do what is right for Britain is that his main concern is what he can get away with inside a divided coalition and a divided party?

[Lord Howell of Guildford]

I think that the noble Lord, in his enthusiasm for these matters, is getting a bit confused. This is an intergovernmental treaty; it is not going forward inside the European Union. The British Government are anxious that there should be orderly development of the eurozone and that obviously it should not collapse into chaos. Nevertheless, as I think the noble Lord himself has written, it has “design flaws” in it—I think those were his words—and therefore there has to be caution and care about the whole way in which it is carried forward. Certainly, the UK does not want to be involved in a treaty that supports a flawed system. We want to be supportive of a design for the future which is sustainable and which brings prosperity, not division, to Europe. That is the position. What is the role of the European Union institutions? We do not want to throw sand in the machine. If some of them can usefully be used in the aim of building a better euro system, we will support them, but we are reserving our position on exactly which institutions should be used and how they should be used. Our general attitude is supportive and constructive, and we are involved, as ever, in the machinery of building a prosperous and competitive Europe and a good single market. These remain our aims and we are taking a leading position on them.

[Lord Taverne]

My Lords, is the report in the Financial Times correct that the Government are giving a measure of support—it seems somewhat conditional—to the idea that those who signed the intergovernmental treaty can use the institutions of the community, including the Court of Justice? Does this have the support of the whole Cabinet, including the Secretary of State for Work and Pensions? Secondly, in his evidence before the House of Commons Select Committee on 11 January, the Chancellor said that the Government, in December, would have preferred to sign the proposed treaty had it included safeguards to protect the proper regulation of the City. Since the new treaty now includes safeguards that prevent it applying to the single market, what prevents the Government taking further steps towards re-engagement in Europe and signing the treaty?

[Lord Howell of Guildford]

There are two points there. As I said earlier, we have reserved our position as to which institutions of the EU as a whole should be usefully deployed in supporting the policing of this intergovernmental treaty. We have reserved our position on that. The report in the Times sounded a bit further forward than that and is not correct.

As to the Chancellor’s views, he has made it clear all along that a treaty that was going to reinforce a eurozone that was sustainable and which met a whole range of conditions, including full implementation of the October agreements, solving the Greek debt problem, recapitalisation of the banks and a proper liquidity structure throughout Europe, was the kind of thing that we would have supported, but that is not on the table at the moment. We will have to see how the intergovernmental treaty works, which of the existing 26 agree to it—not all of them may—and, as it proceeds, we will be supportive. But we do not want to sign up to the eurozone as it is because, as the noble Lord opposite said, and as all observers now recognise, despite their views to the contrary many years ago, the system is design-flawed.

[Lord Hannay of Chiswick]

My Lords, will the Minister say what provisions, if any, of the intergovernmental agreement on the table in Brussels today are objectionable to the British Government? Will he confirm that even were we to sign that agreement and it became an amendment to the Lisbon treaty, none of its provisions would impose obligations of a legally binding kind on the United Kingdom unless and until we join the eurozone?

[Lord Howell of Guildford]

The noble Lord’s last words are the key to the matter. The treaty on the table is designed for the 17, although others may go along with it. It will be debated in the various Parliaments. It is designed for the 17 and involves degrees of surveillance and control that are not congenial from the British point of view; we believe that we can best proceed not by being within and making constant objections and delaying the whole process of the 17 that want to go ahead, but by being supportive from outside. That is the position, which seems perfectly sensible and constructive.

[Lord Pearson of Rannoch]

My Lords, do the Government agree with their own lawyers who have advised that it is illegal to allow the ECJ to police something that is not in the treaties—in this case, the proposed fiscal compact’s debt brake rule? Would it not be wiser to insist that the eurozone follows its own law in the hope that that brings an orderly end to the euro, with a return to national currencies at agreed initial exchange and interest rates? Is that not the only sensible way forward?

[Lord Howell of Guildford]

The noble Lord is letting his vivid imagination roam into the future. We have not reached the situation that he describes; perhaps we never will. I have made it clear that we reserve our position on how and which institutions should be used and how they may usefully be used to police the new intergovernmental treaty. These matters are yet to be decided; the position, I repeat, is reserved.

Pakistan

Monday 30th January 2012 Lords Chamber

Question

14:59

Asked By

[Lord Ahmed]

To ask Her Majesty’s Government what representations they have made to the Government of Pakistan regarding the democratic process in that country.

[The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford)]

My Lords, between 11 and 13 January my and noble friend Lady Warsi visited Pakistan, where she called on Prime Minister Gilani and Foreign Minister Rabbani Khar. She expressed the UK view that a strong, stable, constitutional democracy was in the interests of Pakistan. We are following the political situation in Pakistan closely. We want Pakistan to enjoy credible elections that respect the constitution and help ensure stability.

[Lord Ahmed]

I thank the Minister for his reply. Does he agree that it is important for any democratically elected Government to show respect for law, the courts and public opinion, and to reject corruption, nepotism and bribery? Therefore, does he also agree that it is better to work with national institutions such as the civil service and the army to modernise and reform them rather than criticising them in public? Finally, will he help the Government of Pakistan try to negotiate some sort of peace deal with the Taliban in Pakistan?

[Lord Howell of Guildford]

From the British point of view, the sentiments about how democratic Governments should develop are admirable. There are certain matters inside Pakistan that it is not our business to be concerned with or to solve; they lie with the people of Pakistan. However, the general principles that the noble Lord, Lord Ahmed, outlined are the right ones. Dealings with the Taliban, too, are a matter for the Pakistan Government. There are delicate and important areas where contact with the Taliban appears to be developing internationally. This may be part of the progress and help needed to see Afghanistan get on a better path.

[Lord Hussain]

My Lords, since Pakistan has been ruled by military dictators for a long time, and the present Government are the first in 35 years to complete four years in office, the lack of democratic continuity has weakened the state institutions. How can the Minister's Government help create an environment in which the democratic process will continue uninterrupted in Pakistan?

[Lord Howell of Guildford]

The best way is the way which we are using: namely, playing a very forward part in assisting social, educational and institutional development in Pakistan. Pakistan is the largest recipient of United Kingdom aid: it will work out at about £446 million over the next three years to 2015. We have a huge programme of bringing more children into school—another 4 million out of the 17 million in Pakistan who still do not go to school. We are also playing a major role in other, very valuable social developments. Those are the conditions in which the better democracy that my noble friend rightly wants—and we all want—is most likely to grow.

[The Lord Bishop of Norwich]

My Lords, as we approach the first anniversary of the assassination of Shahbaz Bhatti, the Christian Minorities Minister, in Pakistan, does the Minister detect any signs of hope that Christians and other minorities will be able to play their fullest and most active part in the democratic process there?

[Lord Howell of Guildford]

The right reverend Prelate rightly reminds us of a particularly horrific thing; and there have been other horrific murders as well. None of them is welcome. He asks whether I am optimistic and can offer reassurance that things will improve. We will do our best to support the development of a more peaceful, balanced and democratic Pakistan in every possible way; a Pakistan that tolerates faiths and removes the stain of attacks on minorities, including horrific attacks on the Christian community such as the ones that occurred. However, it would be misleading if I stood at the Dispatch Box and sounded optimistic notes about the future, which is still very precarious for all these faiths.

[Lord Foulkes of Cumnock]

My Lords, I commend the Minister for dealing with three out of four of today’s Questions in such detail. Will he confirm that he will still receive only his basic salary and not a performance bonus? Is that not an example to others?

[Lord Howell of Guildford]

I cannot confirm that because I do not receive a salary.

[Lord Brooke of Sutton Mandeville]

My Lords, does my noble friend welcome the recovery in Pakistan cricket? Does he further think that it would be a happy conclusion to the present series if we won the last test?

[Lord Howell of Guildford]

In seeking a positive side of developments in Pakistan, I certainly had in my notes that its cricket was coming along quite well, but like my noble friend I rather hope that in the next round we do a little better.

Legal Aid, Sentencing and Punishment of Offenders Bill

Monday 30th January 2012 Lords Chamber

Committee (6th Day)

15:05

Relevant documents: 21st Report from the Constitution Committee, 22nd Report from the Joint Committee on Human Rights, 21st and 22nd Reports from the Delegated Powers Committee.

Clause 43 : Conditional fee agreements: success fees

Amendment 118

Moved by

[Lord Thomas of Gresford]

118: Clause 43, page 30, leave out lines 4 to 6 and insert—
“(b) the maximum limit must be expressed as comprising either or both of the following—(i) a percentage of the descriptions of damages awarded in the proceedings that are specified in the agreement; or(ii) a percentage of the amount of fees which would be payable to the person providing legal services including advocacy if they were not acting under a conditional fee agreement,”

[Lord Thomas of Gresford]

My Lords, I have to apologise for the length of my opening remarks, but as your Lordships will have seen, this is a very large group of amendments and it covers some three discrete topics.

Clause 43 deals with the conditional fee agreement—a CFA or no-win no-fee agreement—under which the successful claimant wins from the defendant both damages and costs to pay his lawyer’s fees. The fees under a CFA include a success fee, an uplift of the basic fees by an agreed percentage. The rationale behind the success fee is that it is not the lawyer’s prize for winning his case but his insurance; an uplift on his fees when this client wins covers the value of his time and effort when another client loses and he receives no fees at all. If the claimant loses, he does not have to pay his own lawyer’s fees, because it is no-win no-fee, but he is liable for the money paid out on his behalf for court fees, expert and medical reports, and witnesses’ expenses.

The Government’s purpose in Clause 43 is to amend the current position under the Courts and Legal Services Act 1990 to provide that the success fee payable to the successful claimant should no longer be payable by the unsuccessful defendant but should be paid instead by the successful claimant out of the damages he receives. All the losing defendant will pay by way of costs is the claimant’s lawyer’s base fees and his own costs.

When the 1990 Act, led on in this House by the noble and learned Lord, Lord Mackay, was originally enacted by the Conservative Government to provide relief for the MINELAs—middle income not eligible for legal aid—it was expressly provided by Section 58 that the costs payable by a losing defendant to a successful claimant should not include the success fee payable under a CFA. At the beginning, no success fee was paid by defendants, but in 1999 the Act was amended by Labour so that the success fee was recoverable from the losing defendant, along with the claimant’s base costs. Labour’s policy at that time was to abolish the grant of legal aid to all—the impoverished as well as the MINELAs—in all personal injury cases save clinical negligence. The carrot was that defendant insurance companies would pay the success fee instead of the claimant. The proposals in this Bill seek to return to the original concept of the noble and learned Lord, Lord Mackay, in 1990.

The 1990 Act did not change the general rule that the losing party pays the winning party’s costs; costs follow the event. Therefore, if a claimant lost his case, he did not have to pay his own lawyer’s fees—no-win no-fee—but under the principle of costs following the event, he was liable to pay the successful defendant’s costs, which could be a very considerable sum. To cover this possible liability, an insurance market quickly grew up whereby the claimant would insure himself against the risk of losing; that is, “after the event” insurance, or ATE. The original 1990 Act said nothing about the cost of the insurance premium for such cover and accordingly a claimant was responsible for the premium.

Section 29 of the Access to Justice Act 1999 expressly provided that the premium paid by a successful claimant who had insured himself against the risks of losing was recoverable as well as the success fee. The policy was that an injured claimant would recover his damages in full without any deduction, so the losing defendant—usually an insurance company or a company so large that it was self-insured—paid four times over: the damages to the claimant, the base costs of the claimant’s solicitors, the success fee, and the ATE insurance. As it happens, I raised the issue of the extension of CFAs and its impact on insurance in a dinner-time debate some 14 years ago, on 9 March 1998, before the 1999 Bill was introduced. I was very much against the abolition of legal aid in personal injury cases and at that time was promoting the CLAF scheme that is so successful to this day in Hong Kong and fully supported by the Bar Council. Two particular matters stand out from that debate. My late noble friend Lord Kingsland—and I do mean friend—then the leader of the Conservative Benches in this area, said he applauded the long, hard look the noble and learned Lord, Lord Irvine, was taking at legal aid. He said:

“In his overall review of legal aid, the Opposition applaud particularly his desire to extend legal aid into areas such as the provision of social welfare, immigration and other areas where preventive legal advice will save so much money by avoiding ensuing litigation. All that is to be greatly applauded”.—[Official Report, 9/3/98; col. 93.]

In that debate, the noble and learned Lord, Lord Irvine, said:

“Premiums for personal injury proceedings, in which conditional fee agreements have been allowed since 1995, are typically £100 to £150. For many of those who will gain access to justice, which they are denied now, that is not an excessive sum”.—[Official Report, 9/3/98; col. 96.]

The legislation was passed in the context that the noble and learned Lord, Lord Irvine, believed that insurance premiums for ATE insurance were £100 to £150. The past 11 years have witnessed the unintended consequences of the 1999 Act and the urgent need for reform.

It was emphasised in the Jackson report that the maxim “once size fits all” is certainly not the way to go. In personal injury cases, the defendant who caused the injury will have acted negligently, not deliberately. In defamation or breach of privacy cases, the harm is quite deliberate, usually with the motive of selling newspapers. Personally, I am intensely relaxed about the newspaper that libels an individual or breaches their privacy having to pay the lot—the injured party’s success fee and ATE premium—although I am afraid that neither the Mirror nor the European Court of Human Rights would agree with me. The defendant does not, in a libel case, have to pay for future care or future loss of earnings, and the damages award is usually small. Therefore, different concerns apply in different categories of cases.

15:15

The 1999 changes in the recoverability of the success fee have been highly lucrative for solicitors. The Jackson report points out that if 30 per cent of a solicitor’s fees represent profit and 70 per cent are administration costs, then a 100 per cent success fee, which is not untypical, doubles his fees and gives him a profit of 130 per cent. Since the claimant never has to pay any part of the success fee under the present provisions, he is totally indifferent as to whether the success fee is 10 per cent or 100 per cent. In Road Traffic Act cases, where the success rate is over 90 per cent, the ramping up of success fees became so blindingly obvious that the success fee was limited by regulation to 12.5 per cent. Other cases may be riskier, where the success fee remains at large. Solicitors say, “We have a merits test to ensure that only meritorious claims go forward”. Such a test can easily degenerate into cherry picking, so that risky cases may be dumped and only sure-fire winners taken on. If a lawyer picks only the obvious winners and discards risky cases, why should he have a success fee to insure himself against cases which, by definition, he will never lose?

In today’s climate, I support the Government’s decision to transfer the burden of the success fee to the successful claimant. That will immediately introduce competition for clients. Some lawyers, in easy, run-of-the-mill litigation, may even advertise that they will charge no success fee at all. Others, who take on the riskier cases, will have to calculate how low they can push their success fee percentages to attract clients, in order to cover their losses on those cases they might lose. The proposal that the claimant pays the success fee introduces competition in this area, which will push down the percentages that solicitors ask for.

That brings me to Amendments 118 to 120 and 162. The Government propose to limit the success fee in personal injury cases to 25 per cent of the damages for pain, suffering and loss of amenity in special damages to the date of the award, but to exclude from that calculation any damages attributable to future loss, whether loss of earnings, medical fees, care costs or the like. I should point out that the maximum limit or cap that was envisaged in the original 1990 Act was a percentage of the whole of the award of damages, not a part, as is now proposed. A maximum limit, specified as a percentage of damages, is inappropriate where the action is one merely for injunctive relief or in an area where damages are, by convention, low, such as actions in defamation or privacy cases. Consequently, Amendment 118 provides for the success fee to be calculated not just as a percentage of damages, but also, as an alternative, as a percentage of the fees which would normally be charged. Amendments 119 and 120 are consequential amendments.

Amendment 162 deals with Clause 53, which provides for an additional sum to be paid by a defendant to a claimant if judgment in the claimant’s favour is more advantageous than an offer he made earlier to the defendant which the defendant rejected. The sanctions against a defendant for failing to accept a claimant’s offer to settle generally amount to considerably less than the sanctions against a claimant for failing to beat the defendant’s offer to settle. Consequently, there is less incentive for a defendant to accept a reasonable offer from the claimant than for a claimant to accept a reasonable offer by the defendant. Amendment 162 clarifies that the court must evaluate the non-monetary benefit of injunctive or declaratory relief or the vindication of a claimant’s character in defamation proceedings.

Amendment 137D allows the House to consider one-way costs shifting. This is the second topic with which this group of amendments is concerned. It would mean that a defendant, even if successful, pays his own costs and does not seek them against the losing claimant; namely, one-way costs shifting. It follows that if such a regime were in force, a claimant could bring his action without fear of having to pay the defence costs if he loses. To an ordinary individual, having to pay defence costs takes all his savings and perhaps his home, which would be a significant deterrent to most people from bringing even a gold-plated claim let alone a risky one if he is facing that financial liability.

One-way costs shifting is not a new concept. It has been the rule in legal aid cases since I started practice. An unsuccessful legal aid plaintiff may have an order for costs made against him not to be proceeded with without the leave of the court. I have never known any attempt made by an insurer following such an order to obtain costs or to seek to obtain costs against an unsuccessful claimant. Jackson, in his report, calls it the “legal aid shield”. One-way costs shifting exists in legal aid.

In formulating his proposals, Lord Justice Jackson was assisted by calculations made by the Medical Protection Society, which over an 18-month period calculated that it had paid out £2.8 million in ATE insurance premiums which had been recovered by successful claimants as part of their costs. The Medical Protection Society had itself paid more than £9 million of defence costs of which it had recovered only £380,000 in costs orders against unsuccessful defendants. It had recovered only £380,000 but had had to pay £2.8 million in ATE insurance premiums to successful claimants. It follows that it would be far better financially for it not to seek costs at all when it wins if it could avoid paying the claimant’s ATE premium when it loses. Lord Justice Jackson concluded:

“On the basis of the material provided during the Costs Review, it seems to me inevitable that, provided the costs rules are drafted so as (a) to deter frivolous or fraudulent claims²² and (b) to encourage acceptance of reasonable offers, the introduction of one way costs shifting will materially reduce the costs of personal injuries litigation. One layer of activity, namely ATE insurance against adverse costs liability, will have been removed from the personal injuries process”.

Jackson recommended the introduction of qualified one-way costs shifting. The Government intend to introduce, through the civil procedure rules, such a regime. In my view, it is essential that the principles to be applied in formulating these civil procedure rules for one-way costs shifting should be on the face of this Bill. If the Bill provides on its face that the premiums for ATE insurance should fall upon the claimant, as it does in Clause 45, so should the provisions of one-way costs shifting, the other side of the coin, also appear in the Bill and be properly debated.

At the moment, I understand from discussions with the Government that no precise formulation of the alterations proposed to the CP rules has yet taken place. These rules are made by the Civil Procedure Rule Committee, which is an advisory non-departmental public body sponsored by the Ministry of Justice, headed by the Master of the Rolls and comprising five High Court judge members, one circuit judge member, two district judge members, three barristers, three solicitors and two consumer affairs lay members. I think that Parliament should give the rule committee its parameters and that it should not be left to the Executive, or for the committee simply to follow the recommendations of the Jackson report as it sees fit.

The qualifications in this Bill follow the precedent of Section 11 of the Access to Justice Act 1999 in respect of legal aid; namely, that in making a costs order against a legally aided person, the judge may take into account his financial circumstances and the reasonableness of his conduct. In the course of discussions with representatives of the insurance industry, I have found that they are not concerned about the financial circumstances of the losing claimant. It is so rare that such a claimant can meet the defendant’s costs personally that it is simply not worth the while of the industry to formulate the mechanisms that would be required to assess every claimant’s means. In other words, we do not want means testing, and neither does the insurance industry. Further, Jackson was concerned to say that the claimant must be at risk of some adverse costs in order to deter frivolous claims and applications in the course of otherwise reasonable litigation. He suggested a formula for the proposed alteration to the Civil Procedure Rules at page 190 of his final report:

“the formula suggested above will enable the court to make a costs order in three specific situations where such an order would be appropriate: (a) where the claimant has behaved unreasonably (e.g. bringing a frivolous or fraudulent claim); (b) where the defendant is neither insured nor a large organisation which is selfinsured; or (c) where the claimant is conspicuously wealthy”.

Amendment 137D refers, first, to the one-way costs shifting applying to a claimant “regardless of” his means. The insurance companies do not want it and neither should the Government. It refers to actions which are brought against defendants who are insured or self-insured. We are not dealing with one-way costing where the action is brought against an individual. The amendment also proposes the extent of one-way costs shifting and seeks to add clarity in defining unreasonable conduct. Provision is also made for Part 36 offers. The amendment seems to deal with the objections that might be made to Lord Justice Jackson’s original formulation, which the Government have accepted, and puts forward significant amendments.

As I previously outlined, the expectation of the noble and learned Lord, Lord Irvine, in 1998 was that the premiums for ATE insurance would be in the region of £100 to £150 when he took the decision in 1999 to switch the responsibility for those premiums from the claimant to the losing defendant. But there were unintended consequences. Market forces took over. The claimant was happy to agree to any size of premium which he himself was never going to have to pay, win or lose. If he lost the case, the insurance company customarily waived the premium, in effect it self-insured itself against loss in such circumstances. In the case of Rogers v Merthyr Tydfil County Borough Council, Lady Justice Smith pointed out that cases were being advanced by claimants protected by ATE insurance when no private litigant would dare to take the risk. This judge, who is very experienced in personal injury claims—as I know to my cost—said:

“At present, the insured claimant can notionally pay the high premium which reflects his poor chances of success, secure in the knowledge that, if he wins, the premium will be recovered and, if he loses, he can walk away unscathed. I find it hard to believe that Parliament intended that claimants should be in so much better a position than the private litigant”.

This change has meant that the claimant does not have to worry because he is not going to pay the premium, whatever happens.

15:30

Costs judges who were asked to assess a successful claimant’s costs found it impossible to challenge the size of the premium. In that same Rogers case, Lord Justice Brooke said:

“District judges and costs judges do not … have the expertise to judge the reasonableness of a premium except in very broad brush terms, and the viability of the ATE market will be imperilled if they regard themselves (without the assistance of expert evidence) as better qualified than the underwriter to rate the financial risk the insurer faces”.

So the judges who are supposed to tax costs found that they could not enter into any discussion or sensible judgment as to what a premium should be. The claimant does not care about how much the premium is because he will never have to pay, and the taxing masters—the judges who deal with costs—will not enter that area at all, so that insurance companies can charge whatever premiums they like.

Lord Justice Jackson cited one of the illustrative cases provided to him by the Commercial Litigation Association, where the claimant’s profit costs in a particular case were £425,000, disbursements were £561,000, but the ATE insurance premium was £976,000. In other words, the ATE insurance premium in that case was more than all the other aspects, costs and disbursements put together. I am familiar with premiums in the region of £80,000. Evidence produced to Jackson showed that when these premiums are charged by ATE insurers, 65 per cent of premium is attributable to risk, 15 to 20 per cent is attributable to brokerage fees and 15 to 20 per cent to administration and profit. ATE insurers under this system have been charging whatever premium they can get away with, because it is not challenged by anybody, and only 65 per cent of those premiums are attributable to the risk that they are undertaking.

Jackson advanced two solutions. His first, and preferred, solution is that the premium should be paid by the winning claimant out of his damages to reverse the present situation. His second solution, alternatively, is that the cost of the premium be shared between the claimant and the losing defendant. Under either alternative, the claimant then has an interest in the size of the premium. If he is going to pay it himself, he is worried about how big it is; if he is going to pay a share of it, he is concerned about the size of the premium. Absent some cartel, competition ought in practice to keep the premium at a level which is a true reflection of risk.

The Government have opted in this Bill for the first solution, subject to an exception in clinical negligence cases whereby part of the ATE premium which covers disbursements in the way of expert and medical reports will be recoverable from the losing defendant. That part of the premium, which covers the risk of paying the defendant’s costs, will be paid by the winning claimant out of his damages even in these extreme cases.

If one-way costs shifting applies, as I have previously argued, the defendant pays his own costs whatever the result, the losing claimant does not pay his own lawyers—no-win no-fee—nor under such a regime the defendant’s lawyers, so it is obvious how crucial it is to introduce such a regime as a vital part of the reform of the system.

A claimant, even if successful, will remain liable for court fees and expenses paid out on his behalf for experts’ reports and so on. In a typical case, those expenses would amount to between £2,000 and £5,000, which is enough to deter a genuine claimant from advancing his claim.

ATE insurers, faced with the destruction of a very large market by reason of one-way cost shifting, say that they are not interested in covering merely the costs of disbursements of such small sums. But obviously if the amount of money at risk is £2,000 to £5,000, the premiums will be back in the realms envisaged by the noble and learned Lord, Lord Irvine, in 1998. So although I have conceded ground on the claimant paying the success fee out of his damages, I retain enough of my purity of principle from 1998 to prefer the second option advanced by Jackson, with some changes, and hence the amendments under discussion.

Amendment 144A would extend Clause 45 to all personal injury litigation and not just to that for criminal negligence. Amendment 144B makes the important point that the provisions apply only in favour of those who take out ATE insurance at the beginning of the claim. Jackson found instances of ATE insurance being taken out after liability had been admitted, when there was no possibility of an adverse costs order against the claimant, and the full premium being then claimed against the defendant as part of the costs order. If claimants take out ATE insurance at a later stage of the proceedings, when the wind appears to be rather less fair than they thought, the market might be too small for the risk to be properly spread.

Amendments 144C to 144E are for clarification. Amendment 147A makes the important point that the amount required to be paid in respect of the premium must not exceed a prescribed maximum amount, which is,

“proportionate to the damages or other relief claimed”.

Amendment 148A introduces the concept of sharing the cost of the premium but also incentivises the defendant to settle the case at an appropriate time. It provides that if the case is settled within the pre-action protocol period, or its equivalent, the premium remains payable by the claimant, but at each stage of the proceedings the premium is shared. If the claimant is successful and obtains judgment, he will still have to pay 20 per cent of the premium. I would argue that sharing the premium for ATE insurance, reduced as it would be, because it would refer only to disbursements and not to defendants’ costs, would be a far more satisfactory way in which to vary the cost, much reduced by one-way cost shifting from the huge premiums currently demanded.

Amendment 149A is consequential. Amendment 156AB makes the obvious point that one-way cost shifting and this reform go together, and the regulations on each aspect should come into force in the same day.

I started by apologising to the House for the length of time that I would take in presenting these amendments. I repeat the apology and I beg to move.

[Lord Beecham]

My Lords, I speak rather earlier than I might have expected. I congratulate the noble Lord, Lord Thomas of Gresford, on the lucid way in which he has presented a very complex argument on very complex issues. I do not entirely agree with everything that he said, but the Opposition and I have considerable sympathy for a good deal of it.

This House is familiar with Henry VIII clauses, but in the year of the World Shakespeare Festival this Bill could perhaps best be described as a Henry VI Bill, since it is in three parts. This is Part 2—and in Part 2 of “Henry VI”, there is the famous phrase:

“The first thing we do, let's kill all the lawyers”.

I cannot recall whether that was part of the coalition agreement or the extent to which it would in any event receive approval from a majority of your Lordships.

However, it is necessary for me to give an opposition view of the generality of the case and then speak more particularly about the amendments tabled in my name and the name of my noble friend Lord Bach. I want to be clear that the Opposition agree that costs in litigation are an issue and have to be dealt with. Equally, we dislike the claims management industry and the commercial referral fees charged by companies seeking to promote litigation. We would go a long way with the Government in restricting the scope of conditional fee agreements, success fees and the like in relation to road traffic accident cases, most of which are settled and with relatively modest damages. I would extend that to slip and trip cases as well, which are much the same category. We agree with the noble Lord and indeed with Lord Justice Jackson in promoting qualified one-way cost shifting for all cases and not just for personal injury claims, as the Bill proposes. However, there is a concern about “after the event” insurance, particularly if QOCS were to be limited.

In passing, the noble Lord, Lord Thomas, referred to positions where there is no incentive on claimants to settle, but of course insurers like to have it both ways. They charge, it appears inflated, premiums for “after the event” insurance but then seem to want to shift the cost on to claimants. In exactly the same way, they complain about whiplash injury claims but sell details of possible claimants to claims management or claims referral companies, so one’s sympathy with the insurance industry is tempered by the experience of what it actually does.

There are, however, principles that need to be borne in mind. The overriding principle should be that successful claimants should not see the compensation on their loss eroded by meeting the costs of the insurance, or indeed the success fee in the event of a successful claim. The noble Lord did not deal with the myth of the compensation culture—perhaps he does not have to—but it is a myth, as the noble Lord, Lord Young, made clear in his own recent report to the Government. The fact is that there has been something like a 14 per cent reduction in civil claims cases in the past year and a four-year downward trend in the number of claims brought, but the principle must surely be to maintain access to justice for people of modest means. That was the whole theory behind the changes made under the Access to Justice Act and the introduction of conditional fee agreements.

The Access to Justice Action Group surveyed 69,000 cases in the light of the Government’s proposals and concluded that around a third of those would not be brought if the legislation were to go forward in its present form. Given that we are seeing savage reductions in legal aid, so that the very poorest in any case would be in great difficulties, we are perhaps now seeing a returned-to category of what might be called the legally squeezed middle. Interestingly the same survey showed that around 50 per cent of those who would in effect be expected to bear success fees, and if necessary the cost of “after the event” insurance, would be around the higher rate tax threshold of £40,000-odd a year—not an inordinately affluent group of people.

15:45

That conflicts with the original concept. As it happens, I remember discussing the proposals to take personal injury cases out of legal aid with the noble and learned Lord, Lord Woolf, a professional colleague, after he had spoken at a meeting in Newcastle, his home town. He was full of assurances that all would be well in the volume of work that would be promoted for solicitors and that the system would work very effectively. We are seeing that that is perhaps no longer the case.

There are other consequences, which have yet to be measured fully, that are adverse to the public purse. If good cases are not brought that would have resulted in a recovery of damages, at least two parts of government in the context of personal injuries claims could lose out: the National Health Service for the non-recovery of the costs of treatment—there is an estimate of around £93 million a year for that—and the compensation recovery unit of the Department for Work and Pensions, which, under the current benefits system, reclaims from defendants benefits that have been paid where a claimant has been entitled to those benefits as a result of injuries. Those factors need to be borne in mind.

As the noble and learned Lord has pointed out, the Bill makes success fees irrecoverable from defendants, and in personal injury cases limits the success fee to 25 per cent of general damages, to be uplifted in theory to compensate for that potential deduction by some 10 per cent. Amendments have been tabled that deal with this aspect, but it is perhaps as well to make it clear now that a 10 per cent increase would be an increase on a level of damages that in any case involving personal injuries is regarded as too low. As long ago as 1999, a report indicated that general damages for personal injuries ought to be increased by some 50 per cent. Action was not taken by either the courts or indeed the then Government to secure that change.

We are facing a perverse effect of these changes. Successful claimants lose because they will not cover the cost of “after the event” insurance and the success fee will be taken out of their damages. The principle of English law has hitherto been that the person should be put in the condition that he would have been but for the negligence, in the case of personal injury claims—or other failures, in the context of other types of claim—of another party. That rather disappears under this proposal. In fact, it does disappear. Equally, successful defendants lose because they will not be covered by “after the event” insurance from claimants. Alternatively, they will be faced with qualified one-way cost shifting and so cannot recover costs either.

The people who gain—paradoxically, it might be thought—are the unsuccessful defendants: people who lose their cases. Unsuccessful defendants do not have to pay a success fee or, obviously, the cost of insurance. Unsuccessful plaintiffs gain under the qualified one-way costs system. In my submission, it is a perverse outcome of the cases that those who fail are protected while those who succeed see a substantial cost falling on them.

We argue that costs would be better controlled through better case management and the proper assessment of costs, including a determination of the relevant level of the success fee. It might be possible to prescribe the levels applying to cases in regulations, but in all events the courts should be robust in assessing what is a legitimate success fee. The noble Lord rather dismissed the notion of pooling risk, which would allow for the swings and roundabouts of lawyers undertaking cases with less than 100 per cent probability of success—perhaps substantially less than that. It is the basis of the whole of the Woolf reforms that that risk should be accepted.

There will undoubtedly be cases involving very little risk. I repeat that you can take RTA and trip and slip cases out of the equation, which leaves you with a core of inevitably rather more difficult cases where certainty is by no means apparent. However, I suggest that it is for the courts to make the appropriate adjustment when looking at the success fees. There is a danger that we will see the “after the event” market decline, and unless there is a substantial move to one-way cost shifting across the board there is a real risk people gaining access to justice. That is the basis on which the Opposition approach these matters. I will now—I hope to the relief of the Committee—speak briefly to the amendments.

I agree with many of the noble Lord’s amendments, particularly the amendment to Clause 53 and Amendment 137D, although we would like to see that measure extended to all types of claims, not just to those that he listed, although they are significant. Equally, we agree that clinical negligence should be left out of Clause 45, as proposed in Amendment 144A. We agree with Amendment 144B but not with Amendment 144C. Amendment 148A concerns splitting the “after the event” premium. If that is to be retained either under the Bill or in practice—there are doubts about whether it would survive in practice—that might be a fallback position to explore.

Had the noble Lord, Lord Martin, been here, I would certainly have supported his Amendment 127, which would make it clear that success fees would not include the payment by one party of a success fee payable by another party under a conditional fee agreement. I think that is designed to protect, for example, trade unions supporting their members.

I come briefly to the amendments in my name and that of my noble friend. Amendment 131 deals with the position where a defendant has been unreasonable and where the success fee would be permitted in that event—a success fee to be payable by the defendant would be provided for. That seems to be perfectly straightforward. Amendment 133 would allow success fees for appealed cases. By definition these are not straightforward matters. If an appeal goes forward, there are surely issues to be determined, and there must be a risk in such appeals.

Clause 43 looks at the up-rating of general damages, particularly in personal injury cases. This needs a moment of explanation, and perhaps I can exemplify what the position would be if an award of general damages of £10,000 were to be made. The uplift at 10 per cent would increase the total award to £11,000, but a success fee of 25 per cent in a personal injury case would reduce the amount payable to the claimant to £7,750. The first amendment is, in effect, the Government’s position. To be frank, I am not quite sure why we have tabled it. However, Amendment 137C would restore the £10,000 damages, because it would increase the general damage figure to £13,330, and a 25 per cent fee would reduce the general damage figure back to £10,000. Hence the uplift in respect of general damages only—not special damages—with a net loss to date, would at least shelter the successful claimant from a large reduction in his recovered costs.

Our amendments to Clause 45 raise the issue of the recoverability of costs in clinical negligence cases. They would allow the recoverability of premiums for ATE insurance in such cases, even after QOCS was introduced. The problem with clinical negligence cases is the cost of the experts’ reports; hence these amendments seek to cover those.

In our amendments to Clause 53, under the heading “Offers to settle”, we seek a mandatory uplift, which would encourage parties, particularly defendants, to settle. Very often, the delay in cases is the result of defendants unnecessarily prolonging matters. I have to say that that is often a feature of clinical negligence claims. Hospital authorities and others can take a long time to come to terms.

Amendments 190 and 192 put the emphasis on qualified one-way cost shifting, because they deal with the fact that there is no scheme at the moment. The Government are still considering one, and it would be interesting to know from one or other of the noble Lords opposite—I take it that the noble and learned Lord, Lord Wallace of Tankerness, will reply—how far those discussions have got, where they are heading and what kind of scheme we may be facing. If we are going to agree on a scheme that we can support, we need to know what it would actually involve before any of these changes, which will be critically dependent on a robust scheme, are made.

Equally, Amendment 193 would delay commencement until the general damages uplift and an effective system of disbursements for unsuccessful claims are dealt with by the Government or the courts.

We have set out the three issues that need to be determined: an increase of 25 per cent in personal injury damages, an effective system of qualified one-way cost shifting, and an effective system to meet the disbursements. These are procedural matters. Subsequent groups of opposition amendments will deal with the following: injury cases in group 2, non-injury cases in group 3, and judicial review and public authority liability in group 4.

16:00

[Lord Phillips of Sudbury]

I support my noble friend. My name is on most of the amendments in his name, although not Amendment 137D. I commend him on the clarity with which he spoke to what is an extremely complex set of issues. I wonder whether putting 30 technical amendments in a single group is really an efficacious way of legislating. I am bound to say that the background to these intensely complex practical and theoretical issues does not seem to have been adequately prepared. I endeavoured on day five of Committee to move an amendment calling for a review of clinical negligence cases, which are in a special class of sophistication of their own, and I hope to move it again on Report. I hope that the Minister will not mind my saying that I believe that there has been insufficient preparation for our debates on those matters.

I add only a couple of facts to the underlay to the group spoken to by my noble friend Lord Thomas of Gresford. The position in respect of claims and litigation generally is a mess, let us make no bones about it. It is in a fiendish mess. I speak as one who has always been deeply concerned about the whole concept of conditional fees, which seem to me to be in permanent danger of undermining the professionalism of lawyers, because they have a deep conflict of interest when acting on a conditional fee basis vis-à-vis both their clients and their professional obligations. That is where we are, and perhaps one day we will consider how other countries deal with the problem of how to fund bringing cases to law. Perhaps Germany would be a good example, where the whole field of costs insurance is infinitely further developed than it is here and seems to provide their citizens with a rough equality of access to justice that we no longer have with the progressive dismantling of the legal aid scheme.

To undermine the points made by my noble friend Lord Thomas, one fact struck me forcefully. According to a general insurer from whom the Ministry of Justice has obtained statistics in preparation for the Bill, costs as a proportion of the damages have risen from one half in 1999—whatever the client got by way of damages, the costs were roughly one half—to being roughly equivalent by 2004 and costs now exceed damages by 50 per cent. In the space of just over 10 years, that huge swing in the division of spoils between the lawyers and the insurers on the one hand and a client on the other has taken place. That must give rise to intense concern on the part of anyone and everyone. As I said, I think that the amendments in the group in the name of my noble friend Lord Thomas to which my name is attached improve things a bit, but we should not deceive ourselves that we will end up with fair access to justice.

[Baroness Turner of Camden]

I am not a lawyer, and this is a very complicated set of amendments in a single group. My concern arises because for many years I was a trade union official with responsibility for the legal cases service that we provide to our members. My concern, and that of the TUC, is that the Bill changes the balance away from people who are poor who have had an accident at work and want to seek compensation for their injuries. It has destroyed the balance, as they see it, between the wrongdoer and the injury victim, denying claimants access to the courts and with the money taken from them simply serving as a windfall for negligence defendants and sometimes for their insurers. Even if representation can be obtained, many on a low or middle income may not claim because they are unable to fund disbursements upfront or because of a general feeling regarding the costs, or the risk of the costs, involved. Trade unions collectively assist up to 150,000 personal injury claimants a year. There is a concern that their ability to look after their members will be impacted by the Bill, and in particular by Clauses 43 and 45, which we are currently discussing with this group of amendments.

As has already been explained, back in 1999 mechanisms were put in place to ensure that all reasonable legal costs could be claimed by a successful claimant from the negligent party to protect access to justice, particularly for those on a low or modest income, and to protect claimants’ entitlement to their compensation in full. Such costs include success fees and “after the event”, or ATE, legal insurance. In our opinion, Clauses 43 and 45 would probably reverse that position, destroying injured claimants’ rights.

Clause 43 stops recoverable success fees. Currently, claimants can find lawyers to take on their cases on a no-win no-fee basis using a conditional fee arrangement because the lawyer is paid a success fee. This is an additional cost paid in successful cases to cover the risk of running a whole basket of claims, some of which will be lost. It is the recoverability of this success fee from the insurer that the clause will ban. Instead, the claimant might have to pay up to 25 per cent of their damages to their lawyer as a success fee—if they can find a lawyer to take the case. As Jackson knows—we have been talking about the Jackson report because it is on his recommendations that a lot of this legislation is based—this will harm claimants, and he proposed an increase in damages for the injury alone of 10 per cent to compensate. However, this will not work. Those pursuing employer liability claims will lose out, and this uplift may prove largely unnecessary if the Bill relates only to RTA claims. We are concerned not about that but about accidents at work in this particular briefing.

So far as concerns accidents at work and industrial injury, there is a further concern that if this legislation takes effect there will be a reduction in the number of compensation cases that can be pursued, and that that in turn will have an effect on safety at work, health and safety legislation and so on. That is another impact that this legislation will have on compensation for injuries that workers may sustain in their employment.

Clause 45, at the stroke of a pen, stops a claimant recovering the cost of ATE insurance to cover the risk of paying a defendant’s costs or disbursement. Without ATE, many claimants will not be able to take the risk other than in very straightforward cases.

For those reasons, those of us who are concerned with trade union cases and with work injuries and so on are worried about the impact that this legislation, if not amended, will have on the possibility of people injured at work being able successfully to pursue compensation cases. The Government sometimes seem determined to prevent individuals who feel that they need compensation pursuing their cases. I sometimes think that they have been taken in by all the publicity in recent years about our becoming a compensation culture. I do not think that that is true at all. It is obviously true that many people feel that, if they are injured at work or through somebody else’s negligence, they have a right to claim compensation for their injury and they therefore looks for means to secure that compensation. Sometimes they go to a union if they belong to one, or they may go to other organisations that provide advice and support to individuals. Those individuals will not feel able to do so if there is a risk that they will not get their case taken, or will be landed with fees that they have to pay themselves because they will not get full recovery, having had to pay the compensation success fee to the lawyer involved.

That is terribly unfair, and I hope that during the passage of this Bill we will be able to table amendments that will deal with some of those concerns. Some of the amendments in this group will deal with the concerns that I have voiced this afternoon. They were expressed previously when we had Second Reading and I do not want to repeat everything that was said then, but I want to emphasise that I am talking about people who have very little money. When they are injured at work, often the compensation is no more than £3,000, which may not appear to be a very large sum of money, but to somebody working as a cleaner, it is an enormous sum. Certainly, it is not a trivial amount. People with small claims, who feel that they have been injured and are entitled to compensation for their injuries, may have doubts about whether they can proceed, and they will not find people willing to take up their case. That would be a great pity; it would block people’s access to justice. I thought that in any reform, we should be concerned with improving access to justice. The Bill, especially in these clauses, does not do that. I hope that we can amend them during our discussions.

[The Advocate-General for Scotland (Lord Wallace of Tankerness)]

My Lords, I join the noble Lord, Lord Beecham, and my noble friend Lord Phillips, in thanking my noble friend Lord Thomas of Gresford for introducing this compendious set of amendments. It is useful to do that because it brings together all the different strands of this package. As the noble Lord, Lord Beecham, said, my noble friend Lord Thomas introduced the issue and spoke to the amendments with great clarity. In doing so, he raised a number of important issues to which I hope to respond. I shall, obviously, deal with the amendments, but if accepted, they would completely undermine the reforms that we are trying to make to civil litigation costs.

I shall try to take the amendments together in some of the natural groupings: Amendments 118 to 120 and Amendments 127, 131 and 133 all relate to Clause 43; Amendments 138, 143 to 146, 147A and 148A all relate to Clause 45; Amendments 158, 159, 160 to 162 and 190 to 193 all relate to Clause 53; and Amendments 137B and 137C would insert a new clause.

To respond to the general comments that have been made, both by my noble friend Lord Thomas and the noble Lord, Lord Beecham, perhaps it is worth emphasising the importance of Part 2 of the Bill, even though I shall not go down the Shakespearean historical paths of the noble Lord, Lord Beecham. Part 2 includes provision to implement fundamental changes to the current no-win no-fee conditional fee arrangements regime. As my noble friend Lord Thomas has indicated, it is taking us back to the regime introduced by my noble and learned friend Lord Mackay of Clashfern when he was Lord Chancellor in the 1990s. We believe that the Bill will restore a fair balance to civil justice. It is worth reminding ourselves that conditional fee agreements were used successfully then without the substantial additional costs that have followed the changes introduced by the previous Government in the Access to Justice Act 1999. Under our changes in this Bill, meritorious claims will be resolved but at a more proportionate cost, while unnecessary or avoidable claims will be deterred from progressing to court. We believe that these changes can help businesses and other defendants who have to spend too much time and money in dealing with avoidable litigation—actual or threatened. It is worth reminding ourselves that if a defendant feels pushed into a position where they feel they have to settle a claim that they think does not have any merit at all because of the potential costs that they might incur if they proceeded to defend the action, it is not justice. It is not justice if unmeritorious claims are allowed to succeed.

16:15

The noble Lord, Lord Beecham, claimed that there would be additional costs across government as a consequence of the measures. We believe that that will not be the case. Taking the Bill as a whole, it is estimated that the changes will lead to savings of up to £50 million per annum, for example, for the National Health Service.

The noble Lord, Lord Beecham, and the noble Baroness, Lady Turner, mentioned road traffic cases. The noble Baroness also mentioned cases arising from employers' liability. For completion of the picture, it is worth reminding the Committee that the existing road traffic claims process, which was negotiated under the previous Government, came into effect in April 2010. It covers claims of up to £10,000 where liability has been admitted. There is a general consensus that it has worked well. Following a recommendation of the 2010 report Common Sense, Common Safety from the noble Lord, Lord Young, the Prime Minister announced that we would extend the scheme upwards in value to £25,000, and to other types of personal injury cases, including employers' liability and public liability. The Government intend in due course to set out a way forward on extending the scheme, and we look forward to working with stakeholders on the detail.

Clause 43 seeks to abolish the recoverability of a success fee under a conditional fee agreement from the losing party in any proceedings. This will require claimants pursuing claims under CFAs to take an interest in keeping down their costs and will reduce the disproportionate impact of their costs on those who face the claims. At the moment, a claimant has no interest at all in tackling mounting levels of costs. The costs that losing parties must pay can comprise their own legal costs and the winning party's basic legal costs. That much is reasonable and applies generally in civil litigation. However, under CFAs the losing party also has to pay the winning lawyer's success fee of up to 100 per cent of the base costs, as well as the “after the event” insurance premium that can be very substantial, as we heard from my noble friend Lord Thomas. That is why a losing defendant in a CFA case can expect to pay more than double the legal costs of a defendant in a non-CFA funded case. This in turn can put CFA-funded parties at a significant disadvantage over those whose cases are funded by other means.

[Lord Martin of Springburn]

I apologise for being late for the Committee; I was travelling from Scotland. I am sure that the noble and learned Lord will acknowledge that cases that involve 100 per cent recovery are those that go to court. There are stages where settlements can be made. The defendant can make an offer that can be accepted. If it is done at an early stage there will not be the 100 per cent costs that we were talking about.

[Lord Wallace of Tankerness]

My plane from Edinburgh, too, was delayed today; I understand the noble Lord's difficulties. He mentioned the arrangement for making offers. Part 36 arrangements were spoken to by my noble friend Lord Thomas when he moved the amendment. I will come to the matter in responding to the debate.

As I indicated, very often these cumulative costs can lead defendants to feel under pressure to settle a claim when they have no legal reason to do so, through fear of incurring payment of excessive costs as the case proceeds.

Without Clauses 43 and 45, high and disproportionate costs in civil litigation will continue. Access to justice will not become more meaningful for all parties, as we intend. If all the amendments to Clause 43 were agreed, the fundamental elements of the Government's reform package would be lost, and defendants would continue to be liable for significant additional costs across a range of cases. It is useful to put the level of costs in some context. My noble friend Lord Phillips pointed out that one general liability insurer indicated that, in 1999, claimants’ solicitor’s costs were equivalent to just over half the damages paid; by 2004, average claimants’ costs were roughly the same as the damages; and, by 2010, average claimants’ costs represented one and a half times the damages received by the injured victims, and indicated that while average damages paid have increased by one-third since 1999, average claimants’ costs have increased by two and a third times over that period. These figures reflect Sir Rupert Jackson’s findings that claimants’ costs are substantially higher than defendants’ costs, and that claimants’ costs in CFA cases are substantially higher than in non-CFA cases.

[Lord Beecham]

If damages had increased, as recommended in 1999, and kept pace with inflation, that ratio would not be quite as wide, would it?

[Lord Wallace of Tankerness]

We will come to increased damages. Damages are totally to one side in this. The point I was making was about the difference between claimants’ costs and defendants’ costs. For example, in clinical negligence cases in the period 2005 to 2010, claimants’ costs paid increased by 45 per cent while the NHS Litigation Authority’s legal costs declined by about 30 per cent. That reflects Sir Rupert Jackson’s findings that claimants’ costs are substantially higher than defendants’ costs. That is one of the things that we seek to address.

It might be helpful if I indicate at this stage our current timetable for the implementation of Lord Justice Jackson’s proposals in Part 2—subject, of course, to parliamentary approval. We believe that these are important measures and we want to implement them as soon as possible in order to control the costs of civil litigation. However, I will reflect on some of the specific issues that were raised by my noble friend Lord Thomas. These proposals will require the making of new regulations and changes to the Civil Procedure Rules. We wish to make sure that we get the details of these regulations and rules right, and that will inevitably take some time.

We are also conscious that stakeholders will need appropriate notice of when the changes will be implemented and how the details will affect them. We have already announced that the legal aid provisions in Part 1 will be implemented in April 2013, subject to parliamentary approval. For these reasons, I can inform the Committee that, subject to parliamentary approval, the Government intend to implement the Jackson provisions in Part 2 in April 2013 as well.

As I have outlined, Amendment 127, tabled in the name of the noble Lord, Lord Martin, if allowed to stand, would allow continuation of the current regime of recoverable success fees—which, for the reasons I have indicated, we are determined to tackle. Therefore, we will resist that amendment.

I turn to Amendments 118 to 120. The Government have said that in personal injury cases there will be a cap on the amount of damages that may be taken as a success fee. It is important to remind ourselves that the cap of 25 per cent in personal injury cases is a maximum in order to protect claimants’ damages. Lawyers do not have to charge a success fee of 25 per cent of damages. Indeed, in many personal injury cases where there is little risk of difficult legal issues arising, it may well properly be the case that a zero success fee, or a much smaller success fee, would be appropriate. Indeed, there is no need to claim a success fee at all. As my noble friend Lord Thomas said, an element of competition will start to emerge, and no doubt some firms of solicitors will get a reputation for taking on cases with very modest or no success fees, whereas other firms prepared to take on more risky litigation would have higher success fees. The cap will be set at 25 per cent, but that is intended in personal injury cases only and is to protect claimants’ damages. In particular, it will not apply to damages for future care and loss, which can be very substantial. I do not accept that the amendments tabled by my noble friend are necessary, because he mentioned some non-personal injury cases where that 25 per cent cap will not apply, albeit that the fee under the Bill would refer to a percentage of damages. Obviously, in non-personal injury cases, the 25 per cent rule would not apply. Amendment 118 would allow lawyers to increase the notional fee and overall costs, whereas the policy intention is to reduce these costs. Therefore, we do not believe that Amendments 118 to 120 are necessary or appropriate.

Amendments 131 and 133 seek to exempt certain types of claim from our package of reforms to the existing CFA regime. We cannot accept these amendments as they undermine the Government’s reform of civil litigation funding and costs. Under our reforms, people will still be able to bring cases on CFAs in areas where they are currently used. We are also making improvements that will help claimants wishing to fund claims on a CFA that were not available previously, and we are protecting claimants’ damages. I just referred to the 25 per cent cap; as has also been recognised, there will be a 10 per cent increase in non-pecuniary general damages such as those for pain, suffering and loss of amenity. This change is being taken forward by the senior judiciary.

Amendment 131 proposes that the success fee should be recoverable where,

“the defendant has been unreasonable (in whole or in part)”.

This relates to the recoverability of success fees from the defendant, which we do not believe should be the case. To allow for recoverability where the defendant is alleged to have been unreasonable, at least to some extent, is a recipe for satellite litigation and even more costs being generated. It will introduce uncertainty and the opportunity to allege unreasonable behaviour in every case—one can see the certain incentive to do so—which would not be acceptable.

I will return later to the point made by the noble Lord, Lord Martin, but we are introducing changes that will require defendants to behave properly in relation to offers. The changes to Part 36 of the Civil Procedure Rules—Offers to Settle—are touched on in Clause 53 and the amendments that have been moved in relation to that. The changes will incentivise defendants to make earlier and better offers; otherwise, they will suffer increased financial penalties. With regard to Amendment 133 and the question of funding of appeals, the same general arguments apply as for unreasonable behaviour by the defendants. The Government are not persuaded that any special provisions need to be made in respect of appeals, and appeals can be funded on the same basis as cases in the first instance.

As has been acknowledged in this debate, in personal injury cases we are introducing a system of qualified one-way cost-shifting—QOCS—which will protect losing claimants from having to pay the defendant’s costs. Although these measures are being taken forward outside of the Bill, including through the Civil Procedure Rules, they are an important feature of the overall package. To maintain a level playing field, these changes should apply equally and to all categories of cases. Otherwise, in cases covered by these amendments, the losing party will still be liable to pay not just the winning party’s ordinary costs but all the additional costs associated with CFAs, without any justification.

The effect of Amendments 137B and 137C is almost identical, the difference lying only in the amounts they suggest. I have spoken about the changes we are making to CFAs. As part of his package of reforms, Lord Justice Jackson recommended that the level of general damages in tort cases such as for pain, suffering and loss of amenity should be increased by 10 per cent. The Government have accepted this recommendation, and the increase will apply to all cases, however they are funded.

However, Amendment 137B seeks to make this increase part of primary legislation by incorporating it into the Bill. Amendment 137C specifies that the increase should be 33 per cent. I believe that an increase of 33 per cent would be an overcompensation. As well as exceeding the level of the proposed cap on success fees, it would be a substantial windfall for claimants not on CFAs, who would not be liable for any success fee. It would also increase the burden on defendants, which goes against the grain of these reforms.

I understand that noble Lords wish to see a commitment to a 10 per cent increase in the Bill. However, we have given the matter much thought and we do not believe that to do so is either necessary or practical. The level of general damages has historically been for the judiciary to decide. This was so in the Court of Appeal case of Heil v Rankin, which increased the level of such damages. Again, we believe it would be appropriate for the senior judiciary to take this increase forward, as indeed it is.

16:30

It may also be helpful at this stage if I deal with a question raised with me by my noble friend Lord Faulks at Oral Questions on 20 December. He asked whether bereavement damages awards would also be increased. This award is payable to certain close relatives of a deceased person in the event of a fatal accident caused through another person’s negligence. The level of the award is set by the Lord Chancellor under the terms of the Fatal Accidents Act 1976. I am happy to confirm to the Committee that the Lord Chancellor has agreed that the bereavement damages award should be increased by 10 per cent, in line with the increase in general damages for non-pecuniary loss. This increase will be made in due course by order under the negative resolution procedure, so that the increase can come into effect at the same time as these other measures.

I will now turn to Amendment 137D, which seeks to insert a new clause in Part 2 of the Bill, with the intended effect of extending the scope of one-way costs shifting in other areas of civil proceedings. The burden of costs would remain solely with the defendants and the culture of risk-free litigation by claimants would continue. We believe that this is neither acceptable nor conducive to a package of reforms to no-win no-fee conditional fee arrangements.

Amendment 138 would limit the effect of Clause 45 to areas of law where qualified one-way costs shifting operates. As the Government indicated in response to their consultation, this will initially apply in personal injury cases only. If Amendment 138 was accepted, the recovery of ATE insurance would continue in all areas of civil litigation except personal injury. My noble friend Lord Thomas raised an important issue, namely whether QOCS should be included in the Bill. We have obviously considered this. We believe, however, that it should be implemented by means of an amendment to the Civil Procedure Rules once we have finalised the policy details on how the rules should be drafted. The Civil Procedure Rules are made under the Civil Procedure Act 1997 and have the overriding objective of enabling the court to deal with cases justly. They set out the rules which govern how civil cases should be conducted, including, for example, the costs sanctions that should apply in certain circumstances. They are made by the Civil Procedure Rule Committee and agreed by the Master of the Rolls and the Lord Chancellor, coming into effect by way of statutory instrument.

We will, however, continue to work with stakeholders on the detail of a QOCS regime for personal injury cases. We acknowledge and are grateful for the expert stakeholder contributions that have been received. That work will resume in earnest once the details of this Bill are finalised. However, there are some difficult issues which we are addressing, and which need to be got right for the hundreds of thousands of personal injury cases dealt with each year: what does “unreasonable behaviour” mean? How can we balance certainty for the claimant with the need for the claimant to face at least some litigation risk, the absence of which is a major flaw in the current regime? How can we ensure fairness to all sides, and reduce the scope for satellite litigation? We all recognise that these are important, but nuanced, issues and we believe that they are best resolved by the Civil Procedure Rules. We cannot, as I have indicated, finalise a policy on the rules until we know, for example, the primary legislation as set out in this Bill, but I can say that there does appear to be broad agreement that it should not be a primarily financial threshold in personal injury cases, although that would not necessarily apply were, at some future date, QOCS to be extended to other categories.

[Lord Thomas of Gresford]

Before my noble and learned friend leaves this issue, he knows that my concern is that this amounts to a dialogue between Government and the Civil Procedure Rule Committee, with no input from Parliament whatever, and no guidance to the Civil Procedure Rule Committee on how it should proceed and what the parameters are. What I was seeking to do, in broad terms, with my amendment was to introduce certain specific things—for example, that the word “unreasonable” should not be used in these procedure rules, but we should revert to familiar territory, such as “frivolous”, “vexatious”, “abusive of process” and “fraudulent claim”, actually spelling out where a judge should have a discretion and where he should not. “Unreasonable” has such a broad meaning that it would put any litigant off if he were to be told by his solicitor, “We will take this case forward, but you have got to appreciate that, at the end, the judge may look at it and say that your conduct is unreasonable”. What does that mean?

As I endeavoured to show in my remarks, in explaining that concept in the report Lord Justice Jackson used the term “fraudulent, frivolous”, although he did not use “vexatious”. I am seeking clarity. The Civil Procedure Rules will come out of the air from somewhere and will not have any proper parliamentary scrutiny. They will have been drawn up as a result of discussion between the Executive and the Civil Procedure Rule Committee, which is entirely made up of judges and lawyers. I would have thought that there would be a constitutional position. It is more serious than anything else in the Bill.

The Civil Procedure Rule Committee should have guidance, as elsewhere in this Bill it does. Over and over again in the Bill, we come across regulations being made by the Lord Chancellor. There is specificity about that. But this position is highly unsatisfactory. If the Minister cannot put something in the Bill in the way in which he has described, what assurances will Parliament have that the Civil Procedure Rule Committee will act in accordance with certain principles?

[Lord Beecham]

I absolutely agree with everything that the noble Lord has just said. This is a fundamental change in the way in which litigation is to be conducted. It should not just be referred to a wholly unaccountable, although no doubt extremely worthy, group of people on the rules committee. Obviously, they are very eminent but they are not accountable, in the sense that the normal framework would be, to approve changes of this significance. Perhaps, as he develops his reply, he would deal with the point of restricting this significant change to personal injury cases when Lord Justice Jackson advocated it across the piece. Perhaps he would care also to reflect on a point made when colleagues and I met the Association of British Insurers no less, which, for example, said that it did not support means testing for qualified costs shifting at all. But, as I understand it, that is to be part of the scheme—if that is what presumably the rules committee, since it will not be part of the Bill, will say.

The noble Lord is absolutely right to raise these issues and I hope that the Minister will take this back and think again about how matters are to be progressed given the significance of the change.

[Baroness Butler-Sloss]

Perhaps the Minister will not mind if I add a very few words. I had not intended to intervene but, as a former chairman of a rules committee, I have to say that I have considerable faith in the good sense of the way in which it does its work. But the points that have been made are extremely relevant. It is not really the business of a rules committee to change something so dramatic. As the noble Lord, Lord Thomas of Gresford, has said, I would add that “unreasonable” is extremely difficult. The words used by the noble Lord are the standard words that have been used from time immemorial, as the lawyers say. “Unreasonable” is nothing like as serious as the other term but is liable to cause considerable difficulties of interpretation.

[Lord Wallace of Tankerness]

My Lords, it is very evident from the three interventions that this matter is clearly exercising the Committee. I certainly note from the experience of the noble and learned Baroness, Lady Butler-Sloss, having chaired a rules committee that perhaps we are going into territory which we may not have been in before. As to what my noble friend has said, I sometimes hesitate to put things on the face of the Bill because, as we all know, once there, they limit what a rules committee might be able to do if faced with an obvious set of circumstances where it does not believe there should be one-way costs shifting, and it can inhibit that. However, I take the point that unreasonableness could be going too far towards the other extreme in terms of its lack of clarity.

My noble friend asked: if it is not possible to put something in the Bill, what assurances could be given? That is something we shall certainly want to reflect on when considering these contributions. I am sure that we shall have an opportunity to address this again at the next stage of the Bill, and if there are assurances that can be given, I would hope that we would be able to do so. Perhaps I may leave it at that for the moment. We recognise the importance of the points that have been made.

I should restate that there already appears to be broad agreement that there should not be a primary financial threshold in personal injury cases for QOCS, although that would not necessarily apply were QOCS to be extended at some later date to other categories of personal injury. I hope that reassures my noble friend on that particular point.

Amendments 143 and 144 seek to replace the Lord Chancellor’s discretionary power under Clause 45(2) with a duty to make regulations in respect of the recovery of “after the event” insurance premiums relating to expert reports in clinical negligence cases. I can give the Committee the assurance that we intend to allow for this recoverability so that poor people can get expert reports in clinical negligence cases without having to pay for them upfront. However, we have deliberately kept a degree of flexibility around the drafting of the regulations.

The effect of Amendments 144A to 144D is to extend the recoverability of ATE insurance premiums to all civil cases. Unlike the current exception for clinical negligence, the proposed exception is intended to apply to ATE insurance which covers the risk of paying opponents’ costs as well as funding expert reports.

[Lord Thomas of Gresford]

My Lords, with great respect, I advanced the amendments in the context that one-way cost shifting will go through, as the Government say it will, in which case the defendant’s costs are immaterial. The only ATE insurance that will be required will be for the disbursements of the claimant himself, which would not otherwise be covered. That is the area to which I am referring in those amendments.

[Lord Wallace of Tankerness]

My Lords, we believe that the package of proposals seek to end ATE insurance premiums being charged to the defendant with the specific exception of clinical negligence cases. To start unpicking it in such an important respect would not retain integrity of the proposals as a whole. I hope that I am not misinterpreting what he said, but my noble friend has suggested that it might be possible to split or share the recoverability of success fees or ATE insurance premiums. Indeed, I think that the Bar Council has suggested that some success fees or ATE insurance premiums should be payable by the losing side with the remainder payable by the claimant. Lord Justice Jackson made alternative recommendations on partial recoverability of success fees and ATE insurance premiums in the event that his principal recommendations were not accepted. But the Government had a full public consultation on both the primary recommendations and the alternatives and gave careful consideration to the responses. We decided to take forward the primary recommendations—abolishing the recoverability of success fees and ATE insurance premiums—as the best way of restoring proportion and fairness to the CFA regime.

It has been suggested, as referred to in Amendment 146, that the market may not provide for or adjust itself sufficiently to take account of these. The amendment requires the Lord Chancellor to,

“have regard to the financial and commercial viability of the insurance market”,

in making regulations under Clause 45(2). I accept that the changes the Government are seeking to implement are fundamental, but we expect the insurance market to respond positively to them. It is easy to say ahead of an event that all sorts of appalling things will happen, but after 1999 the market certainly adjusted to the opportunities with ATE premiums, and it is not surprising that those who wish to maintain the status quo are making substantial representations to that effect.

16:45

Ministry of Justice Ministers and officials have met a substantial number of different insurers as the proposals have been developed since Lord Justice Jackson’s recommendations were published. Although some providers have said publicly that they will pull out of the ATE market if the changes go ahead, others have indicated that they will look positively at developing products which meet market needs as the details of the proposals are finalised.

Amendment 145 seeks to ensure that the costs of disbursement and any additional insurance taken out against adverse costs after the introduction of QOCS can be recovered from the losing side. The amendment goes against the objectives behind Clause 45, which is to reduce costs associated with ATE insurance.

Amendments 147A and 148A would have almost the same effect in that they would allow the ATE insurance premium to remain recoverable by way of a costs order, which may potentially be set at a much higher level than what is being proposed in the Bill. An inflated cost burden will remain with the losing side, which cannot be right in the circumstances.

My noble friend Lord Thomas and the noble Lord, Lord Martin, referred to offers to settle, which are dealt with under Amendments 158 to 162. Again, the Government do not feel able to accept the amendments, which are either unnecessary or inappropriate.

It might help if I say something about part 36 of the Civil Procedure Rules, dealing with offers to settle. The current rules permit the court to impose what are, in the main, costs sanctions against a party that refuses an offer made by the other party but then does not beat that offer at trial. The sanctions are designed to encourage early offers and early settlement of cases, as the noble Lord, Lord Martin, indicated, so that both parties are spared substantial costs in both time and money. Lord Justice Jackson argued that these costs sanctions need redressing in favour of claimants. As we set out in our consultation response, we intend to amend the rules in order to encourage claimants to make offers and defendants to accept them. Clause 53 enables rules of court to be made to permit a court to order an additional amount to be paid to claimants by defendants who do not accept a claimant’s offer to settle which is not subsequently beaten at trial.

As I have said, the intention is to set the additional amount payable at 10 per cent, but there are issues to be resolved as to whether 10 per cent is appropriate in every case, in particular in higher-value claims. We will continue to work with stakeholders on what the details of the rules should be, but I hope the Committee will agree that these are matters best left to the rules. For example, the amendment would apply the increase in all cases, whatever the value of the claim, whereas we are discussing with stakeholders whether there should be some cut-off or tapering in higher-value claims.

Amendment 162 seeks to include in the value of non-monetary benefit any,

“injunctive, declaratory or other non-monetary relief and any form of vindication of the claimant’s reputation”.

The amendment is unnecessary. It is the Government’s intention that such matters would be included in the definition of non-monetary benefit awarded to the claimant in any event should the additional penalty be calculated in that way. Clause 53 gives some flexibility to make sure that the rules are appropriate across all categories of law, and it is our intention that they should be.

Amendment 161 seeks to establish a procedure to review every three years the level of the additional amount payable by the defendant. This is not necessary, particularly if the flexibility currently afforded by Clause 53 is maintained. The Lord Chancellor will have the power to review the level of sanctions and can be called to account for that if necessary. The Government are committed, as has already been indicated to the Committee in previous debates, to a post-legislative review of their reforms between three and five years after the Act is passed, which could include the level of the additional amount.

Finally, Amendments 190, 192 and 193 seek to prevent the implementation of the reforms until certain requirements have been met. The Government have given a commitment to implement the measures, which we have outlined outside of this Bill. I hope that the detail of that has given the necessary reassurance.

I am grateful for the indulgence of the Committee in answering a considerable number of amendments. However, I think that it has been useful to consider this—as it were—omnibus set of amendments, which have raised all the different elements of the package. I urge noble Lords not to press their amendments.

[Lord Martin of Springburn]

On the incentive to settle early—I am trying to put this in layman’s terms—is the noble and learned Lord saying that a claimant can, through his solicitor, put it to the defendant that it would be a reasonable settlement, for example, to pay X amount or to print something in a particular magazine that would help the defendant to get his reputation back? Is the noble and learned Lord saying that, if such an offer is refused by the defendant, that would be taken into consideration by the court?

[Lord Wallace of Tankerness]

I think I understand what the noble Lord is saying and I think I gave an indication on that point. Let me just try to find that—

[Lord Thomas of Gresford]

May I help by saying that my Amendment 162 goes directly to that point?

[Lord Wallace of Tankerness]

As I said in response to my noble friend Lord Thomas, we do not believe that that is necessary because it is the Government’s intention that such matters would be included in the definition of non-monetary benefit awarded to the claimant in any event should the additional penalty be calculated in that way. Clause 53 gives us the flexibility to do that so that the rules can be made across all categories of law. It is our intention that they should be. However, perhaps I may put that in writing, in a letter to the noble Lord that I will circulate to other Members of the Committee, to explain the matter in more detail.

[Lord Thomas of Gresford]

My Lords, I am most grateful to all noble Lords who have spoken in this debate and, in particular, to the noble and learned Baroness, Lady Butler-Sloss, for her support on the issue—which I regard as having constitutional significance—about whether the Civil Procedure Rules should be formulated without Parliament having any input into them at all. It seems to me that it is for us to decide, one way or the other, what the particular parameters should be.

Let me just pick up on two points. First, should the means of the claimant come into it at all? The insurance industry does not want that, but the proposal in the Bill is that the claimant’s means should be taken into consideration. What about the meaning of “unreasonable”? The meaning is so broad that it should really be narrowed down. On that issue, I want to hear further from my noble and learned friend and I shall be talking to him about it between now and Report. I will take the issue further if necessary.

Secondly, on the question of splitting the burden of the insurance premium, it seems to me that that is a sensible way to go forward. The corks from the champagne bottles will be popping down in the City when people read my noble and learned friend’s response that the premium will fall entirely upon the claimant. Why should it not be split? There would be advantages both ways in splitting the premium: first, there would be an incentive for the claimant to ensure that premiums are not too high and are not, as at the moment, left completely in the air; on the other hand, if you split the premium in the staged way that my amendment proposes, there would be a great incentive on the defendants to settle. The course that I have suggested includes advantages beyond the mere way in which the liability falls. I would like to hear a little bit more about why the Government prefer Lord Justice Jackson’s first proposal, as opposed to his alternative proposal, which I am not persuaded is the better one. I shall certainly return to that matter again.

I remind my noble and learned friend that, on this side, I have accepted that the success fee should be paid by the claimant from his damages, subject of course to a limitation of up to 25 per cent. I agree with him—in fact I made the point earlier—that the probability is that solicitors involved in non-risk litigation will advertise, “No success fee payable here”. Those bigger firms that get involved in the riskier litigation will do a very determined assessment of what risks they are prepared to carry in advertising their own services subject to a success fee. I see that there is an advantage in that. I shall read and study what the Minister has said and, I hope, discuss the matter further with him and come back on specific issues at Report. At the moment, I beg leave to withdraw my amendment.

Amendment 118 withdrawn.

Amendments 119 and 120 not moved.

Amendment 121

Moved by

[Lord Beecham]

121: Clause 43, page 30, line 12, at end insert—
“( ) The amendments made by subsections (2) and (4) do not apply in relation to proceedings that include a claim for damages for—
(a) death; or(b) physical or psychological injury,resulting from any breach of duty trespass to the person.”

[Lord Beecham]

I will not detain the House long on this group of amendments, which sets out a menu—perhaps almost an à la carte menu—of cases in which it might be appropriate to depart from the general principle that the Bill advances. In other words, it would extend the success fee exemption into personal injury cases more generally.

Amendment 121 is of a general nature and perfectly straightforward. It is my understanding that, at the time when the changes were introduced to legal aid for personal injuries and the initial scheme established under the Administration of Justice Act and Access to Justice Act 1999, reservations were expressed by the then Opposition—both parts of it—which I personally shared at the time and still share. I have already outlined the problems that we have with the nature of the uplift and deduction that is contained in the Government’s proposals. I shall not expatiate on those any longer.

Amendment 122 looks to complete exemption for employment liability personal injury cases. These are usually intrinsically more difficult than, for example, the RTA case, which all of us agree should not carry the position in relation to success fees and the like that currently apply. Certainly, as a practitioner who spent a lot of time on those cases, I would have thought that there was a strong case for taking those out of the arrangements proposed by the Bill, and that success fees and ATE insurance should rest where they currently do on defendants.

Amendment 129 looks at a different category of case—cases of maximum severity on which the Judicial Studies Board guidelines lay down parameters. These cases are necessarily more complicated, certainly in relation to disbursements and the like, and generally heavier to promote than the conventional claim. It may be that in those cases a different regime should apply.

Amendment 130 deals with the case of occupier’s liability. There are not all that many personal injury cases arising out of occupier’s liability claims. I am advised that there was a watering down of protections under the Occupiers' Liability Act 1984, although I have to confess that I do not recall quite how much watering down took place at that time. Nevertheless, these are cases in which, again, there are rather more involved in pursuing them than in a straightforward claim and this is also a possible case for modifying the general approach of the Bill.

17:00

On Amendment 134, the noble and learned Lord has referred to a welcome provision for increasing the damages for bereavement, which are generally thought to have been too low in any event. That increase will also assist in these cases, but the proposal in this amendment is to deal with success fees and to provide that they might also be levied in these cases, which are often somewhat more difficult to pursue for the very reason that the unfortunate deceased cannot give an account of what happened. It is not always the case that that is what makes it more difficult to pursue but it very often will be, and in those circumstances the success fee argument about that falling on the defendant becomes correspondingly stronger.

Amendment 136A also refers to an area of law which I think we come on to later. The noble Lord, Lord Alton of Liverpool, has an amendment on asbestosis, which is a terrible disease—I have some professional experience of it—but not the only disease that has caused great pain and suffering for many people. There is a whole raft of cases, such as pneumoconiosis cases, while others such as repetitive strain injuries are somewhat different. They are troublesome but by no means as serious, yet nevertheless quite complicated, and some of them have given rise to compensation schemes negotiated nationally. There is of course still the issue of pleural plaques, which has been adequately dealt with in the noble and learned Lord’s jurisdiction although not in the constituency, as it were, of his noble colleague the Minister. England has not taken the same view about pleural plaques as Scotland, which is unfortunate, but again that underlines both the complexity of the system and therefore, in our view, the need not to restrict the successful claimant’s damages by reducing them to paying for success fees and “after the event” insurance.

Amendment 136B makes the point that in personal injury cases where a public authority is liable it seems reasonable that such an authority, representing as it does the whole community, should participate in pooling the risk which the scheme was originally designed to promote rather than the cost of it being met by successful plaintiffs. In this context, the whole community should be involved since it is authorities acting on its behalf who will have been deemed liable, whereas in other cases it is sectional interests represented by separate insurance companies—for which we would still argue, but this is a different case.

Those amendments refer to the success fees and the following amendments deal with costs orders. Again, there is a general application of the principle to all personal injury cases, unless of course we have QOCS fully implemented in a way which goes somewhat further than the Government currently propose, with the limitations that we have already discussed. Again, Amendment 152 would make ATE costs recoverable in the case of employers’ liability cases, while Amendment 156AA makes the same argument in relation to disease cases and Amendment 156C preserves cost liabilities by agreement for industrial illness liability cases.

It would be welcome if the Government were to welcome all these. I anticipate that that will not be the Minister’s response, but it may be that, on further consideration, some of these categories of case would evoke more sympathy, and possibly a modification in the Government’s stance, than others. For that reason, I invite the Minister, if not today then later, to peruse the menu with particular care and maybe select some, if he cannot select all, of these improvements, as we would regard them, to the scheme that the Bill lays out.

[Lord Newton of Braintree]

My Lords, I wonder whether I might come in briefly, not least because of the reference to the later amendment of the noble Lords, Lord Alton and Lord Wigley, and others that is acknowledged to be related to asbestosis, which in effect is raised by one of the amendments in this group. I hope that the noble Lord, Lord Alton, will understand. I had indicated that I might speak in support of his amendment but I hope that he will take this as a speech in support; I do not expect to be here if this drags on as it looks like doing. Am I allowed to say that kind of thing?

The main thought that occurred to me was—I say this before coming more positively to the noble Lord’s amendment—that this and the two subsequent amendments look to me like a pretty scattergun approach. By the time I had read through them over the weekend, there appeared to be almost nothing that noble Lords on the Front Bench opposite were not seeking to exempt, and on a very wide front. I would like to know, for example, what Amendment 121 means by “physical or psychological injury”. We can all understand what is meant by death, but “physical or psychological injury”, which I think is referred to in that amendment—I hope I have got this right—appears to be of a breadth that could cover anything from a cut finger to hurt feelings when someone was nasty to you, and I am not aware of a definition of “physical or psychological injury” that would narrow it. If I am wrong about that, no doubt the noble Lord, Lord Beecham, will tell me. Some of his other amendments are more closely defined and relate, for example, to definitions in the criminal injuries compensation scheme. If he wishes to intervene, by all means he may, but I thought that this was a blunderbuss approach.

[Lord Beecham]

Well, I am sometimes guilty of blundering, but a good example of psychological injury would be post-traumatic stress disorder, which is not at all uncommon in the case of severe accidents. That is the sort of territory. This is a fairly conventional term in personal injury litigation.

[Lord Newton of Braintree]

As a non-lawyer trespassing with great trepidation into this lawyers’ paradise territory I am prepared to accept that, but to a layman “physical or psychological injury” as a definition of any serious kind would cover pretty well anything. If I am told I am wrong then I will accept that, but at the moment I think it is in doubt.

Having made that point, which will indicate that were there to be any question of pressing some of these amendments to a vote—I understand that there is not—then my noble friend on the Front Bench will be thrilled to hear that I would not be minded to support them, I turn to the more positive point about Amendment 156A and the amendment later on of the noble Lord, Lord Alton, relating to asbestosis. I have some experience of claims relating to that disease—or rather to mesothelioma, the form of cancer to which it often gives rise—in my capacity as both Minister for Disabled People and Minister for the industrial injuries compensation scheme, and latterly as chairman of a hospital sometimes concerned with these respiratory diseases. I think there is a real case for wondering whether we should not maintain assistance to that group of people.

There are two reasons for that. One is that this condition is what you might call very slow burn. Exposure to asbestos that occurred very many years ago may give rise much later to mesothelioma, one of the nastiest forms of cancer. In consequence, there could be significant difficulties in proving the causation. Therefore, there is a case for making sure that legal aid is available in such cases. The nature of this disease and the problems associated with it also make a strong case in ordinary human terms for ensuring that people who have contracted it through no fault of their own as a result of something that happened during their employment should be helped to establish whether their employer could be held liable for that, or, indeed, whether they should get compensation in any other way. Therefore, I hope my noble friends on the Front Bench will not consider that this amendment would have a scattergun effect but that it is well targeted and deserves careful consideration. I hope that the noble Lord, Lord Alton, will make his case alongside mine in an hour or two or whenever we reach the relevant amendment.

[Lord Alton of Liverpool]

My Lords, I wish to intervene briefly to support the terms of the amendment spoken to by the noble Lord, Lord Bach, specifically on industrial-related injury such as mesothelioma—the issue to which the noble Lord, Lord Newton, has just alluded. We will debate that whole question later but it is worth reinforcing the point that 30,000 people have died of mesothelioma over the past 30 to 40 years and that 60,000 more people are predicted to die of this terrible disease in due course. From the time of prognosis to death, the period which elapses is usually about nine months. Whatever else, it is obvious that this is not a group of people who can bring in vexatious or frivolous cases. If the Government are minded to look for some exceptions—the rifle-shot approach that the noble Lord, Lord Newton of Braintree, has just advocated, not the blunderbuss approach—clearly this is one of those groups which I hope they will look to exempt. The measure does not even ask for legal aid; it simply asks for the status quo, which is that success fees can be paid in such cases.

[Baroness Butler-Sloss]

My Lords, the noble Lord, Lord Walton of Detchant, would have wanted to speak at this moment or, indeed, on the amendment of the noble Lord, Lord Alton. He reminded me of the appalling stories of the miners and the solicitors who eventually took virtually all their money. Whatever else is done, it is of enormous importance that one should be very strict about how much can be taken from the damages that may be received. However, more important than that is this special class of asbestos sufferers. They are not large in number, although the noble Lord, Lord Alton, gave extremely worrying figures that I did not know about. The life expectancy of these people is dependent on whether they are suffering from blue asbestos or white asbestos. They are a very special case. One entirely understands what lies behind the Government’s need to introduce this measure. However, whatever else they do, one hopes that they will recognise this particularly special case.

17:14

[Lord Newton of Braintree]

My Lords, given that this is Committee, perhaps I may intervene again. I forgot to say, because I stood up in some haste, that the numbers point is interesting, as a consequence of what I call the slow burn, where a lot of cases that are appearing now relate to injury caused many years ago. My understanding is that cancer is one of the few whose incidence is, if anything, increasing rather than decreasing, because of the delay from the time of causation in such cases coming through. I think I have got that right, but whether I have or not I am delighted that the noble and learned Baroness, Lady Butler-Sloss, joined us in support of this point.

[Lord Wallace of Tankerness]

My Lords, perhaps I may deal with Amendments 121, 122, 129, 130, 134, 136A, 136B, 151, 152, 156AA, 156AB and 156C together. All seek to exempt certain types of cases from the Government’s reforms of no-win no-fee conditional fee agreements—CFAs. My noble friend Lord Newton described some of these amendments as being parts of a blunderbuss approach. I think that the noble Lord, Lord Beecham, described it as a bit of a shopping list. I shall come on to the issue relating to mesothelioma sufferers.

The amendments clearly stem from concerns that individuals may be unable to afford to bring certain personal injury cases. My noble friend Lord Newton of Braintree anticipated later amendments in the group beginning with Amendment 137A, which will be moved by the noble Lord, Lord Alton. I recognise that other issues arise such as the difficulty in trying to track down previous employers. I know that my noble friend Lord McNally will respond to that group of amendments and bear in mind what my noble friend Lord Newton said. When I was a Justice Minister in Scotland, I remember the plight of many mesothelioma sufferers, who were trying to get the process expedited so that their cases could be brought to court because many of them had a very short life expectancy. I certainly recognise the importance of those cases and I am sure that there will be a fuller debate on the back of the amendments to be moved and spoken to by the noble Lord, Lord Alton.

The difficulty with the other amendments in this group, as my noble friend Lord Newton said, is that when taken together they do not leave very much of the original intention of the Bill. With regard to recoverable or non-recoverable success fees being shifted to the defendants, it was pointed out in the previous debate that such fees have led to an escalation of costs. A plaintiff does not have the same interest, or may have no interest, in seeking to contain costs in those circumstances. One amendment relates to situations in which the defendants are public authorities. Some people have to pay the price of these additional costs. In motor insurance cases, we pay them through increased premiums. Council tax payers will no doubt bear some cost when escalating costs are picked up by public authorities.

The changes that we are bringing about will lead to costs becoming more proportionate. Equally, claimants will still be able to bring necessary and meritorious claims, and receive damages when they are due. However, as with privately paying clients, claimants on CFAs may have to pay some of their legal costs out of damages recovered. However, as I have indicated, we are introducing a number of measures that will help claimants to pay their solicitors’ success fees. The point was well made by my noble friend Lord Thomas of Gresford, in response to the previous debate, that in many cases no success fee is charged and some solicitors may have a selling point: “We will litigate for you, and no success fee will be charged”. That is more than likely to happen.

We must also remember that there will be a 10 per cent increase in general damages for non-pecuniary loss such as pain, suffering and loss of amenity. There will be a cap on the success fee at 25 per cent of damages awarded but, significantly, that will not apply to damages for future care and loss in personal injury cases. That will help to protect a claimant’s damages.

We have already discussed qualified one-way cost shifting. That will mean that losing claimants in personal injury cases who act reasonably will not have to pay a winning defendant’s costs, which in turn will reduce the need to have expensive ATE insurance products. Amendment 156AB is intended to ensure that the changes to the ATE insurance arrangements under Clause 45 do not come into force until the QOCS regime has come into force. I assure the Committee that we intend the package of reform to come into force at the same time.

On Amendment 156C, Clause 46 prohibits membership organisations from claiming the costs incurred by self-insuring against risk. That point was made by the noble Baroness, Lady Turner, in our previous debate. As I understand it, under the Access to Justice (Membership Organisation) Regulations 2005, bodies are listed by the certification officer. Trade unions represent an important number of those bodies, but a number of others have also been listed under Section 30 of the Access to Justice Act 1999.

As has been said on many occasions, the Government have decided to abolish the recoverability of ATE insurance premiums, and believe that this change should apply equally to arrangements for membership organisations. Retaining the recoverability of ATE insurance premiums for membership organisations would create an unfair advantage and mean that defendants in claims brought by members of such organisations would continue to be liable for significant additional costs in such cases and be placed at a disadvantage.

Lord Justice Jackson made no formal recommendations in reference to member organisations. In such a compendious report, one may wonder why not. Nevertheless, in his response to the consultation, he supported the Government’s proposal that changes to the recoverability of ATE insurance premiums ought to apply equally to the arrangements for membership organisations in order to remove any unfair advantage. That view was shared by 63 per cent of respondents to the consultation, who thought that retaining recoverability of the self-insurance element for membership organisations would create an unfair advantage. It is to ensure that that unfair advantage does not occur that we resist the amendment, and I invite the noble Lord to withdraw it.

[Lord Beecham]

My Lords, I reassure the noble Lord, Lord Newton, that this is a group of probing amendments to see which, if any, the Government might feel on reflection ought to be accepted and the scope of the current scheme in effect retained. Clearly, the answer has not been one to encourage optimism on this side of the House, but there are cases, particularly the last one to which the noble and learned Lord referred, where the Government are trying, as so often, to have it both ways.

In previous debates we have heard trade unions invoked as a source of advice and support for their members once legal aid goes. This is an area in which trade unions have for a long time been active in promoting the interests of their members. They will now lose that benefit. In my view, there is a strong case for the Government to look again at the position. I accept that they want organisations such as trade unions to support their members in the field of legal advice, but if so, they ought to endeavour to facilitate that, not at the Government's expense but by retaining success fees and the self-insurance element that the noble and learned Lord proposes to remove.

Asbestosis is probably the most acute of the diseases involved, and when we will come to a debate on it I will strongly support the noble Lord, Lord Alton. It is sometimes forgotten that it is not just direct exposure to asbestos that causes problems and has resulted in litigation but indirect exposure. There have been cases in which wives dealing with laundry and clothes that have been contaminated with asbestos fibres have themselves suffered injury. They have eventually succeeded in obtaining compensation, but that is an illustration of the kind of difficulty and complexity that can arise. There may well be other cases. Every few years, a new condition reaches the courts. Asbestosis was one; miners’ lung disease, pneumoconiosis, was another; and there are others. Although it is certainly true that, as the noble and learned Baroness, Lady Butler-Sloss, pointed out, some lawyers rather exploited the position in some of those cases involving minters, on the other hand many lawyers took these cases on over a very long period at considerable risk to themselves before obtaining settlements. That eventually led to the sensible outcome of a national scheme that determined a scale of damages and, for that matter, the scale of costs. There will be other cases. One imagines that cases may arise over time in the nuclear industry. There have already been some in which radiation has caused damage. I hope that at the very least the Government will look at those cases sympathetically.

The noble and learned Lord referred again to the number of cases that are being pursued. However, I remind him of the figures that I quoted in the first debate: the very detailed analysis of 69,000 cases showed that a third would simply not have been brought under the proposals presently in the Bill. A significant proportion of cases would therefore be pursued, many of them no doubt successfully although others not.

If we are still in the business of trying to promote access to justice by spreading the risk so that it is not always against lawyers’ interests to run cases with a lesser probability of success, that is something that the system should encourage. The fear is certainly that cases with less than a 75 per cent chance of success will just not reach the courts. A very respected firm, Thompsons, which acts for a number of trade unions, indicates that at the moment it takes cases with a risk level as low as 50 per cent, and it cannot see how it could conceivably do that in the future. Yet some of the very cases that we have been talking about involving asbestosis, pneumoconiosis and so on started off with a probable success rate of 50 per cent at best and arguably even worse. If we are not to close the door on emerging cases of that kind or on cases with perhaps a two-thirds chance of success, we have to have a balance to which success fees can contribute. The Opposition’s case is that that ought not to be simply a matter for successful defendants; it ought to be a collective insurance risk. That is the position that we seek to get to.

[Lord Lester of Herne Hill]

I am very grateful to the noble Lord; I had not intended to intervene. Does he agree that in the public interest we ought to be concerned not only with securing a fair balance between claimants and defendants but with being quite clear that there must be adequate safeguards against abuse by members of the legal profession in relation to conditional fee agreements and success fees? I have encountered abuses, for example in the equal pay area, where claimants’ lawyers have insisted that in cases against public authorities the women concerned should enter into binding agreements to ensure that a cut from the damages for equal pay for these poorly paid women goes to the lawyers and that no individual settlements are made without the consent of the lawyers. Should we not be very concerned about those kinds of things and about driving up the level of unnecessary litigation?

[Lord Beecham]

I entirely agree with that and I think that there ought to be a regime for the determination of the size of the success fee in any event. If a case is brought, that matter should be capable of being decided by the court. The noble Lord’s point is one which unfortunately will see damages being taken willy-nilly precisely from claimants in that category. They will not have the opportunity of getting the success fee paid by the other side. In a sense the noble Lord is supporting the case I am making. I entirely agree that members at both ends of the legal profession need to be monitored and that the courts ought to be taking a more positive role both in case management, as I indicated in the first debate, and in the assessment of what is an appropriate success fee. I beg leave to withdraw the amendment.

Amendment 121 withdrawn.

Amendment 122 not moved.

Amendment 123

Moved by

[Lord Bach]

123: Clause 43, page 30, line 12, at end insert—
“( ) The amendments made by subsections (2) and (4) do not apply in relation to proceedings that include a claim for damages for loss resulting from any breach of duty to exercise professional care or skill.”

[Lord Bach]

My Lords, in opening this group of amendments, I shall do my best to be as brief as I can. The Committee is obviously in very tolerant mood this afternoon, as was shown to the noble Lord, Lord Thomas of Gresford, who made an excellent speech in favour of his amendments in the first group. His speech was almost as impressive as the report of Lord Justice Jackson in its completeness and, I was going to say, in its size. Both pieces of work are very much to be commended.

Before I discuss Amendment 123, I shall also speak to Amendments 124, 126, 132, 153, 154 and 156 in the group. It is worth pointing out to the Committee that for shorthand purposes we talk about the Government, as it were, accepting Lord Justice Jackson’s report. They have accepted part of it and rejected other parts. It is important to remember that at all times. Lord Justice Jackson himself, as all people in his position do, when putting forward his report before the previous general election, made it clear that it was to be seen as a package or not at all. Of course, the Government have decided to pick and mix—maybe all Governments, to be fair, would have decided to pick and mix, but this Government have certainly done that. What we meet in Part 2 of the Bill is not pure Jackson; it is very much a part of Jackson that the Government like but not the part that they do not like. In particular, that relates to legal aid and to clinical negligence. Other matters in Part 2 are not just not pure Jackson; they are anti-Jackson.

I shall set the scene for Amendment 123. An elderly pensioner places her life savings of, say, £40,000 with an investment adviser. That adviser assures her that he will keep it ticking over so she has some moderate income but will not be exposed to risk. Instead, the adviser, who has not his client’s but his own interests at heart, places the money in a high-risk instrument for which he gets a hefty broker fee. This otherwise impecunious pensioner loses all her money in the first year. Today, if she sued that investment adviser for professional negligence and won her case, he would have to give her back the £40,000—her own £40,000—pay her lawyers’ costs and a success fee which can range up to, as we have heard, 100 per cent of basic costs if he denies liability for as long as possible, and the insurance premium that the pensioner takes out to cover herself should she lose the case.

Under the proposed legislation, should it go through unamended, things would change dramatically. The pensioner would get her money back but then her lawyer’s success fee and the cost of insuring against losing would be deducted from her original capital. In short, the £40,000 might become £20,000, or even less. Surely the Committee would agree that that is an inequitable outcome, and not one that many in Parliament or outside could welcome. It is simply a by-product of legislation that purports to deal with tens of thousands of road traffic personal injury cases—largely whiplash—that drive up the cost of motor insurance, rather than the few hundred professional negligence cases which is what this amendment is about, that are heard each year.

It is only common sense that we should not seek to legislate for a system of litigation that allows professional people to prey on their impecunious and weak clients. The Committee today is full of professional people of one sort or another and the House is even more full of them when it is sitting. As we all know, being in a profession is a privilege. When a professional takes on contractual fiduciary and moral duties to do their best to help their clients, they take on an important responsibility. We have professions in our society because we need experts who specialise, whether it is expertise in finance, in my example, the law, engineering or medicine. They should know that society takes seriously if and when they act negligently, with malice, or breach their duty of care. Should we make it so difficult for the individual to take action and claim back their damages in full? Would that not have a corrosive impact on trust in the professions and their regulation, which is something that professions and the professionals themselves should not and do not welcome. We think that the answer to this dilemma is to listen to what Lord Justice Jackson said and extend one-way costs shifting to all litigation, not just keep it to personal injury. That in one fell swoop would deal with the problem that the Government talk about with regard to losing defendants’ paying the insurance premiums of winning claimants, which we are told simply inflate costs without adding a huge amount of value.

Secondly, perhaps we could limit the non-recoverability of success fees to 80 per cent of the litigation market—the side of the market that has more nuisance and abuses— which is low-value road traffic cases and public liability personal injury cases. Should we fail to do this, and leave the Bill unamended, the perpetrators of the PPI mis-selling scandal—the mortgage mis-selling scandal of the 1980s and 1990s which noble Lords will remember—and thousands of other instances when rogue professionals have abused their position of trust, will go unpunished and unheard. Their victims will multiply in a system where those who have been wronged are dissuaded from taking action against rogues, knowing that Parliament will have legislated to substantially limit their rights to redress. It would be something of a rogues’ charter.

I end what I have to say about this amendment by citing the views of the president of the Professional Negligence Lawyers Association who said that many litigants face the dilemma of having had their trust betrayed by one professional adviser and that their only redress by way of litigation is to risk remaining assets and perhaps insolvency by trusting another—meaning another professional adviser—to win their case. That is not a satisfactory position and we ask the Government to think again.

The subject of Amendment 124 is privacy and defamation. Both matters are—as always, but particularly at the moment—the subject of intense discussion. We are still living through a scandal that was as devastating to the reputation of the media industry as the expenses scandal was to the political world. Every Member of this Committee believes in both the freedom and the viability of the press; clearly that is something that unites us. At the moment we have the potential of major reform of the law of defamation being pursued through Parliament. The Minister who will respond to this group of amendments has responsibilities in that area. I commend what he has done up to now and I am delighted that the noble Lord, Lord Lester, is in his place, because he is in many ways the author of the reform of defamation that I hope we will see before long.

We welcome discussion and reform, which are important. The balance is wrong between the freedom of the press and the rights of the individual to be free of tortious defamation; we should look at that. However, the impact on the law of the legislation that we are discussing will be too grave for us to stand by while it passes. The impact of Part 2 of the Bill will be to make defamation and privacy proceedings in the main completely inaccessible to the average citizen. It is not just the Official Opposition who see this problem. The Liberal Democrats tabled amendments on Report in another place to exempt these cases from the reforms. The Joint Committee on the Draft Defamation Bill stated:

“Nonetheless we are sufficiently concerned about”,

the Government's proposals,

“to ask the Government to reconsider the implementation of the Jackson Report in respect of defamation actions, with a view to protecting further the interests of those without substantial financial means”.

I come to the Dowler case. As the Committee will know, Bob and Sally Dowler lost their daughter Milly. They wrote to the Prime Minister, asking for the reforms that we are debating to be withdrawn. They wrote:

“What we wanted to make clear to you is that we could not have done this without a “no win no fee” agreement ... What helped was the fact that we would be insured if we lost a case and a premium for the insurance would be taken from the other side if we won. Without that we would not have been able to start a case or even threaten it … We are sure that you do not want to go down in history as the Prime Minister who took rights away from ordinary people so that large companies could print whatever they like and break the law without being able to challenge them”.

That is perhaps the best example I can give the Committee this afternoon. It shows what is at stake here.

Let us imagine that, in the wake of a scandal as extraordinary as the hacking scandal—the hacking of the phones of hundreds of innocent people—our response in Parliament was to make it more difficult, or even impossible, for the victims to take action and expose further scandals. Without the powers of the court to compel disclosure as part of litigation, we would not have seen the mountain of evidence that we now know exists. There would have been no information, no investigation and no justice.

Why are privacy and defamation cases so problematic in this legislation? It comes down to the fact that in general the courts here do not award huge damages to victims of defamation or invasion of privacy. Damages are very low—an average of some £4,000. According to research analysis by Mr David Howarth, a Cambridge law professor better known to us as the shadow Justice Secretary in the previous Parliament and MP for Cambridge, average costs are around £11,000. According to Lord Justice Jackson, insurance fees are around £65 for cover of £100, and I am afraid that defendants sometimes rack up costs in denying liability for as long as they can. So the costs of the claimant and defendant dwarf the damages that are sometimes involved.

17:45

Should I successfully sue a newspaper now for defaming me, I will receive small damages and the satisfaction of redress. My lawyer's fees will be paid by the paper, as is normal, as will their success fee and the premium for my insurance. Under the new system, I would receive a small uplift of 10 per cent in damages, taking the figure in my example to £4,400. My lawyer would receive his costs from the wrongdoer—the defendant—as is normal. However, the success fee would come from my damages. If the paper had stretched out the litigation, the success fee might be as high as 100 per cent of base costs: £11,000. In this example, I now have a net loss of £6,600 from winning my case.

However, we argue that it might get worse. My insurance premium will also be taken from me as a winning claimant. The defendant has stretched this out and built up costs. My insurance premium, which of course reflects the potential cost liability, is perhaps £10,000. We should remember that the Government have no plans for one-way cost shifting in this type of case, even though the case for it has been well argued by the noble Lord, Lord Thomas of Gresford, and by my noble friend Lord Beecham, among others. There is no succour for me to be had there. Suddenly, despite winning my case, in my example I am left with a bill of £16,600. Who on earth would take action to defend their good reputation if they faced being left with an enormous bill?

According to Lord Justice Jackson, we are talking about between 200 and 250 cases a year. It does not appear to be a great crisis in a compensation culture. Without doubt the result of the Bill would be that the ability to take action would be very much restricted for ordinary people and would allow media companies, if they were so inclined, to print whatever they liked without challenge.

I have no problem with fixing the law around defamation if we find it to be broken—and I think that changes need to be made. However, making it unenforceable would be something quite different. I hope that the Government will think about cases of this kind and will deal with this credibly, instead of carrying on with their approach so far: namely, the blanket dismissal of a compelling argument advocated by this side of the House, by the Liberal Democrats in another place, and by a Joint Committee of both Houses.

I will now be very quick. Amendment 126 is about small businesses. We are trying to deal with small businesses suing large ones for breach of contract. Like professional negligence cases, these cases do not involve general damages per se but concern past loss. It is hard enough now for small businesses, even without being in that situation. If they sue for breach of contract, they do not get all their losses back. It is difficult for them to find a lawyer to take their case. I fear that this may be a serious miscalculation. There is no award of general damages that will increase by 10 per cent in these cases. There is no capping of how much lawyers can take, either. We know of the general sympathy that there is for small businesses around the Committee and in both Houses of Parliament. If the Bill is not amended, they will be prey to the worst kind of economic uncertainties at a time when they are struggling.

Finally, I come to Amendment 132. I hope the Government will think about this as well. Cases of public importance are highly risky, and we want to encourage lawyers to take them on because they set precedents and help make our law by evolving the common law, which is crucial, as the Committee will agree. If those cases are restricted to just the wealthy, then the cases in which the rights of the impecunious are in question will just not come before the courts. They are difficult and tough cases. We want to make sure that they get a fair hearing. It is something we want the Government to consider amending before the Bill goes through.

I am sorry to have taken up so much of the Committee’s time on these important amendments. They could, of course, have been split into different groups, but perhaps it is right that they have not been. I hope that the Government will listen carefully to what has been said in this group. I beg to move.

[Lord Lester of Herne Hill]

I shall just say something about Amendment 124 in relation to defamation and privacy. This could take hours of a separate debate, but I am going to try to be extremely brief. As the noble Lord, Lord Bach, has indicated, this has to be seen in the context of a defamation Bill that has not yet been published. We have had my Private Member's Bill, a government draft Bill and consultation, and I hope very much that there will be an actual Bill in the Queen’s Speech in the next Session.

I suggest that it is perhaps not appropriate to be moving amendments at this stage so far as costs and insurance are concerned until one knows the substance of the actual defamation Bill. I take it—and the my noble friend the Minister will slap me down if I say something that he strongly disagrees with—to be one of the objects of the reform of defamation law to secure a fair balance between the rights of claimants and the rights of defendants; and between the fundamental right of claimants to vindicate their reputation and their right to personal privacy on the one hand and the right of defendants to freedom of expression on the other. Claimants, so far as libel is concerned, have tended to be the rich and the wealthy, not always, but mainly. The rich and the wealthy, whose lawyers are also rich and wealthy, have abused their power in the past, as the previous Justice Secretary, the right honourable Jack Straw, recognised when he introduced his proposals about capping success fees and conditional fee agreements in this area. They have abused their power by running up enormous legal costs, even in cases where there was no real defence, with the result that the defendant, normally a regional or national newspaper, was faced with a situation where the damages might be £20,000, but the legal costs might be £250,000. It was that abuse that led the European Court of Human Rights in the Mirror Group case to indicate that that had a serious and unnecessary chilling effect on the freedom of speech of publishers. I emphasise that.

The second thing I want to emphasise is that just as claimants have tended to be rich and powerful, although one wishes that the poor would also be able to vindicate their reputations, defendants are not always rich and powerful national newspapers. They may be the citizen critic accusing a public authority of abusing its power, an NGO or a small regional newspaper with very little funds to meet legal costs. I take it to be an objective of the defamation Bill to reduce the costs of litigation and to discourage litigation in the area of reputation and privacy by encouraging the use of lower courts, say county courts, not just the High Court, focusing on alternative dispute resolution and finding ways of securing equality of arms, to use the European phrase, between the parties where there is inequality of arms at the moment. All that needs to be tackled in the context of a future defamation Bill, when we can look at procedures and costs in relation to those reforms which must be designed to secure a fair balance, not a charter for rich newspapers or rich claimants. I think that until we know the Government’s final thinking on this and are able to debate it, it is premature to try to adjust the costs and insurance provisions of this Bill in order to try to tackle the kind of issues that I have inadequately summarised.

[Lord Prescott]

My Lords, I apologise for missing the first few minutes of this debate. The debate I listened to earlier on Clause 43 showed that there is a great deal of feeling about an injustice being perpetrated here in all forms of the use of no win, no cost. I have been in an interesting situation that I would like to relate to noble Lords as an example of what can happen under these new changes.

At Second Reading, I made it clear that I thought this Bill moved power and resources to the wealthy and more powerful and away from the individual, and that the individual was going to be the victim because they were seeking legal redress. These amendments will make it much more difficult to achieve that. It is really about strengthening the more powerful in our society, particularly in regard to individuals and the press. The evidence is clear in the many examples. They do this by changing the rules of no win, no cost under the 1999 Act and other legislation. Under this Bill, the cost of the insurance to take out these cases and, indeed, the changes in the risk payments, will transfer not from the loser, but from the one who has won the case. If you win the case, you are still going to pay a penalty.

In looking at the circumstances—and I shall refer to my court case on telephone hacking—one can see the fundamental difference. I am talking about individuals who see their rights being breached by the media. For example, under the system we have at the moment, I was awarded £40,000 damages. My solicitor’s costs were about £80,000. That means that I got £40,000, my solicitor got £80,000 and the insurance and the risk were included in that. What we are proposing now is to limit the amount of money paid to lawyers for the risk factor—I shall not go into all the arguments that have been made here—which is how they secure more money to take on more risky cases for more people to get access under this no win, no cost situation.

In my mind, that is straightforward. The damages come to me, they are mine. The lawyers get their full costs. Who carries all these costs? The people who lost the case, the ones who have been phone hacking, who have been breaking the law, which we are all aware of, and who have even been paying the police. In those circumstances, why should they not pay the full penalty? I understand that they quote the Mirror Group case at the European Court of Human Rights. In that case, the costs were high. Why? It has always been the practice of the press to fight until the last minute. If anybody wishes to pursue them with no-win no-fee, they say, “Sue us”. You may well have a case, but they will make you sell your house and everything else before you have sufficient resources. At the end, when you have done all that, they say, “Okay. We’ll concede the case”, and they will offer you some kind of damages. That is the pressure that puts costs up in the courts in these cases.

What would have been the effect if I had pursued my case under these new rules? Believe me, this press is not going to go away; it is still going to be committing the same offences. We have a PCC that is particularly useless and will continue to be unless we make fundamental changes. Anyone listening to the Leveson inquiry must hear that the press has not changed its mind; it is still going to go ahead and do the same things because that is how it sells newspapers. Let us assume I have a complaint of a similar nature against the press. This would mean that I would have to get a no-win no-fee situation. Given that they have already reduced the risk costs, it is highly unlikely that they may find this a risky situation. In fact, when I was complaining in this House and elsewhere about what the press was doing about phone hacking and about Murdoch, I was almost a lonely voice.

18:00

I do not think that will go away but if you reduce the risk costs, those lawyers will say, “This is a big risk, I am not going to take the case”. You will be on your own to see if you can pursue it. Let us say you find a lawyer who is prepared to do that; they will sue for damages and make the claim. Taking my case, let us even assume that the lawyer is successful, after those difficulties, and that damages are awarded to me. Under these new rules, I will have to carry the insurance cost and the risk cost, given that the difference is limited to 110 per cent. If that is the case, I will be the one who is penalised.

I worked out what the costs were under this formula. It would mean that nearly all my damages would have gone in paying the costs that I am expected to pay if I win the case, and the people who have their costs reduced are the people I am suing, even though they have admitted they are wrong. Therefore, the one who has actually won the case is worse off. They would take nearly the £40,000—I have looked at these figures and that is the possibility. Does that strengthen the individual or does it strengthen the more powerful party in this unequal relationship? Indeed, this clearly shows that the latter is the case.

A survey has just come out—I do not know whether Members have seen it—of 16 press organisations. It was conducted by the Ministry of Justice. Question 1 was:

“Do you agree that CFA success fees should not longer be recoverable from the losing party in any case?”.

The answer was:

“Yes, for the reasons set out in the response enclosed. UK law also needs to be amended to comply with Article 10 of the European Convention on Human Rights”—

and that is quite apart from being shattered from our people claiming the human rights when they are spending most of the time trying to defeat it. But the point is that there are 16 identical replies—every one of the replies from television, radio, the Guardian, the Mail, Sky, BBC, was exactly the same, to all 60 questions. All of a sudden, when they are usually divided about many issues, when it comes down to money, all 60 answers are that they should keep their position. Even the good old liberal Guardian sided with Dacre, for God’s sake—that takes a bit of thinking about. They are now agreed that they should be able to keep more of their money, even though they are the ones that transgressed in this situation. For those 16 to get together—some lawyer has written the answer to every one of them. If a trade union did that, we would be in trouble. It would be all over the front pages: “60 identical replies, it must be a conspiracy”. Of course it is a damn conspiracy. That they have come together in this survey to give exactly the same answers is perhaps not a crime, but it is near to it. They have the power to do it.

It is not new to me. When I was in the other place, they made exactly the same request to the Labour Government. The Labour Government did not agree— there was a bit of quibbling around at times but I will not go into that—and the change was prevented. We explained that it would reduce the possibility of people taking cases, it was putting the burden on the most vulnerable individual and reducing the burden on the press. That is totally unacceptable, so we rejected the change. Why have this Government come along and said, “Now we are going to give permission”? They must have in the records the reason why we refused it—they are always exploring our past records. They believe that we should shift the power to the more powerful group and reduce the individual’s rights in these circumstances. That is unacceptable.

You may think that the press has changed, but I do not and so we will wait and see. I have been a victim of many of its attacks, and I live with that. I have an example of a political action in the past week by the Daily Telegraph. I announced that I might stand for the job of police and crime commissioner and I got a full page on that in the Telegraph. What worried me was that it used as evidence all personal facts. When I got on to the paper and asked, “Where did you get that information, because it is lies?”, I was told, “We got it from Wikipedia”. It did not even ask a question; it just pumped it out. Why? Because it was a political action to attack somebody from another political party for decisions they have made.

I have an action for a judicial review. What would happen now with judicial review? I get no-win no-fee; it helps me to take against the police. You can hardly argue that it is not a public interest. They have not carried out their jobs and I hope that shortly they will make an apology for that, but I could not have won that without no-win no-fee. That is the reality of it. If that is removed, how would you take an action on judicial review? What I also find offensive is that I will be told I should not have the assistance but the Metropolitan Police will use all the money in its accounts employing the best barristers to take me on—and that is taxpayers’ money—while I am told as an individual that I cannot have that right. That is what this Bill is going to do. It will make it more difficult to say to the Metropolitan Police, “You have got it wrong”—and I hope shortly that will come out.

The whole point of this is that we are shifting power from the vulnerable to the powerful. We are shifting the cost and putting it onto the more vulnerable. This is what these amendments are opposing. At Second Reading, the noble Lord, Lord McNally, said this was a radical shift. Well, it is, but I did not think it was as radical as I now understand it to be. It is a radical shift away from the weak and to the strong, and it is going to make it more difficult, particularly in these media applications. This Bill is not about better civil justice, it is about disadvantaging the vulnerable. That is what we should not accept and that is why we are moving these amendments.

[Lord Martin of Springburn]

My Lords, I support the noble Lord, Lord Bach. I listened with interest to the noble Lord, Lord Lester, and his comments about the rich and famous being able to take cases to court. This is what worries me about the lack of no-win no-fee. I am not concerned about the rich and famous, I am concerned about ordinary men and women, who maybe only once in their life have been defamed by a newspaper. At the Leveson inquiry one former editor said, “If it sounds good or if it sounds like the truth, just lob it in”—just to lob it in for a woman or a man who is living a quiet life is very cruel and hard.

For those of us who have approached newspapers and said, “What you have said about me is wrong”, their first reaction is, “If you don’t like it, write a letter and we will print it in the readers’ column”. How insulting is that, that I or anyone else should then make a contribution to a newspaper—which is usually a nasty newspaper that you would not even have in your home—by putting a letter into their column? That is even the line that they take with the Press Complaints Commission. Everyone knows that when anyone takes up a complaint with the Press Complaints Commission, they are not even looking for money, they are looking for some redress, and that is the first course of action that they take.

Years ago, perhaps in the 1950s, 1960s or 1970s, it used to be the case that if a newspaper printed something that was wrong about you, it was a matter between you and the newspaper. This is not the case nowadays, because when a newspaper prints an allegation, there is a press preview on Sky News or the BBC, where they get some talking heads to chew over what has been said about you that day. That means that even when you are deeply embarrassed about what has gone out, and you have not even had a chance to redress the balance, within hours of that newspaper being published hundreds of thousands of viewers are able to get a look at that newspaper because they are invited to do so by another press organisation.

I note the point that the noble Lord, Lord Lester, has made about local newspapers. When is it that people take offence at a local newspaper? There is maybe the odd individual. But a local newspaper says to itself, “We do not have the resources to involve ourselves in a law suit, so we had better be careful before we go to print”. My local newspaper is the Springburn Evening Times. While there have obviously been people who have taken exception to what it has had to say, I have never known anyone to take it to court, because as an organisation it is careful about what it does.

[Lord Lester of Herne Hill]

Has the noble Lord read the evidence that was given to the Joint Committee on the Draft Defamation Bill by various NGOs and regional newspapers, indicating the ways in which the existing law of libel has a very similar chilling effect on their ability to report and comment on matters of public interest?

[Lord Martin of Springburn]

I have not read the document, but now that the noble Lord has drawn it to my attention, I will. What I am talking about is the experiences that I have had of local newspapers. Of course, they are careful that they do not get involved in any litigation, in the same way as we—as people who have privilege in this Chamber—will be very careful about what we say out in the street, because we know that we would be subject to litigation.

However, the national newspapers are not concerned about being subject to litigation. Some of them are very rich organisations indeed. They know full well, when someone comes along—well, we have covered the rich and famous. Let us take a different situation. We, as a House, encourage people to go into public life. Once you get into public life, you are under the microscope. It may well be that Members of Parliament down the corridor are paid a better salary than your average journeyman or journeywoman—a blue-collar worker, I take it—but they are not paid so well that they can take on some of the people in the media who are vicious and nasty, and are willing to have a go not only at them, but also at their wives and families.

I know that this is about an amendment and therefore I had better not go on for too long about the whole thing. I will say, however, that ordinary men and women should be able to go and, if necessary, take their case to court. I take the noble Lord’s point that if there is a lower court that can handle it, that might be all the better. I will end by saying this: how ordinary can this situation be? An unemployed man in Liverpool, who was a pass-keeper in his local church—the person who does the collection plates and opens the church ready for the service—was accused in a publication of taking money from the collection plate that he put around. His difficulties were so great that he had to get the cheapest bus ticket from Liverpool to London to see a no-win no-fee lawyer to make sure that the balance was redressed. He won. Are we going to say of a man like that, who is unemployed, who was doing his duty in his church—someone who is respected not only by the congregation but by the whole community—and who has an accusation like that made against him, that we cannot allow him to get to court and put his case?

18:15

[The Minister of State, Ministry of Justice (Lord McNally)]

My Lords, this has been a very useful debate, with a good deal of passion. During parts of it, I was reminded of a saying that my old mentor, the late Lord Callaghan, used to be fond of, that a lie is halfway round the world before truth has got its boots on. He used to say that 30 years ago; what would he say today, with the internet, tweeting, blogging and the rest? Perish the thought.

We are in a very difficult area. Many of the issues that have been raised today are currently before various inquiries and committees of the other place, and, indeed, in litigation, so I shall tread carefully on this. I have to tell the noble Lord, Lord Prescott, that even under the present regulations, legal aid for judicial review is means-tested, and so I doubt whether he would get legal aid even in the present circumstances.

A number of very emotive cases have been raised. I saw the publicity around the Dowler case letter. I thought at the time, and I still think, that it is almost inconceivable that the Dowlers would not have been able to pursue their case under conditional fee agreements. The idea that they would have been powerless in the case that they had is perhaps countered by the fact that the matter was settled out of court—and if reports are to be believed, at a cost of £3 million to the offending company. I am not so sure that the argument that they would have been left powerless stands up in those circumstances.

I shall deal with the various issues raised. First, it is true that the Government are looking for an opportunity to legislate on defamation. We will have to await the Queen’s Speech to see whether it can be taken in the next Session, but we have made a lot of progress on it. We have had my noble friend Lord Lester’s Private Member’s Bill, which I then took to a government draft Bill. It has now had a very good and thorough examination by a Joint Committee of both Houses for pre-legislative scrutiny, under the chairmanship of my noble friend Lord Mawhinney. In turn, that committee has produced a very good report.

We are certainly ready to look at reform of defamation, but I would say—and again, this touches on much of what has been discussed today—that we are looking to try to remove some of what has been described as the “chilling effect” of our present defamation laws on the rights to free speech, as against the rights of the individual which the noble Lords, Lord Prescott and Lord Martin, have outlined today. It is important that we get the balance right.

I say with no sense of bitterness that 10 years ago, when I tried to introduce a modest amendment to strengthen and put some backbone into the Press Complaints Commission, I was told from this Dispatch Box by the Labour Minister of the day that my proposals were the,

“slippery slope to state control”—[Official Report, 6/5/03; col. 1067]—

of the press. That is where the Labour Government were 10 years ago.

We have to get the balance right between freedom of the press, which is so important to a functioning democracy, and proper responsibility on the part of that press. I hope that one of the things to come out of the recent discussions, debates and inquiries will be a much better form of accountability and regulation that addresses the very point made by the noble Lord, Lord Martin, about the speedy and cheap resolution of damage to reputation. We have come a long way from the time when people went into libel or defamation cases expecting to come away with football pools-sized awards. That is not the case. As has been said on a number of occasions, these days the likely costs of litigation always outstrip the likely awards.

I think that there is a good and useful account on this. We have to await the outcome of the Leveson inquiry, although I strongly believe that the opportunity to reform defamation is a separate matter. I would be very worried if Leveson produced a kind of tsunami of debate that swept away the real opportunity to go ahead with defamation reform.

Let me go back to the point with which the noble Lord, Lord Bach, opened the debate, after which I will comment further on the media issue. He mentioned professional negligence claims. Under our reforms people will still be able to bring cases on CFAs in areas in which they are currently used. After all, we are returning the CFA arrangements to their original form. I am aware of concerns about professional evidence claims that can involve, for example, claims against negligent building surveyors, accountants or solicitors. We have carefully considered the consultation responses on these types of case but remain unconvinced that there is anything fundamentally different about them to justify an exemption from the general principle of no recoverability of success fees and “after the event” premiums.

The noble Lord also mentioned financial services. A number of bodies could deal with those kinds of cases, including the Financial Ombudsman. As to how these reforms would affect small businesses, the Federation of Small Businesses, which is not always ready to support the Government’s approach, supports the proposals in this Bill.

The noble Lord, Lord Beecham, frankly said that this is one of a number of probing amendments to see whether the broad architecture, which provoked the original debate today, would be changed in any way. This and a number of debates to come will test whether we are likely to change our mind and make any exceptions from that broad architecture. The Government do not see that any exception to this is justified except in relation to ATE insurance premiums in respect of clinical negligence expert reports that we have previously discussed.

I therefore resist all these amendments, as they seek to undermine the Government’s reform of civil litigation funding and costs. The current arrangements with a recoverable success fee and ATE insurance allow for risk-free litigation where claimants have no real interest in the legal costing incurred on their behalf. This has led to an increase in the costs of civil litigation and must be addressed. The judgment of the European Court of Human Rights in the January 2011 case of Mirror Group Newspapers against the UK, usually called the Naomi Campbell case, found that the existing CFA arrangement with recoverability in that case to be contrary to Article 10, on freedom of expression, of the convention. Changes are therefore necessary and the current regime cannot continue.

The Government are aware of concerns about access to justice and the ability of those with modest means to pursue claims against often powerful media organisations. However, we do not believe that it is necessary to make any special provision in relation to the costs of privacy or defamation proceedings. We will continue to monitor the position following the introduction of the CFA reforms and other reforms to the law and procedure for defamation claims on which the Government have recently consulted.

As the coalition agreement made clear, we are firmly committed to reform of the law on defamation. The right to speak freely and debate issues without fear of censure is a vital cornerstone of a democratic society. We want to ensure that a fair balance is struck between the right to freedom of expression and the protection of reputation. There are real concerns that the threat of libel proceedings is being used to frustrate robust scientific and academic debate, and to impede responsible investigative journalism and the valuable work undertaken by non-governmental organisations. The draft Bill, which we published last year, aims to bring the law up to date and ensure that the right balance is achieved. We are also looking at ways of speeding up court cases so as to cut the costs involved in defamation proceedings, and encouraging the use of the alternative dispute resolution in order to facilitate early settlements.

The Government are also aware of concerns about professional negligence claims, which can involve, as I have said, claims against surveyors, accountants or solicitors. We carefully considered the consultation responses in respect of the impact of professional negligence cases, but remain unconvinced that there is anything fundamentally different about them that would justify an exemption from the general principle of abolishing the recoverability of success fees and “after the event” premiums. I can assure noble Lords that the Government have considered all these amendments individually and in the round. If accepted, the amendments to which I have referred would undermine the overriding objectives of the package of reforms, which are to make the costs of civil litigation more proportionate. The Government believe that lawyers will take on meritorious cases without recoverable success fees, including in cases to which these amendments relate. It is not unreasonable for any success fee to be paid by the party entering the CFA.

In respect of the risk of an adverse costs order, different considerations apply in respect of different proceedings. The Government have said that qualified one-way cost shifting should apply in personal injury cases. Lord Justice Jackson suggested that QOCS might be considered for introduction in some non-personal injury claims as an alternative to recoverable ATE insurance. The Government are not persuaded that the case for this has been made at this stage.

Personal injury cases, as a class, are different form other types of litigation. There are hundreds of thousands of personal injury cases each year. They are typically run on CFAs with ATE insurance and involve claims by individuals against generally well resourced or insured bodies. These claims have a high overall success rate and the primary remedy sought is damages. The position is different and less clear-cut in non-personal injury claims. CFAs are very much a minority form of funding in these claims, and rolling out QOCS to these would distort the market by imposing substantial changes on all cases in a particular category of proceedings for the benefit of a small number of claimants.

The Government will examine the experience of QOCS in personal injury claims before considering whether it should be extended further. Different considerations apply in different types of case. Environmental claims, for example, typically involve more than one claimant who can contribute towards the costs. “Before the event” legal expenses insurance may be available in relation to the provision of goods and services.

I have listened carefully to the arguments advanced in respect of exceptions in individual areas covered in this group of amendments. However, I am concerned that making these exceptions could undermine the benefits of these reforms. I therefore urge noble Lords not to press their amendments.

18:30

[Lord Bach]

I thank the Minister for his response, but he will not be surprised to hear me say that I found it deeply disappointing and unsatisfactory. I do not think that the arguments he has employed deal with the gravity of the issues raised in these amendments. I thank noble Lords who have spoken in this debate, in particular the noble Lord, Lord Lester of Herne Hill, with his expertise. In a moment I will respond to one or two things he said, which he will be able to see in Hansard because he is not in his place at the moment. I am particularly grateful for the contributions of my noble friend Lord Prescott and the noble Lord, Lord Martin of Springburn. They made this debate come alive with their powerful and passionate speeches which dealt with real-life situations as opposed to the theory that we so often talk about when we are dealing with this kind of legislation. If nothing else, I hope very much that the Government will read carefully what those noble Lords said before deciding their next step.

On the law of defamation, perhaps I may make my position absolutely clear. I believe that it should be changed and I look forward to the reforms. I have spoken on them before. We shall see what the Bill looks like but I am in favour of the reforms. Of course we want to see the right balance between claimant and defendant in defamation cases, as I hope we do in every part of our law. But we are not talking about that. You can have the best system in the world, but if only very few people can actually use it, it is not much good. That is the real criticism here. The system will be changed, it is hoped for the better, with a better balance for those who manage to get proceedings off the ground, but if it is only the rich and the powerful who can sue for defamation, then as I say, it is not much use and goes against the British system which should allow all people to have access to justice. If we leave it to the Defamation Bill itself, this Bill will already have passed in its present form. Is it really believable that the Government will then suddenly say, “Oh, we were wrong in the Legal Aid, Sentencing and Punishment of Offenders Bill and so we will change it now that we have the Defamation Bill”? I do not think so. That is why these issues have to be raised in this Bill.

The noble Lord, Lord Lester, was right to say that there are defendants in defamation cases who are not powerful, but I remind the Committee that defendants can and sometimes do use CFAs in cases of this kind. They, too—good, successful defendants—if they are not able to use CFAs because of the risks attached to the costs position, may find themselves not using them when they do already.

In theory, the Minister is absolutely right to say that the CFA system still exists and that people can still use CFAs, but in practice the question that arises from these amendments is this: will they, when they stand to lose their assets even if they win their case? That is the issue. We gently warn the Government now that it is no good looking at this four or five years down the line when it is discovered that the Government have been so inflexible in their approach to this part of the Bill that justice is denied to a large number of ordinary people because of the statute that will then be in place. The Minister said that there was coalition agreement about defamation reform. Indeed there was, but I remind him and the Committee that there was no coalition agreement at all about Part 2 of this Bill.

If the Minister accepts that damages are outstripped by costs, surely the Government must agree that success fees plus “after the event” insurance will dwarf the damages that are awarded; that is, victims will be left out of pocket. If they fear being left out of pocket, they are not going to sue, even if they have a good case. The original form of CFAs was also prayed in aid by the Minister. He should be reminded that the original form was only for PI and insolvency, certainly not for defamation cases. Here, of course, if the Government have their way, the changes will relate to defamation for privacy and professional negligence. If the Bill remains unamended, the effects will be very severe indeed.

We have had a good debate. I am grateful to the Minister for responding to it in the manner in which he has, even if his arguments are unconvincing. I beg leave to withdraw the amendment.

Amendment 123 withdrawn.

Amendment 124 not moved.

Amendment 125

Moved by

[Lord Bach]

125: Clause 43, page 30, line 12, at end insert—
“( ) The amendments made by subsections (2) and (4) do not apply in relation to proceedings that include a claim for judicial review of a decision, or of a failure to decide, by a public body.”

[Lord Bach]

My Lords, judicial review proceedings offer a chance for the ordinary citizen to review decisions made by the state or by an emanation of the state, be it local government or powerful governmental bodies, if they have a justifiable interest in that decision. It is often the last chance for the law to review the decisions of lower courts and tribunals or state decisions that are not in themselves subject to appeals. The costs of bringing a judicial review claim are considerable, in the region of £10,000 to £20,000 for a straightforward case, and obviously higher for a more difficult one. If the claimant is unsuccessful, they are likely to be liable for the defendant’s costs as well as their own. They are therefore looking at legal bills of perhaps upwards of £30,000 if they lose and they must be prepared for this eventuality bearing in mind the unpredictability of judicial review proceedings by their very nature, and, of course, costs orders.

Conditional fee agreements are in theory available as a means of funding judicial review proceedings, although they are relatively rare. We are therefore not discussing the standard way of funding, but rather the minority of cases that are taken by CFA for judicial review. These are cases that are not being picked up by legal aid or other mechanisms of funding. In some instances, what is called a protective costs order may be the only way in which the claimant can bring the claim, or it may be necessary to consider applying for a protective costs order in combination with one of the options I have mentioned. However, protective costs orders are themselves available only in relatively limited circumstances based on the rules set out under the leading case of Corner House Research and subsequent decisions. We put this to the Minister in another place but felt that his answer was unsatisfactory. I ask the Committee also to find it so. I hope I may be forgiven for quoting him at length:

“Responses to our consultation indicated that CFAs are less commonly used outside the area of personal injury and are not frequently used in judicial review proceedings. In addition, ATE insurance is rare in judicial review In our view, therefore, the abolition of recoverability of CFA success fees would have relatively little impact on judicial review claims, and the key driver for the introduction of QOWCS to reduce the need for and costs of ATE insurance is not present. Although there is already some element of one-way cost shifting in judicial review cases where the claimant is legally aided—

the noble Lord, Lord Thomas of Gresford, explained to us the rule about QOCS in legal aid—

“or obtains a protective costs order, the introduction of QOWCS for all judicial review cases would be a significant change that could distort the market and significantly affect public authorities, which could face large numbers of unmeritorious claims that would have to be defended, at least until the permission stage”.

He went on:

“Under our reforms, people will still be able to bring cases on CFAs in areas where they are currently used, as we are returning the CFA arrangements to their original form. In judicial review proceedings, which raise issues of general public importance, claimants can, in appropriate cases, apply for a protective costs order to limit the amount of the defendant’s costs that they may be required to pay if they lose, and legal aid is also being retained for the vast majority of judicial review cases currently funded. Legal aid recipients will continue to benefit from cost protection”.—[Official Report, Commons, Legal Aid, Sentencing and Punishment of Offenders Bill Committee, 13/09/11; col. 555.]

On qualified one-way costs-shifting, this is plainly in contravention of what Lord Justice Jackson’s position appears to be. His recommendations were these:

“Qualified one way costs shifting should be introduced for judicial review claims … If the defendant settles a judicial review claim after issue and the claimant has complied with the protocol, the normal order should be that the defendant do pay the claimant’s costs”.

He pointed out that protective costs orders and legal aid did not pick up all cases and many meritorious cases.

Lord Justice Jackson wrote in his report, citing Michael Fordham QC and Jessica Boyd:

“A public law costs regime should promote access to justice. It should be workable and straightforward. It should facilitate the operation of public law scrutiny on the executive, in the public interest. This is the key point. For judicial review is a constitutional protection, which operates in the public interest, to hold public authorities to the rule of law. It is well-established that judicial review principles ‘give effect to the rule of law’…The facilitation of judicial review is a constitutional imperative”.

With regard to the success fee, we believe that Lord Justice Jackson may not be right. He said in his report:

“If qualified one way costs shifting is introduced, in my view that will strike the right balance as between claimant and defendant in judicial review proceedings. There is no justification for imposing upon defendants the additional burden of paying, potentially huge, success fees. Significantly, a number of respondents from both sides of the fence have recognised this principle during Phase 2. The success fee payable, if any, must be a matter between the claimant and the claimant’s solicitor”.

How, then, will the impecunious settle the success fee and from which non-existent bank account? Furthermore, if public law practitioners cannot retrieve their success fee, what will be the impact on their decision to take on 90 per cent to 10 per cent cases, let alone 50 per cent to 50 per cent cases? It is in the interests of justice that those cases are sometimes taken on, but many may not be in future. How will the Government protect the constitutional imperative, if they agree that it is one, that administrative law should be allowed to be pursued by the ordinary citizen in cases of judicial review when legal aid is not available? I beg to move.

18:45

[Lord McNally]

My Lords, like the noble Lord, Lord Beecham, when speaking to the first series of amendments, the noble Lord, Lord Bach, continues to jab away at the broad architecture of these reforms. In these reforms we do not accept every last jot and tittle of Lord Justice Jackson’s report but, in the main, we accept its major thrust. It is a package of reforms and we are concerned not to dismantle it by accepting this series of amendments. The reasons for that are clear. The Jackson report was motivated not by government initiative but by judicial demand. Both the Master of the Rolls and the Lord Chief Justice wanted to look at a dangerous inflation in civil costs which in their view—a view that we share—was having an impact on access to justice. Whether there was or is a compensation culture, we can debate for a very long time, but we know that in many parts of the law there has been a quite worrying inflation in costs. A number of examples given by noble Lords on all sides suggest that action is needed. The Official Opposition’s view on the Jackson report was not clear from the remarks of the noble Lord, Lord Bach—he said that he did not agree with this bit of it. The noble Lord, Lord Beecham, looks like a greyhound in the traps, but perhaps at the end of the debate he can tell us his party’s general approach to Jackson.

[Lord Beecham]

My Lords, before my noble friend answers, perhaps the Minister can say which bits of the Jackson report he is in favour of, because there is quite a lot of it that he has not adopted.

[Lord McNally]

The bits that we are in favour of are in the Bill.

As someone who firmly supported the Hunting Act, I am not sure that I am allowed to use the term “shot my fox”, but the arguments that I was intending to deploy were very accurately read out by the noble Lord, Lord Bach. They remain the same as those which my honourable friend Jonathan Djanogly deployed in the Commons—that is, under our reforms people will still be able to bring cases on CFAs in areas where they are currently used in judicial review. After all, we are returning the arrangements to their original form. Legal aid is being retained for the vast majority of judicial review cases that are currently funded. Legal aid recipients will continue to benefit from costs protection. Although I understand what the Opposition are doing in testing various parts of the architecture of the reforms, I can only say again that we will resist the amendments, as they seek to undermine the Government’s reform of civil litigation funding and costs.

I have listened carefully to the arguments advanced in respect of exceptions in individual areas. However, we should not revisit arguments that have already been fully and properly aired in these debates. I am concerned that making the exceptions that the amendments advocate would undermine the benefits of our reforms. I therefore urge the noble Lord to withdraw the amendment.

[Lord Pannick]

Does the Minister accept that claimants in judicial review cases will not be able to pay success fees, because victory in a judicial review almost never results in the payment of damages to the claimant?

[Lord McNally]

Yes, I would think that that was true. I understand that such cases are extremely rare. A success fee would not be the enticement to take the case.

[Lord Bach]

My Lords, I thank the Minister for his response. When I first accused the Government of not having accepted the Jackson package, I was very careful to say that whatever Government were in power would probably not have accepted every word of such a major report. However, it is interesting what this Government have accepted and what they have left out. In short, they have left out any defence of legal aid, whereas Lord Justice Jackson was very concerned that there should be no more cutting in civil legal aid. That is also very much the view around the Committee on Part 1 of the Bill as well as, in relation to Part 2, in the case of clinical negligence if nothing else. We think that the Government have picked the wrong bits of Jackson to support, and they have left the best bits out, which is rather careless of them.

Three senior costs judges, who deal with some of these issues daily, said in their submission on the Jackson report:

“we do not agree with the proposals set out in the Report ... The CFA regime has undergone many changes and improvements since implementation. Having taken a decade for these to have been achieved, now is not the time to made radical changes which give no guarantee that access to justice at reduced costs will be delivered under Jackson”—

they go on, perhaps rather unfairly, to say—

“where it failed under Woolf”.

That was their view. So there is a difference—a justifiable difference—of opinion, both in this Committee and outside this Committee among those who have to decide these cases.

The Government should be warned that they should not just stick so rigidly to their formula for changing without looking at individual areas of the law. Flexibility is important, as well as having rules. If the Government are just going to say no to every exception to Jackson, I fear that, certainly in some areas, the reforms that will then go through, if the Government get their way, will be disastrous for civil justice in this country because they will mean that so many people will not be able to get justice who are currently able to do so.

This is a probing amendment, but it also has some real feeling behind it. However, of course I beg leave to withdraw the amendment.

Amendment 125 withdrawn.

Amendments 126 and 127 not moved.

Amendment 128

Moved by

[Lord Thomas of Gresford]

128: Clause 43, page 30, line 16, after “(6)” insert “Subject to subsection (7),”

[Lord Thomas of Gresford]

My Lords, I must move this amendment, since it is in the names of the noble and learned Lord, Lord Mackay, of myself and of the noble Lord, Lord Bach. It is an alliance of all three parties.

[Lord Bach]

It was made in heaven.

[Lord Thomas of Gresford]

Yes, or the other place.

The noble Lord, Lord Bach, pointed out something that I think should not be overlooked: in the 1995 order that introduced CFAs, insolvency litigation was recognised specifically, along with personal injury litigation, as a category to which CFAs should apply. The one principle—perhaps it is not so much a principle as a rule—that underpins the Jackson report is that no cap fits all, whereas the Government’s approach seems to be that they have a package that applies to everything, regardless of what it is. That is not the approach of Lord Justice Jackson, who was very careful to distinguish between various areas in his report. Insolvency litigation is a category that should be considered because of the particular features that affect it.

What is insolvency litigation? Insolvency practitioners undertake litigation on behalf of creditors against company directors or third parties whose actions have caused serious harm to a business. This includes taking money out of the business for personal use, concealing assets and committing fraud. In some cases, these actions—of directors and third parties—have led to the business’s failure. The insolvency practitioner, who is brought in to deal with the disaster that has occurred, has a legal duty to maximise the returns to creditors. In cases where directors have acted improperly, this may involve undertaking litigation to return money rightfully owed to creditors, including the business community and Her Majesty’s Revenue and Customs. Without the use of litigation, directors could get away with dishonest practices and businesses would lose money.

In insolvency situations, a company by definition has no money. Consequently, there are no funds available to the insolvency practitioner, who is trying to clear up the mess, to pay the legal costs involved in pursuing litigation. The creditors’ only realistic hope of recouping money owed to them is for the insolvency practitioner to engage solicitors on a conditional fee arrangement. In addition to this, insolvency practitioners may be personally liable for costs incurred as a consequence of litigation and therefore require protection with “after the event” insurance. As the system currently exists, the success fees under a CFA and the ATE insurance premiums are recoverable from the defendant if a judge, on the merits of the case, considers them to be liable.

What are the impacts of this? First, let us consider the impacts on the business community. The current system is particularly helpful in insolvency litigation because it allows insolvency practitioners to maximise the assets available for distribution to creditors. If the success fee and ATE insurance premium were instead to be borne out by the insolvent estate, it would substantially reduce the amount of money returned to creditors. So the proposals here would mean that the defaulting directors or fraudulent third parties who caused the failure of the business would escape the burdens of success fees and insurance premiums, and that would reduce the funds available to pay the genuine creditors of the insolvent company. At a time when businesses are struggling, it would seem counterproductive to implement measures which would reduce their returns.

In addition to lost revenue, the business community would also suffer, as the Government’s proposals would discourage an insolvency practitioner from taking action against a delinquent director. Given the considerable risks involved in insolvency litigation, an insolvency practitioner will only commence litigation on advice and once satisfied that it is economically justifiable for the creditors. Generally speaking, these people are not carrying out risky litigation; insolvency practitioners are going after the people who owe money or who have defrauded the company for which they were acting. The trade body for insolvency professionals analysed a sample of 23 case studies where insolvency practitioners undertook litigation against a director or third party, using CFAs and ATE insurance. The trade body’s assessment was that, if the Government’s proposals were to go ahead, the total impact on creditors in the 23 cases analysed would be a loss of £3.6 million—a 47 per cent reduction in returns to creditors. That would be the effect on the business community.

Her Majesty’s Revenue and Customs is the largest unsecured creditor in formal insolvencies in England and Wales. It is the single largest beneficiary of the ability of an insolvency practitioner to avoid dilution of returns to creditors by the recovery of success fees and ATE premiums from unsuccessful and fraudulent directors in litigation. So it benefits the Revenue to keep the current system in place, and it is counterproductive to implement measures that will remove this revenue.

The present system is a real and tangible benefit to society and to the business community. Not only does it ensure that delinquent directors do not get away with sharp practice, it also increases the returns available to creditors, including the Revenue and business community.

Amendment 135, which is the main amendment that we have put down, seeks an exclusion from the general rule so that a cost order may include provision requiring the payment of fees payable under a conditional fee agreement, which provides for a success fee in proceedings by a company being wound up or entered into administration; proceedings brought by a person acting as liquidator or trustee of a bankrupt’s estate; and proceedings by a person acting as an administrator under the Insolvency Act. This is a benefit to the business community and to the Revenue, and I wait to hear why the Bill proposes to take away those advantages for no apparent gain. I beg to move.

19:00

[Lord Bach]

My Lords, we on this side very much support the amendment, in very much the same terms as the noble Lord, Lord Thomas of Gresford, has moved it. As he said, insolvency practitioners are appointed to help insolvent companies sue directors in order to recover money for creditors of the insolvent company. The companies are insolvent; they cannot pay for a lawyer—they have no assets. The practitioners’ job, which is sometimes a difficult one, is to recover as much money as possible. It is always in the public interest that they are able to do so, and I am sure that the Government would agree with that proposition. As both practitioners and regulators have warned, alongside HMRC and the Insolvency Service, these sorts of actions will be severely compromised in future. As the noble Lord has just told the Committee, HMRC is a major creditor, if not the major creditor, to many insolvent companies, so the public purse will itself be hit to the tune of £200 million. I remind the Minister that that is more than half of the total legal aid cuts and enough to pay for social welfare law at least twice over.

The Institute of Chartered Accountants for England and Wales, a very respected body, said:

“we are deeply concerned that the legislation in its current form could have a harmful impact on the insolvency process. Unless claims brought by insolvency practitioners are exempted, this legislation would prevent potential recovery from incompetent or fraudulent directors or bankrupts, which will result in greater losses being borne by innocent creditors when a business is made insolvent … Those creditors are usually small businesses or HMRC, who would lose potential tax receipts, a cost ultimately to the taxpayer. Furthermore, fraudulent directors and bankrupt sole traders would keep the gains they made from irresponsible management of their business”.

That is why Revenue and Customs and the Insolvency Service have lobbied the Ministry of Justice for an exemption, but to no avail.

Let me take noble Lords to the Guardian newspaper on 6 June last year, when it reported:

“A spokesman for the Ministry of Justice said: ‘We are considering the impact of abolishing CFA [conditional fee arrangements] recoverability in insolvency and related proceedings. These proceedings can bring substantial returns to creditors, including Her Majesty’s Revenue & Customs. We are therefore discussing the specific implications with a view to reaching a satisfactory conclusion.’ … A spokesman for Revenue & Customs said: ‘HMRC is in discussion with the Ministry of Justice about the implications of the Jackson Report but is unable at present to comment further on this matter’”.

The Minister can comment further on this matter in a few minutes’ time. What was the outcome of the negotiations between the Ministry and HMRC? We have heard why these cases need protection, but nothing on how this will be achieved. If the Minister is to support what is contained in the Bill, he should tell the Committee how he intends to protect against the arguments used by the noble Lord, Lord Thomas of Gresford, and myself in moving and speaking to the amendment. This is a good—if not the best—example of how wrongdoers will benefit at the expense of victims. In this case, it is even more serious, because the victims are us, potentially—the taxpayers and people of this country. That is why this particular amendment supports the proposition that a one-size-fits-all package is not right for the civil justice system and that a degree of flexibility needs to be built in. If the Government maintain their position on insolvency, the wrongdoers will gain and the creditors will lose. I look forward very much to hearing how the Minister defends this particular proposition.

[Lord McNally]

My Lords, I feel as any Minister would, who sees an amendment signed by the noble and learned Lord, Lord Mackay, and noble Lords, Lord Thomas and Lord Bach—the names sound like one of those formidable halfback lines from a 1950s soccer team. I know that it would be the wrong game for the noble Lord, Lord Thomas.

The amendments refer to both success fees and ATE insurance in insolvency. Just for information, Lord Justice Jackson recommended the abolition of recoverability of success fees and ATE insurance premiums in insolvency proceedings. However, we have already established that we do not simply use Lord Jackson as a defence in all matters. As the Government indicated in the other place, we are aware of the specific concerns around the impact of the CFA changes in insolvency cases. The use of CFAs in these cases, under the Insolvency Act 1986, can bring substantial revenue to creditors, including Her Majesty’s Revenue and Customs.

I cannot go a great deal further. The noble Lord, Lord Bach, has now introduced a new system whereby he makes my speech and his own speech and leaves not a lot for me to say. I am nevertheless grateful that on the record we had speeches from the noble Lord and from the noble Lord, Lord Thomas, setting out the problem in probing amendments, as they have acknowledged. As the noble Lord, Lord Bach, revealed in his speech, there are ongoing discussions between HMRC and MoJ, and the Government are considering the position in respect of insolvency proceedings. Until we have come to a conclusion—

[Lord Bach]

The quotation I read from the Guardian was from June 2011. We are now very near the end of January 2012 and the Bill is now in your Lordships’ House. When are these negotiations going to finish?

[Lord McNally]

They are ongoing. I admit that sounds like that song “Reviewing the Situation” from “Oliver!” but I have no doubt that the good relations between the MoJ and Her Majesty's Revenue and Customs will produce a satisfactory result, which I will report to the House at the earliest possible moment. In the mean time, I request the noble Lord to withdraw his amendment.

[Lord Thomas of Gresford]

While I am most grateful to my noble friend for that reply, it would be helpful for these negotiations to complete before we have to vote on this matter on Report—as we undoubtedly will, along with the people who have signed it. Can I suggest to my noble friend that he talks to whoever he has to in order to get a move on? It seems a no-brainer to me that this amendment should be accepted and the quicker it is resolved, certainly before Report, the better.

Amendment 128 withdrawn.

Amendments 129 to 135 not moved.

Amendment 136

Moved by

[Baroness Coussins]

136: Clause 43, page 30, line 18, at end insert—
“( ) After subsection (7) insert—
“(8) The Lord Chancellor may by order prescribe that sections 58(4A) and (4B) and subsection (6) shall not apply to any conditional fee agreement where all of the following conditions are met—
(a) the proceedings include a claim by an individual or group of individuals for damages, (b) the loss or injury allegedly caused has occurred in a developing country,(c) a judge of the High Court has certified, whether before or after the commencement of court proceedings, that—(i) the proposed litigation raises issues which ought, in the interests of justice, to be considered by a court in England and Wales;(ii) the resources of the proposed claimant or claimants are significantly less than those of the proposed defendant or defendants; and(iii) in the absence of the provisions of this subsection there would be a significant risk that the proposed claimant or claimants would be unable to secure effective legal representation in England or Wales.(9) In subsection (8) “developing country” means a country, not being a member state of the European Union, whose per capita gross national income was less than 50 per cent of the per capita gross national income of the United Kingdom in any of the three years prior to the year (or if more than one year, the first year) in which the injury or loss is alleged to have occurred.”.”

[Baroness Coussins]

My Lords, Amendments 136, 137 and 140, which are in my name and supported by others, are designed to protect access to justice for vulnerable victims of human rights abuses committed in developing countries by UK multinational companies. I thank the Minister for meeting me to discuss these amendments, and I know that he shares my commitment to ensuring that this Bill will do nothing to undermine or impede access to justice for some of the world's poorest and most vulnerable people. Unfortunately, without these amendments—or amendments along these lines—there will be a serious risk of doing exactly that. I am grateful also to CORE, the corporate responsibility coalition which includes CAFOD, Amnesty, Oxfam and other leading international NGOs, for their support for these amendments. I should also declare an interest as an independent consultant on corporate responsibility.

The sort of cases I am referring to are few and far between. There have been only nine or 10 in the past 15 years, which reflects the high cost and high risk of bringing such cases in the first place, so we are not looking at a situation where any floodgates are likely to be opened by retaining the current system. We are talking about cases such as the one against Trafigura in 2006 on behalf of 30,000 residents of Côte d'Ivoire who were affected by the dumping of toxic waste, or the one against Monterrico Metals in Peru, where 28 people who objected to the mining company's development plans were detained and tortured. That case was finally settled in 2011, five years after the incidents.

I will not recite details of all the other cases but I assure your Lordships that whether we are talking about asbestos miners in South Africa, campesinos in Colombia or Peru, or communities living in Abidjan, these are people who face indescribably difficult hurdles in seeking justice against the multinational companies which have harmed them. In a context where there is a clear imbalance in influence, economic clout and access to legal expertise, the odds are stacked against them already and it is vital that we do not close off the route to justice in the UK courts that occasionally can be pursued.

19:15

In theory—and I acknowledge that this is the Government’s present position— these human rights abuse cases could still be brought. The Bill does not actually say that they are forbidden in any way but I would argue that in practice, the changes proposed to the structure of the costs regime for civil litigation mean that such cases would effectively be too costly and too risky for any law firm to undertake. As a consequence, vulnerable people will be abandoned and denied justice. The Bill, as we have heard in debates on other amendments, proposes that success fees should be taken from the damages awarded to the claimants instead of from the company in cases such as the ones I have described, and that they should be capped at 25 per cent of costs. In addition, the Bill would abolish the recoverability from the company of “after the event” insurance premiums if the company loses.

Together, these two reforms would effectively annihilate the chances of any legal firm being in a position to start the lengthy process of such a case, inevitably involving a great deal of expensive overseas travel, the commissioning of scientific and medical expertise and so on. Indeed, there are already massively high legal hurdles which have to be cleared before a case can reach the courts in the UK—for example, proving to the court that no relevant in-country resolution is possible and that corporate liability at a global level is indeed arguable, rather than the human rights abuse being the result of some error or misdeed by a local subsidiary.

I stress that I have no quarrel with the Bill’s intention in principle to rationalise the costs system and to save money, but my amendments do not interfere with that overarching objective. They do not seek to spend a single penny of taxpayers’ money from the public purse; they simply seek to retain the present system, under which damages may be paid by the company itself. When it comes to the recoverability of “after the event” insurance premiums, the Bill already includes an exemption for cases of clinical negligence and I hope that the Government agree that it would be right—and equally, in the public interest—to extend that exemption to human rights abuses in the sort of cases I have mentioned. As I said earlier, I believe this can be done without opening any floodgates. However, if the Minister feels that this perhaps could be achieved with more precise wording than I have managed to craft in my amendments, I hope he will agree to take this away and give it further thought, and perhaps come back on Report with something that can do an even better job.

I am also aware, thanks to the helpful meeting with the Minister, of the Government's view that damage-based agreements, or DBAs, would in future provide an arguably better route to justice for human rights abuse victims, because they are particularly suited to group actions where lawyers’ fees may be recovered as a percentage of the damages awarded to successful claimants. However, I urge real caution before the Government satisfy themselves that this would be the right way to go. In a jurisdiction such as the US, where claimants receive much higher levels of damages, DBAs may well be appropriate but in the UK, where compensation payable by defendants is relatively modest, victims would be denied a proper remedy if the costs burden associated with litigation is shifted from defendants on to claimants, as the Government intend in this Bill. This would apply particularly to claimants from developing and emerging countries, where damages are calculated at local rates whereas the lawyers’ fees reflect the UK’s high level of legal costs.

By contrast, our present system has been praised by no less a figure than Professor John Ruggie, the United Nations special representative on business and human rights. His Protect, Respect, And Remedy framework was adopted only last year by the UN Human Rights Council and was warmly welcomed by the UK Government, who took an admirable and leading position in discussions at the UN to commit to translating the framework’s principles into practice in the UK, and to encourage others to do likewise in their countries. Professor Ruggie himself highlighted to the UN Human Rights Council the UK’s current system of deferred ATE premium payments as an example of how innovative, market-based mechanisms can help keep the costs of bringing a legitimate claim to a reasonable level. Why on earth would the Government want to ditch such an important and well recognised system now?

Even more recently, the Joint Committee on Human Rights published its report on the Bill, also drawing attention to the views of Professor Ruggie and the dangers of the proposed changes to litigation funding, which in his view could,

“constitute a significant barrier to legitimate business-related human rights claims being brought before the UK courts in situations where alternative sources of remedy are unavailable”.

The Joint Committee urged the Government to introduce appropriate amendments to the Bill, and I hope the Minister will agree that the amendments that I have put forward are a good place to start. They are not anti-business but pro-responsible business and will help to drive up standards. There may well be a risk that, without them, some businesses will find it easier to regard themselves as off the hook when it comes to observing their human rights obligations in developing countries. I really do not want the UK to be responsible for that, and I am sure that the Minister does not either.

I should add for clarity that the definition of a developing country in subsection (9) of Amendment 136 is taken directly from the World Bank’s definition, and I understand that there is general consensus that that definition is fair and workable.

These are sensible amendments, in line with government policy and the basic objective of the Bill with zero cost implications for the public purse, that would continue to provide access to justice for some of the world’s most vulnerable people. There are enough obstacles in their way already; please let us not add another. I beg to move.

[Lord Pannick]

My Lords, the noble Baroness, Lady Coussins, makes an overwhelming case here. I support her. I share the concern that she has expressed that, without the substance of the amendments that she proposes, there is a very strong risk that the Bill will fatally undermine the limited access to justice—it is very limited—that is currently available in practice, and I emphasise “in practice”, in relation to allegations of serious wrongs committed by British companies in developing countries. I very much hope that the Minister will listen favourably to what the noble Baroness has said and be able to accept the principle of the amendments. If there is concern that further safeguards need to be added into the amendments, and there may be, I hope that the Government will come back on Report with an amendment of their own.

[Baroness Hooper]

My Lords, it was drawn to my attention that the changes introduced by the Bill would make it almost impossible for foreign victims of human rights abuses committed by UK companies to access justice in this country. These are indeed sensible amendments that would protect access to justice for, as the noble Baroness has said, a very small number of vulnerable people affected by poor business practices while ensuring that there is no additional cost to the public purse.

Because of my particular interest in Latin America, I am aware of some of the cases quoted by the noble Baroness, Lady Coussins, in setting out the reasons behind the amendment. As has been said, she has made the case so clearly and fully that it is not necessary for me to go on at any length, but I wish to record my support for these amendments. I hope that the Government will give serious consideration to them.

[Lord Judd]

My Lords, I, too thank the noble Baroness, Lady Coussins, for having spoken so well to her amendment. I remind the House that I have been involved for much of my professional life in the kind of issues that arise in the matter that we are discussing; I am of course a former director of Oxfam. It is difficult to put on record just how concerned the voluntary agencies are, all of which I think are deeply respected in this House, and the anxiety that they have about the consequences of the new proposals.

As I have said before when I have dared to intervene in these highly expert legal arguments, it is important sometimes to spell out the social realities. The noble Baroness did this commendably in her introduction but I would like to fill that out a little more. I make no apology for doing so because we must remember what we are talking about.

In the 1996 case against Cape plc by 7,500 South African asbestos miners who had developed a range of sinister asbestos-related diseases following prolonged exposure to asbestos dust in the workplace, evidence came to light that the company had actively lobbied to conceal the nature and extent of the health risks associated with asbestos exposure and had knowingly exposed thousands of workers to the deadly dust. The courts decided that the case could be tried in England rather than South Africa. The company reached a final settlement with the claimants in 2003 to the amount of £10.5 million.

Take another case: the experience of Monterrico Metals in Peru. In August 2005, 28 people were detained by police, bound and hooded and then held for three days at the Rio Blanco mine in a remote area of northern Peru. They had been protesting against the development of the mine, the principal asset of Monterrico Metals. According to their witness statements, the protestors were held against their will and subjected to physical and psychological torture, including beatings and, in some cases, sexual abuse. The company denies involvement in the police operation but witnesses reported that the mine’s management were co-ordinating the police operations. Five claimants were shot, one lost an eye and another protestor bled to death. This case was finally settled in August 2011, shortly before it was due to come to the English High Court and six years after the incident took place. As part of the out-of-court settlement, the mining company imposed a gagging order on the amount of the compensation payouts, which applies both to the farmers and to the legal firm representing the protestors.

Both these cases were brought on a no-win no-fee basis. Under those arrangements, as we all know, the victims’ lawyers took on a significant burden and risked considerable financial costs if the case was unsuccessful. The Government’s proposals would significantly increase the cost and the risk of taking on cases relating to corporate abuses of human rights abroad, which by their nature are extremely complex and expensive to investigate and pursue. For victims of alleged abuses in the developing world, the cost of insurance premiums would be prohibitive if they could no longer be recovered. Even if they won their case under the proposed regime, the success fee would be taken out of the victims’ damages rather than paid by the defendant company. I could go on in some detail about the implications but the legal arguments have been very well put, and they relate to many of the legal arguments that have been put forward in a domestic context.

I make this plea to the coalition Government. They have held high the flag of their moral commitment to the third world. How, consistently with the stand that they are making, can they allow the new proposals to go forward with all the consequences of injustice, hardship and suffering that would follow?

19:29

[Lord Alton of Liverpool]

My Lords, I wish briefly to raise my voice to support my noble friend Lady Coussins in moving this amendment, and in so doing mention that I am treasurer of the All-Party Parliamentary Friends of CAFOD group, one of the groups that has made representations about the amendments before the Committee.

Some 6 million people have died in the fighting in the Democratic Republic of the Congo over the past 30 years. A lot of the conflict and the human rights abuses, which continue to this day in places such as Goma and the Kivus, where rape is used daily as a weapon of war—a Question on that subject was raised on the Floor of your Lordships' House as recently as last week by the noble Baroness, Lady Kinnock—have been driven on by a culture of appropriation whereby mineral assets have been taken, particularly in the past by companies based in Belgium but also by some British companies, and in a culture of impunity.

Unless it is possible to test such cases in western courts, those violations will go on in the future. That is why it is so important to maintain at least this small opportunity—the opening that exists in domestic law at present—for such cases to be brought before our courts. I hope that when the Minister replies to this amendment, he will be able to tell us precisely how often this provision has been used, whether there has been any cost to the public purse and how much that has amounted to, and whether he thinks that in any event that is a price worth paying to uphold the rights to which my noble friend referred in her admirable speech in moving the amendment.

[Lord Avebury]

My Lords, I do not believe that any cost whatever has fallen on public funds but I shall be as interested as the noble Lord, Lord Alton, to hear from the Minister about that aspect of the amendment. Both the noble Baroness, Lady Coussins, in moving the amendment, and my noble friend Lady Hooper, underlined the fact that we are talking about a very small number of cases that would not encourage the development of a litigation culture; quite the contrary. In the few cases that we are talking about, there would be a significant impact not only on the lives of many thousands of people who are directly affected but, as has also been emphasised, on corporate practices and international norms in business and human rights.

I declare an interest as president of the Peru Support Group, which was particularly concerned in the Monterrico Metals case described by the noble Lord, Lord Judd. This is a paradigm case because there is no doubt whatever that the poor indigenous inhabitants of Peru would have been totally unable to mount this action if the proposals in the Bill had come into effect. Is that really what your Lordships want—to say that people in the third world who are victims of appalling human rights abuses by United Kingdom or United Kingdom-based companies are not going to be able to bring proceedings in the courts of law? I do not believe that that is what your Lordships would like to happen. Therefore, I beg my noble friend to listen very carefully and come forward with proposals that, if they are not word for word on the lines of these amendments, at least convey their sense, as the noble Baroness, Lady Coussins, said.

[Lord Elystan-Morgan]

My Lords, I, too, support this amendment, which was presented with such lucidity and articulation by my noble friend Lady Coussins. The exact motivation behind the changes that are being incorporated into the Bill is not clear to me. Is it to save the public purse some money, or is there some other purpose? If it is a case of saving the public purse some money, what aspects of the possible results have been examined? Exactly what evidence has been collected? How satisfied are the Government that a net saving in that regard will be brought about? It is obviously not the Government’s intention to deprive worthy people of a redress that they have at the moment, albeit in an imperfect state, as my noble friend Lord Pannick suggested. That cannot be the motivation, but undoubtedly that would be the result.

It is true that the number of cases is not immense, but justice is one and indivisible. The stain on the name of justice in these matters is considerable indeed. I remember in the early 1970s being a member of Lord Elwyn-Jones’s chambers. He was briefed by some South Sea Islanders whose island had been abused by the rapacious acts of mining companies that were registered in the United Kingdom. Out he went for a conference. As the launch was drawing into harbour, hundreds of people were drawn up on the quay—a very high percentage of the islanders—all singing, “Oh God our help in ages past, our hope for years to come”. Elwyn-Jones, being the man he was, was greatly inspired by that and, indeed, the islanders won a redoubtable victory. It is in defence of such situations that I greatly welcome the initiative brought about by the noble Baroness.

[Lord Stevenson of Balmacara]

My Lords, this has been a very interesting debate that has been well supported all round the House. I hope the fact that so many noble Lords have spoken in support of these amendments will weigh on the Minister when he responds.

I would like to spend a few minutes talking about the dichotomy between the rhetoric that we have heard from the Government about the importance of human rights, which we support, and the impact of the measures before us. Under the existing regime, it is already extremely difficult for the cases that we have talked about to be brought in the UK. In the past 15 years, only nine or 10 such cases have been brought. However, these cases have had a significant impact not only on the lives of thousands of people directly affected but—this is important—on corporate practices and international norms in business and human rights.

When the Prime Minister met the Colombian President Juan Manuel Santos in London on 21 November, we were delighted to hear him say:

“Governments of the United Kingdom and Colombia reaffirm their shared commitment to respect, protect, and promote human rights. We reaffirm our commitment to uphold the human rights treaties and agreements we are signatories to, in particular the Universal Declaration of Human Rights, and the International Covenants on Civil and Political Rights and Economic, Social and Cultural Rights”.

I am sure the Minister and his Government want to match reality to that rhetoric. The problem is that, possibly as a result of an unintended consequence or possibly of trying to get one cap to fit all cases, the considered view from all those involved in this area is that the practical result of the proposed changes will be that it will be almost impossible for poor individuals and communities from the developing world to pursue justice in UK courts. We think that this is wrong in principle but also because of the message that it sends to multinational companies based in the UK. Our amendments would create an exemption so that vulnerable victims of human rights abuses in the developing world would still be able to bring cases to the UK. There is no evidence of any need to address the possibility of a spate of spurious claims here; the truth is that it is already very difficult to bring these kinds of cases against UK-based companies in our courts.

Amending the Bill will be essential if the UK is to meet its commitments on business and human rights and to avoid giving the impression that somehow the Government have gone soft on the way they wish to treat business that causes abuse overseas. The rhetoric is good. We know that the Government have consistently supported the UN “protect, respect and remedy” framework for business and human rights and the guiding principles developed by Professor John Ruggie and adopted by the UN in June 2011. In those framework and guiding principles, Principle 26 explicitly states:

“States should take appropriate steps to ensure the effectiveness of domestic judicial mechanisms when addressing human rights-related claims against business, including considering ways to reduce legal, practical and other relevant barriers that could lead to a denial of access to remedy”.

As recently as December 2011, the UK submission to the UN Working Group on Business and Human Rights stated:

“The United Kingdom has placed human rights as central to and indivisible from the core values of British foreign policy. We believe the potential of business to impact on the human rights of individuals worldwide has only been fully recognised in recent years. The endorsement by the Human Rights Council of the UN Guiding Principles on business and human rights in June 2011 marks a high point of international consensus on the issue”.

In light of the praise for Professor John Ruggie’s achievements, it is vital that we keep open the chance of mounting human rights actions in the United Kingdom. The reality of today’s world is that global companies play an increasingly important role and can impact on almost all aspects of our lives. While many UK transnational companies act responsibly, it is important that in situations where human rights abuses occur abroad, poor and vulnerable victims can still seek justice in our courts.

As the noble Baroness, Lady Coussins, said, the Government have already made an exception in the Bill for ATE in clinical negligence cases. Is it not possible to do the same for this limited set of cases? As has been mentioned, the mover and supporters of the amendment met last week the noble and learned Lord, Lord Wallace of Tankerness, and the noble Lord, Lord McNally, who I thank for their time and courtesy in listening to us. I came away from the meeting feeling that there was a willingness to find an accommodation on this issue. If the Minister is happy to signal his willingness to continue those discussions, I am sure that there will be a way of resolving the differences, and I look forward to having a chance to do that.

[Lord McNally]

My Lords, I pay tribute to the noble Baroness, Lady Coussins, and her record in this area. Looking down the list of noble Lords who have spoken in this debate, I see the names of many with whom I have been shoulder to shoulder in many debates. I do not think that there is any division between us on that.

To address the point made by the noble Lord, Lord Stevenson, about the Government’s rhetoric on human rights, I shall, to quote Tony Blair, “leave it to history” to make judgments about the coalition Government. However, one thing that I am absolutely proud of is that in a time of great austerity the sustaining of our aid programme and the follow-on impact on human rights around the world will always be to our Government’s credit—as, too, will their decision to implement the Bribery Act, to take the lead in international anti-corruption campaigns and to be strong advocates for human rights around the world. There is more than rhetoric in this Government’s record on this issue.

I talked with the noble Baroness, Lady Coussins, and the noble Lord, Lord Stevenson, on these issues and, as they know, I am not convinced that the amendments are necessary or appropriate. Let me try to explain why. The Government believe that it is still possible to bring claims against multinational companies once our changes to CFAs are implemented, but the costs involved will be more proportionate to the sums at issue. The proposers seek to address not the validity of the claims but the iniquity of a system that can allow legal costs to escalate to significantly more than the damages at issue.

It is worth emphasising at this stage that the current system of recoverable success fees and recoverable ATE insurance premiums, with the consequence of high civil costs, is not seen in any other jurisdiction in the world. However, I should emphasise that while we should do all we can to ensure that UK business continues to flourish abroad, this will never be done at the expense of violating any of the rights and laws of the host country. The Government are committed to ensuring that UK companies continue to conduct themselves to the highest standards, especially when carrying out trade and transactions in other countries.

CFAs will continue to be available, but the Bill also extends another funding option, to which the noble Baroness, Lady Coussins, referred: the Government are making available alternative methods of funding—such as the use under Clause 44 of damage-based agreements, DBAs, which could be used to fund group actions against multinational companies. Some say that our proposals will decrease the number of these claims, while others, including the Confederation of British Industry and some American companies, are concerned that DBAs will in fact increase the number of such claims. The Government believe that they have the balance right between protecting access to justice and making costs more proportionate. Our aim has been to ensure that litigation is available to stop corporate harm.

It has been mentioned that we were among the champions of the Ruggie guidelines, and it is true that the Government strongly support the UN guiding principles on business and human rights that were developed by Professor Ruggie. We co-operated closely with him on his mandate and fully support the international working group that has been established to take his work forward. I was pleased that I was able to announce that support immediately after that report was published.

19:45

One of the problems that have been referred to is the disproportionate difference between the amounts at issue and the legal costs involved. The Trafigura case is often cited as an example where claimants would have been denied access to justice had our reforms already been in place. However, I must stress that once our reforms are implemented, overseas victims of alleged corporate harm by UK multinational companies will still be able to bring claims in England and Wales against such a company.

We are not, as some have suggested, denying access to justice; we are simply trying to restore a much-needed sense of proportion and fairness to the current CFA regime. I can only repeat the extraordinary costs that were claimed in the Trafigura case. The costs sought by the claimant’s lawyers were in excess of £100 million, while the damages amounted to £30 million. I am not questioning the merits of that case but only the costs involved, which the Court of Appeal ruled were disproportionate. That is why we are pressing ahead with these reforms.

We are addressing the excessive costs that can be claimed. In addition, these amendments would not meet the objectives of our reform, which are to reduce litigation costs. Rather, the amendments would allow those costs to continue to escalate. The certification process proposed in the amendment opens up uncertainty and significant prospects of satellite litigation in individual cases around the criteria for certifying claims as being suitable for exemption.

The Government believe that our proposals to control legal costs should apply across the board. We are not persuaded that the case has been made for any exemptions—

[Lord Judd]

I am very grateful to the noble Lord for giving way and I would not question at all his personal sensitivity to the issues that have been raised. Over a lifetime, I have known that he cares deeply about these things. However, can he assure the House that in their considerations the Government have taken fully into account one of the complexities that have arisen since 2009, when the Rome II regulations were introduced? They mean that the damages are related to what normally prevails in the country in which the harm occurred, whereas the costs may well be related to what applies within the United Kingdom. This means that there is a huge obstacle to taking on a case of this kind because of the risks involved and what the bill might be if the costs had to be met by those endeavouring to make the claim.

[Lord McNally]

I am aware of that. As the noble Lord said, that issue was to a certain extent present in the Trafigura case, where 30,000 people each received £1,000 and the lawyer got—or tried to get— £100 million.

[Lord Elystan-Morgan]

I am most grateful to the noble Lord for giving way. Without detracting in any way from the point made by the noble Lord, Lord Judd, is not the difference between the damages counted and the costs incurred in many cases indicative of the inequality of arms between the situation of the claimants and that of the defendants, many of which are multinational companies with a gross turnover per annum greater than that of 50 of the least privileged countries in the United Nations?

[Lord McNally]

Part of the problem of answering a debate such as this is the horror stories, abuses and problems raised about the capability of multinational companies to misbehave. No one denies that. I have spent most of my life in politics being greatly suspicious of many such operations. We cannot funnel that down to a change in an area that, it has been admitted, has covered 10 cases in the past decade. I understand noble Lords’ commitment to take on those abuses, but to suggest that the English legal system is in any way able to meet the point is to put too much of a burden on it.

As I told the noble Baroness, Lady Coussins, I do not believe that such cases will not be brought because often the motive is not profit; it is many of the motives that have been explained tonight. What is at stake for the companies concerned is often not money but reputation. I do not believe that we are creating an insurmountable barrier to take cases where English or Welsh companies are at fault, but I will draw the debate to the attention of my right honourable and learned friend the Lord Chancellor, because the speakers list should be respected. My right honourable and learned friend and I believe that the fear of the effect of what we are doing is exaggerated. The opportunity that the Bill offers for other forms of financing of litigation is underestimated, but I will ask him to read the debate, look at the arguments deployed and consider the amendments. For the moment, I ask the noble Baroness to withdraw her amendment.

[Baroness Coussins]

My Lords, I thank all noble Lords who have contributed to the debate and the Minister for his reply. I remain convinced that it would be much better to avoid an undesirable, unintended consequence than to worry about adding something to the Bill that might not be 100 per cent technically, strictly necessary. If the lawyers behind CAFOD, Oxfam and Amnesty are convinced that the amendment is necessary, the Government should take them seriously. I look forward to the Minister's response after he has spoken to his colleagues. This issue will not go away, but, for now, I am happy to withdraw the amendment.

Amendment 136 withdrawn.

Amendments 136A to 137 not moved.

House resumed. Committee to begin again not before 8.55 pm.

Health: Stroke Care

Monday 30th January 2012 Lords Chamber

Question for Short Debate

19:55

Asked by

[Baroness Wheeler]

To ask Her Majesty’s Government what plans they have to address variations in health and social care support for people after stroke identified in the Care Quality Commission’s special review, Supporting Life After Stroke.

[Lord De Mauley]

My Lords, I respectfully draw noble Lords’ attention to the fact that, except for the noble Baroness, Lady Wheeler, and my noble friend the Minister, speeches are limited to three minutes.

[Baroness Wheeler]

My Lords, I am delighted to have secured this debate on the key issue of support in the community for people who have had a stroke and their carers. The Care Quality Commission report, Supporting Life After Stroke, was published a year ago this month, following a landmark special review by the commission, which charted what was happening in every primary care trust area in England.

I do not have a record of when I proposed the debate, but clearly patience has paid off. In fact, one year on and in the lead-up to the Government's promised spring White Paper on social care, consideration of the report's findings and proposed actions is timely indeed: both to address the widespread concerns about the impact that the major changes to the NHS will have on the huge progress that has been made in recent years; and to highlight the need for care pathways to address the need for long-term support for stroke survivors and not just help in the immediate period after hospital discharge.

Before moving to the report's findings, it is worth briefly providing a word of praise for the much beleaguered CQC itself. The special review is an incisive, excellent piece of work—precisely the type of national review report that the CQC should be undertaking—setting out a range of actions for service providers, commissioners and central government from its locally based assessments. However, there is doubt about the amount of meaningful follow-up work that has been done by the commission and indeed whether it will be able to undertake such review work in the future—but I will come back to that later.

For the record, I give the stark facts about stroke. Stroke is the third biggest killer, the largest single cause of severe adult disability in the UK, and the second major cause of dementia. There are about 110,000 strokes and 20,000 TIAs—that is, mini-strokes—per year in England and approximately 300,000 people are living with moderate to severe disability as a result of stroke. Stroke is also one of the most expensive conditions, with direct care costs to the NHS of £3 billion a year within a wider cost to the economy of £8 billion.

The central message of this debate, nearly five years since the start of the implementation of the 2005 national stroke strategy, is that there must be no turning back, no brake on the enormous progress that has been made and that we must keep up the momentum. As a carer of a severely disabled adult who most certainly would not have survived his major brain haemorrhage without the immediate care and treatment measures outlined in the strategy being in place, I can personally testify to the life-saving effectiveness of the strategy in the area where I live, and pay tribute to the marvellous skills of ambulance and hospital nursing, physiotherapists and medical staff in getting him through. We know that, as a result of the national strategy, that excellent early treatment experience is replicated in many stroke centres across the country. But we also know from the 2011 national stroke audit undertaken by the Royal College of Physicians that huge variations in standards of acute care still need to be addressed.

Similarly, the CQC report on community-based care for stroke survivors once they have left hospital found significant variations across England in the extent to which they are supported to cope with life after stroke. In many areas, the report found that people were unable to access the services they need when they need them. Early supported discharge, focusing on intensive rehabilitation in the home rather than in the hospital, was available in only 37 per cent of areas; 32 per cent of PCTs failed to commission physiotherapy in the community across the whole of their area; in 48 per cent of areas, people waited an average of two weeks until receiving speech and language therapy—vital lost days in a such a critical enabler to living and coping with stroke.

The CQC also found major problems with people and their carers accessing services and support after hospital discharge; information packs not easy to follow or not including information about local services; carers not given information about local carer support or befriending schemes; information not available in relevant community languages other than English; helpline staff not trained to deal with people with communications problems such as aphasia; and, most common, a named contact for support which did not look across health, social and community care.

However, the overall CQC message is that, despite the problems it identified, much has been achieved in improving post-hospital support and many of the building blocks necessary to achieve a transformation in care are now in place. In the words of the CQC, the report shows that the barriers to effective care after transfers home can be overcome and improvements made to which can help people both to recover from and cope with life after stroke. The report reinforces my message about keeping up the momentum and ensuring that it is not lost in the light of the threats to improvements in post-hospital stroke services from substantial cuts to local social care budgets and the impact of the reorganisation of the NHS.

The CQC recommendations cover a wide range of actions to address the variations in service provision that it found. These include PCT service improvement plans to address the problems and, most importantly, to ensure that services are adapted to individual needs, such as for people who have little or no support from carers or family members, people in care homes, people with aphasia, and people from black and ethnic minority communities. From my experience as a carer, often battling to ensure that the various support services actually happen and join up, I shudder to think what happens to the many stroke survivors living on their own.

The authors of the CQC report highlighted the importance of the NHS stroke improvement programme and the 27 stroke care networks that operate at regional level. They have a key role to play in helping to improve longer-term stroke support in the weakest performing areas, and I hope that the Minister will be able to give reassurances that funding of the networks will continue following the current review period.

It is clear from the problems highlighted in the report—and the CQC stresses this—that strong national leadership and support will continue to be needed for the foreseeable future to support the changes in the longer-term stages of the stroke care pathway envisaged. I hope that the Minister, in his response, will be able to reassure the House that the national Commissioning Board will commit to ensuring that the key elements of the national strategy are incorporated into future guidance to commissioners of stroke services and that it will also ensure that the strategy continues to move forward to meet the challenges ahead.

On the question of leadership at national level, the Department of Health’s continuing failure to appoint at least an interim national clinical lead for heart disease and stroke following the resignation of Sir Roger Boyle has caused much concern and has led to precisely the leadership vacuum that we must avoid at this critical transition phase. Moreover, the number of staff in the vascular team at the department has also significantly declined during this time. Meanwhile, there are still national clinical directors for other major areas such as cancer, diabetes and respiratory disease. Can the Minister explain how the Government justify not filling the heart disease and stroke post, even on an interim basis? How is this leadership role currently being undertaken, and how will he ensure that the Commissioning Board has the expertise to advise and deliver on stroke strategy without it?

In the time I have left, I have some key questions for the Minister arising from the report. First, I understand that the CQC’s remit has changed since publication of this report and that the review team working on stroke has been disbanded. In the absence of the proposed targeted CQC inspections, as well as training and support for the weakest areas, how will the Minister ensure that all PCTs, now in their clusters, have reviewed the CQC local assessments and are implementing action plans? Is this the last stroke review that the CQC will undertake?

Secondly, consistent and authoritative data on stroke care once people leave hospital is vital to gauge what progress is being made. How will information on the quality and standard of stroke services be monitored and reported in the future, and will more information be collected on post-hospital stroke care and support?

Thirdly, I am sure that the Minister will join me in recognising the valuable work undertaken by the voluntary sector in providing stroke support services. I refer in particular to the Stroke Association, although I should also like to give a quick plug for the amazing work of my local TALK charity in Surrey for stroke survivors with aphasia. However, the removal of the ring-fenced conditions from last year’s £15 million government grant to local authorities, combined with local authority budget cuts, uncertainties over NHS funding and future commissioning arrangements, will seriously threaten the viability and provision of services in the future. How will the Government ensure that local authorities provide adequate support for voluntary organisations and networks providing such vital community support for stroke recovery?

Fourthly, I draw your Lordships’ and the Government’s attention to the publication in May of the Stroke Association’s forthcoming Daily Life survey as part of Action on Stroke Month. It is the largest survey of the life experience of stroke survivors across the UK. I am sure that the Minister will want to commit to working with the Stroke Association on the outcomes to ensure that the long-term support that stroke survivors need are improved.

I end with a hobby-horse of mine concerning stroke. We were told rather authoritatively by a number of medical, nursing and social care staff, and well-meaning others, that there was a two-year “real” improvement window in stroke care—in other words, if improvements to impaired movement, paralysis or speech loss had not occurred by then, that was how it was going to be. That is a common myth and it is not true. With the right support and care, stroke can be, and often is, a long journey of small, continuing improvements—to memory, to motivation, to speech, to thought processes, to the ability to live with disability and to finding ways of enjoying a good quality of life. That is why making progress in strong and continuing support for stroke survivors in the community and addressing the current variations across the country is so important. I look forward to the contributions to the debate and to the Minister’s response.

20:05

[Lord Lingfield]

I am very grateful to the noble Baroness, Lady Wheeler, for securing this important debate. I declare an interest as chairman of the ARNI Trust, which deals with rehabilitation after stroke. The noble Baroness has reminded us that stroke is now ranked as the largest single cause of disability among adults in the United Kingdom. About a third of a million people are now living with moderate to severe consequential problems, and in the brief time allowed I want to touch on one new initiative concerning them.

I was privileged early last year to visit a community centre serving a wide area. Inevitably, among those who come every day just to chat, dine or use its amenities were a considerable number of stroke survivors. I was there to open a unique new stroke facility, which has been pioneering a novel approach developed by the ARNI Trust, and this is the use of fitness trainers. I have to say that hitherto I had thought of fitness trainers as well-muscled young men and women hired at some expense to put city executives through their paces. However, these were rather different. Each had undergone a rigorous course in teaching exercises suitable for stroke victims. They are not physicians or physiotherapists, of course, and the techniques that they teach are simple but innovative ones which relate to the daily life-needs of their patients. I shall give an example.

Many stroke survivors will tell you that they dread falling over because getting up unaided is usually impossible. At home, they often ring the emergency services to assist them, the alternative being possibly to lie on the floor for many hours until a carer arrives. The staff of the centre that I mentioned spend many thousands each year on hiring professional paramedics to turn out when a stroke victim has fallen over while there. This is a legal requirement. In the new facility, the fitness trainers teach a novel and safe technique, currently the subject of a clinical study by a group from the University of Exeter and Plymouth University. It is called IGO—“I get off the floor”. Patients who have learnt it can get up unaided. It has been so successful that the centre now saves some £8,000 each year in paramedic costs, and the disabled people whom I interviewed are delighted with the new-found independence that such techniques can bring.

These trained fitness professionals are now teaching these techniques throughout the country, often in the homes of the stroke disabled, for there is evidence—and the noble Baroness, Lady Wheeler, touched on this—that some stroke victims can continue to make improvements long after conventional wisdom suggests. I have met many who have been able, after training in these techniques, to discard walking aids, and one has been mobilised out of his wheelchair.

Finally, evidence suggests that quite properly the vast majority of funding available for stroke nationally is directed towards the acute phases. In my view, a small funding adjustment towards long-term needs would lead to a greater emphasis on functional exercise after stroke.

20:08

[Baroness Pitkeathley]

My Lords, I thank my noble friend not only for securing this debate but for the wide-ranging way in which she introduced it. Her personal experience as a carer enriches our debates, and it is on the care experience that I want to focus in the few moments available to me.

I want to bring to your Lordships’ House Olivia, who looked after her husband, Ronald, when he suffered a massive stroke. She said:

“He spent four months on a stroke ward where little was done to rehabilitate him; he was lucky if he got 10 minutes of physio a day and even less input from speech and occupational therapists”.

She felt that the care he was receiving was so poor that she would take him home, and she thought that she would be better off doing that. Within days of taking him home, she felt that his condition had improved, and Ronald also received support there from district nurses and a physiotherapist. Olivia had to fight to get information and support. She said:

“It took months to determine what help we might be entitled to. I was passed from department to department, we were subjected to assessment after assessment and review after review, answering the same questions over and over again, the various departments procrastinating over every decision”.

She is still convinced that she made the right decision to care for Ronald at home, but the lack of support for her meant that she had to give up paid work to care, and suffered then from stress and depression, providing round-the-clock care. The impact of both people losing their incomes forced them to sell their home and go into sheltered rented accommodation. Your Lordships may think that that is an extreme example but it is not. It is a common experience in some families.

One of the great difficulties about a sudden onset condition such as stroke is that carers have little time or opportunity to plan for caring responsibilities. Intensive support, or reablement as we often call it now, following hospital discharge, can make the difference between a more rapid recovery and the need for ongoing long-term care. Not only is it crucial to support the independence of the stroke sufferer but for family members, too. Many families can juggle short periods of intensive caring and ongoing lower levels of support with paid work. They are very willing to do that, and to juggle it with other family commitments. But the lack of rehabilitation services can extend the length and intensity of the caring responsiblities of families. Evidence from Carers UK shows that many families are at risk of longer-term penalities: falling out of work and risking isolation, ill health and financial hardship.

In addition to support with personal care and mobility, stroke survivors often experience communication difficulties and changes in behaviour. That, too, can lead to stress and strain in the caring relationship. When the Minister responds, I hope that he will acknowledge the importance of caring families and address specifically the latest developments to support the Olivias of this world, as well as the Ronalds, who are the sufferers, particularly in respect of the unacceptable variation in levels of support available to them.

20:12

[Lord Rodgers of Quarry Bank]

My Lords, this debate is the latest in a series of short debates in which the House has explored the causes and consequences of stroke. Of today’s list, three—the noble Baroness, Lady Rendell, the noble Lord, Lord Clinton-Davis, and I—spoke at the first of them on 23 May 2006, arising from the pioneering National Audit Office report Reducing Brain Damage: Faster access to better stroke care.

The noble Lord, Lord Clinton-Davis, and I drew from our personal experience as victims—a term I do not like, but it is used. For my part, I was not physically disabled but my speaking, reading, writing and comprehension were severely affected. I needed two and a half years of speech therapy to recover my capacity, and longer for my confidence.

In her ministerial reply in 2006, the noble Baroness, Lady Royall of Blaisdon, gave a sympathetic response, saying that the hospital to which I had been taken following my stroke five years earlier used to have one of the worst performing stroke services in the country but that it had been turned round to one of the best.

I say that because stroke had been grossly neglected by the NHS until the late 1990s. Since then the perception of stroke has been transformed and I pay tribute to the Stroke Association as it has played an important campaigning role. I also pay tribute to Sir Roger Boyle for his leadership of the national stroke strategy. I am sorry that he has felt unable to continue his role during these turbulent NHS times. Among unfinished business is to ensure that GPs can recognise and take seriously the symptoms of stroke in a patient and to contribute towards the rehabilitation and care of stroke victims.

In reading the 2010 stroke sentinel audit reports, I have found no reference to GPs and only one in the Care Quality Commission report, in passing, on the role of GP consortia in the new commissioning procedures. I would be grateful for the Minister to bring up to date this aspect of the national stroke strategy—involving GPs in stroke—and explain where responsibility will lie on completion of the current Health and Social Care Bill.

I greatly welcome the initiative of the noble Baroness Lady Wheeler, in putting forward this debate, and I hope that we shall have further occasions in the House to maintain the momentum of change.

20:16

[Baroness Masham of Ilton]

My Lords, I thank the noble Baroness, Lady Wheeler, for her timely question. People up and down the country are concerned about the standards of care there will be for people with long-term conditions in a reformed NHS. It is hoped that a quality standard will be commissioned by NICE over the next Parliament.

My husband had a stroke sitting in his armchair watching cricket; our previous Black Rod had a stroke in bed. It can happen at any time. I am pleased that there have been improvements in recent years, but could these be at risk? People are living longer post-stroke with a higher level of need. More than 900,000 people in England are living with the effects of stroke, with half of them being dependent on other people for help with everyday activities.

Early intervention of speech and language therapy is crucial and has a direct impact on the length of stay in hospital and the outcomes for the patient. However, anecdotal evidence shows that many speech and language therapists’ posts are becoming frozen or lost, and budgets are being cut by between 9 and 33 per cent. More than one-third of people have persistent speech, language or communication problems after a stroke. Patients are sometimes left over a weekend with no food or fluids with a sign on their bed, “Nil by mouth”, and forgotten if they have not been assessed by a speech therapist. Hospitals must do better. Patients with dysphagia are at risk of serious complications, developing respiratory infection or pneumonia, and suffering from undernourishment and dehydration.

Prevention, if possible, is the best option. People with atrial fibrillation—irregular pulse—are five times more likely to suffer a stroke. A quality standard will raise awareness of the condition among commissioners and GPs. Everyone should be taught to take their pulse and to help others do so. Children could learn this at school and could then check their parents. Information on AF and stroke prevention should always be available. Taking blood pressure with a BP machine will not show an irregular pulse.

The CQC's special review identified a number of areas that service providers and commissioners could focus on to drive improvements. Work at national level could support these improvements. I hope that the Government will put this into practice.

20:18

[Baroness Rendell of Babergh]

My Lords, I, too, congratulate my noble friend Lady Wheeler on instituting this timely and needed debate. In recent years, as the Care Quality Commission's review points out, attitudes to stroke and treatment for stroke have improved enormously, with better access to specialist stroke units, greater use of thrombolysis and improved working across care and social services. People are able to leave hospital earlier and receive rehabilitation when they return home. Despite this progress in recovery, data collected by the national sentinel stroke audit have shown that it is after that return home that people tended to feel abandoned. More than half had unmet needs for care and more than half wanted more information about strokes. The audit found that 48 per cent of PCT areas had a two-week average wait for community-based speech and language therapy, even though one-third of stroke survivors experienced communication problems after stroke. It is on this aspect of rehabilitation that I will concentrate briefly today.

Complaints from stroke survivors included a failure to find what help could be got, a failure to be “treated like a human being”, and of a lack of respect for people's dignity, which came about through a failure to understand another culture. One woman stroke survivor had difficulty communicating because although she spoke English her mother tongue was Urdu. We have heard much lately about the desirability of immigrants who come to the United Kingdom learning our language, but here we are not talking about learning English but about speaking it to a high level of comprehension and being understood. The woman who was an Urdu speaker could speak English and no doubt read it but not confidently when she needed to take information from the printed word or from rapidly imparted speech.

Only a third of the areas covered provide information in languages other than English. Audio and DVD access is available to stroke survivors only in one-fifth of cases. Many services provide limited support and information only for people of working age, despite stroke being the largest cause of disability in adults and particularly in older people. With three main foreign languages and 16 main immigrant languages spoken in the United Kingdom, surely the time has come to remedy the situation of stroke survivors by providing those who require it with the requisite information in translation, for example, into Urdu and Bengali among others.

Good information about what stroke is and what can be done is often still lacking. The national stroke strategy, now three years old, recognises that people's needs require regular reassessment so that changes can be taken into account. A review should take place six weeks after someone has left hospital, and again after six months, and PCTs should set out that the people who have had a stroke and their carers should be involved in these reviews. Only one in 10 of the information packs given to stroke survivors mentions the reviews, or people's right to ask for a reassessment if their needs change. Many must be unaware that the reviews should take place. How much more obscure and difficult to follow are the details of reassessment for those who have to struggle through information in a language that is at the best of times difficult for them.

20:22

[Baroness Browning]

My Lords, I, too, welcome the opportunity that the noble Baroness, Lady Wheeler, has given us to discuss this subject. I was a member of the Public Accounts Committee in 2006 when we received the National Audit office report, and again in 2010 when we reviewed the progress of that report. It is concerning to think that some of the concerns of the Public Accounts Committee in 2010 were picked up in the CQC report. I will pick up on one or two of them.

We in the Public Accounts Committee said:

“The Department lacks evidence about what types of post-hospital support and long-term care are most effective for stroke patients and does not have a clear plan as to how such care should be funded”.

I hope that my noble friend this evening will be able to assure us that that has been taken on board, particularly in the light of the changes to the health service. Also, despite 11 per cent of stroke patients being newly admitted to care or residential homes after their stroke, there is little understanding of what services stroke patients need in these settings. As a former constituency MP, I know not only that stroke is life-changing but how much more so it is when somebody one day has a stroke at home and never goes back to that home, instead going into nursing or residential care. I hope that that group of people will not be forgotten and that my noble friend will address them as well.

There is also the question of the joint care plan, which is picked up in the CQC report, and particularly, as part of that care plan, the need for regular reviews. I think the point was very well made about this two-year cut-off point. In fact, the CQC report shows that those plans which incorporate the structure of six-week reviews and six-monthly reviews are not only ongoing but that the best quality care is usually delivered as well. Yet we see that only two-thirds of people had six-weekly reviews, 44 per cent had six-monthly reviews and only one in 10 information packs given to patients on discharge mentioned the reviews at all.

At the UK stroke forum in December last year, the Secretary of State for Health announced that work will begin this year on the development of an outcomes strategy for cardiovascular disease. Will the outcomes strategy for cardiovascular disease replace or complement existing national strategies, such as the stroke strategy? How will it focus on the areas most in need of improvement, such as longer term care and support for stroke survivors? I hope that when he replies my noble friend will also be able to tell us what progress has been made on the development of the outcomes strategy for cardiovascular disease.

20:25

[Lord Clinton-Davis]

My Lords, I thank my noble friend for promoting this debate. I know only too well that a stroke can have devastating effects. Often, it kills. It can often lead to serious disability, mental and physical, and it can disrupt families. The commitment to long-term support is vital, as is the training of carers in suitable cases. The Government should indicate their unwavering support for the recommendations of the CQC report, and there should not be wide discrepancies in the country in the care of stroke sufferers. In my experience, physiotherapy is an absolute must, yet it is not always available on the scale necessary or sometimes not at all. Speech and language therapy and rehabilitation are too often woefully inadequate. Local services should be more widely known. So many organisations—PCTs, adult social services and providers—have a substantial role to play, which should be recognised much more widely.

There is so much to say about this and I thank my noble friend Lord Rodgers. He and I have suffered from this. Unfortunately, there is so little time to say everything, but this scourge demands a much more positive response from the Government. They should recognise how valuable this work is. I join with others in paying tribute to the Stroke Association for the work that it has done in focusing upon the essential issues.

20:27

[Baroness Wall of New Barnet]

My Lords, I, too, congratulate my noble friend Lady Wheeler on picking an opportune moment for this debate and on her concentration on after-stroke care. If you talk to clinicians involved in stroke, they say that the treatment you get immediately has a major effect on what may happen later on, so I want to concentrate on the situation in London. Many noble Lords will know that in London 6,000 people a year suffer a stroke. London is the region that has done most to improve its management of acute stroke. In the past, if you had a stroke in London, you could have been taken to any one of the 38 hospitals which have an A&E department. This fragmented care meant that too many patients were not getting the care and rehabilitation they needed. Over the past two years, London has reorganised stroke care. If you suffer a stroke now in London, you are taken rapidly to one of eight specialist hyperacute units capable of delivering the highest quality care from an expert team of clinicians. Following this, you will receive specialist, multitherapy rehabilitation care and ongoing medical supervision in one of 24 new stroke units.

The results show a dramatic improvement. The new arrangements will save between 300 and 500 lives a year with a commensurate reduction in disability. London has moved from a poorly performing system to one which is now not just the best stroke system in the UK, but is comparable to the best in the world. Dame Ruth Carnell, the chief executive of SHA London, has many things to be proud of but, in my view, none more than driving the reconfiguration of the stroke services across London.

I need to declare an interest when advising the House that Barnet and Chase Farm Hospital’s acute stroke unit, based on Spruce Ward at Barnet Hospital, is the first unit in London to be accredited as meeting all the standards set by the London cardiac and stroke networks.

The noble Baroness, Lady Wheeler, drew our attention to the CQC report, which reminds us of the need to ensure an equal focus is given to the development of stroke services outside hospital, and I support that. As ever, the rehabilitation end of the pathway is getting less attention than the acute, but it is important that stroke care is given uniformly, and I ask the Minister to take on board that inequality. Is the London model of hyper and acute stroke services one that the Government are minded to replicate and encourage across England and Wales?

All those who suffer this awful and possibly life-changing illness deserve the very best acute services. As the CQC says, the further extension of this superb treatment and care in supporting their lives is essential.

20:31

[Baroness Gould of Potternewton]

My Lords, there is no question that the 2010 national stroke strategy has heightened the knowledge of stroke across the country, but there is still evidence of gaps in long-term provision.

I will concentrate on aphasia, which is an outcome, among others, that my daughter still suffers from 15 years after having a stroke. Aphasia can take the form of people not being able to speak at all or having only a few words; others can no longer read, write or use numbers. All the evidence shows that services are not planned with the needs of people with aphasia in mind.

There are currently about 250,000 people in the UK with aphasia. However, statistics are notoriously difficult to collect. This is illustrated by the findings of the Care Quality Commission. Only 7 per cent of adult social services departments reported including people with aphasia in designing stroke information. Eighty-one per cent of PCTs have not tried to estimate how many people with aphasia live in their area. All this is further compounded by the fact that communications disability is not a recognised disability and so is not monitored. People with aphasia are invisible. A simple solution would be to monitor how many people have aphasia at the time of the stroke, at discharge from hospital and when under the care of social services.

Key to the provision of services for people with aphasia are the voluntary bodies, and I want to refer to one specific organisation, Connect, of which my daughter is a board member. Connect is a charity for people living with aphasia, which offers information and support for carers and health professionals. Crucially, it recognises people with aphasia as experts and as such has pioneered innovative ways of working in partnership with people with aphasia. It aspires to enhance and extend statutory service provision once statutory services end and offer the opportunity to re-engage with life beyond services. This is in addition to the provision of a statutory workforce and a passionate and highly skilled workforce of volunteers supporting service development and delivery. At the same time it aims to reduce costs for national services by reduced visits to the GP as a result of improved mood, greater self-esteem and increased social participation as well as reduced dependency on speech and language therapy, enabling earlier discharge from statutory services.

It is not all about specialist rehabilitation, important as that is, but sometimes about low-cost, accessible, creative, peer-led activities such as drop-in, befriending and awareness provided by a third sector organisation. However, real support is required to help organisations such as Connect and the Stroke Association continue to provide these vital services in the long term. Stroke is not a one-off event but a life with complex disabilities.

20:34

[Baroness Thornton]

My Lords, I congratulate my noble friend Lady Wheeler on being patient enough to allow this debate to take place tonight. I thank all noble Lords who have taken part in this debate.

When Andrew Lansley was appointed to the Cabinet by David Cameron in May 2010, we might have expected that the new Health Secretary would take the trouble to introduce himself to the leading players in his department. I have to say that this was not the case. Sir Roger Boyle, who had been toiling away as the Government’s national director for heart disease and stroke for more than a decade, did not actually meet the Secretary of State until just before he parted company with the department. As someone who judges the success of something by the action that is taken, not by the rhetoric, I think that that is decidedly unimpressive.

Sir Roger Boyle was appointed as national director for heart disease in March 2000. He led the implementation of the National Service Framework for Coronary Heart Disease, which led to a 50 per cent cut in deaths from heart attacks. That has been in the news very recently. He published the National Stroke Strategy in December 2007, and indeed was working on the implementation of that stroke strategy when he left the department last summer. My question to the Minister is this: I understand that Sir Roger Boyle has not been replaced. If he has not been, why not? Indeed, what does that say about the priorities of the department on the issue of stroke?

It is a pity that Mr Lansley did not make more of an effort to find out what Sir Roger was up to. He would have learnt some important lessons about the NHS and what it had achieved without the benefit of the market revolution that is being ushered in under the NHS reforms before the House.

The second question I would like to ask the Minister is what future, therefore, will the national stroke strategy have in a reformed NHS, and who will be responsible for its implementation under the proposed new system?

My third question picks up the points made by my noble friend Lady Wall. It concerns whether something as successful as the London stroke strategy could be replicated and how that would be achieved. I make no apology for repeating the question that I have been asking, on and off, at every opportunity over the last year or so, because I think that so far we have not received a satisfactory answer. The London stroke strategy was achieved through a London-wide strategic plan driven by clinical co-operation. I would like to know how, and in what timeframe, such a strategy would be possible under the new levels of decision-making bureaucracy and, some might even say, fragmentation that are being proposed by the new Bill.

Would there be a great risk that the clinical competition that allowed the London strategy to move forward, if it were to be an economic or financial competition, would have to be based on the failure of some centres, to allow others to emerge as winners? That is my understanding of how things would have to move forward. I hate to say this to my noble friend Lady Wall, but it seems at present to be less rather than more likely under the new regime.

I thank all noble Lords who have covered what seem to be all conceivable questions about the matter of stroke, and I look forward to the Minister’s reply.

20:38

[The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)]

My Lords, I am delighted that the noble Baroness, Lady Wheeler, has been successful in securing a debate on stroke care, and I thank her for introducing the subject so ably. As demonstrated today by the number and quality of contributions made by noble Lords, it is an area of great interest and one that it is vital to keep in the public eye. I shall do my best to cover as many issues that have been raised as I can, but I shall write to those noble Lords whose questions I have not been able to cover.

Stroke care has witnessed huge improvements over the past few years and many thousands of people have benefited. Stroke patients are getting treatment that is faster and better than ever before and data suggest that improvements are continuing. I pay tribute to the work of Sir Roger Boyle during his time as national clinical director. The latest data show that over 80 per cent of stroke patients are spending the majority of their hospital stay on a stroke unit, and the management of high risk transient ischaemic attack patients has also improved by 20 per cent since 2009. Access to immediate brain scanning has improved considerably and more patients are receiving thrombolysis giving them a better chance of regaining their independence following a stroke. There has been the very successful campaign to raise awareness of stroke—the Act FAST campaign.

We want the progress underway to continue but we also know, as was pointed out by the noble Baroness, Lady Pitkeathley, that we need to do more to improve support for people after stroke. As we acknowledged when the Care Quality Commission published its report last year, there is still more to do in ironing out the variations in stroke care, particularly in the support provided to patients when they leave hospital.

The noble Baroness, Lady Wheeler, asked about monitoring of outcomes with the benefit of robust information. At a national level, our focus on outcomes through the NHS, public health and adult social care outcomes frameworks sets out the areas we want to improve. Stroke specifically features in two parts of the NHS outcomes framework in terms of reducing premature mortality and in recovery from major illness.

Noble Lords will be interested to hear that the stroke indicator on recovery has been developed in collaboration with several organisations, including clinicians, academics and the NHS. The indicator, based on the modified Rankin scale, will assess the patient’s recovery from stroke after six months. It will provide an incentive for the NHS and social services to work together, getting the right services in place so that when patients leave hospital they have the support they need to make the best possible recovery. I hope that that reassures those noble Lords who are afraid that care will be fragmented. This outcomes framework will drive services in the opposite direction.

The social care outcomes framework is helping to gauge the progress made by local services and drive up standards across the country. One of the areas this framework covers is reducing the need for care and support and delaying dependency. This will help people to live healthy independent lives and properly manage any health needs. Local authorities will be able to compare their services with those of other authorities around the country and make improvements based on what has been proven to work elsewhere, integrating care and working together to provide care that suits individual patients. For stroke survivors, this means providing access to the kind of support that they need to enjoy the best possible quality of life after their stroke.

Building on the national stroke strategy, the NICE quality standard for stroke, which has been mentioned by a number of noble Lords, has been developed with patients, commissioners and leading doctors. This provides an authoritative definition of what high quality care for stroke actually means. They are the measures of quality that matter most to patients and the NICE quality standard for stroke recognises the key role that rehabilitation plays in making sure people can live their lives as fully as possible after their stroke.

My noble friend Lady Browning suggested that there is perhaps inadequate understanding of what patients need in care settings. The NHS, through the stroke improvement programme and the 28 stroke networks in England, is working to make sure that stroke care improves at all stages of the patient pathway. The stroke networks connect different organisations and teams that have roles to play when someone has a stroke so that patients can be sure of co-ordinated management from the moment they are first in touch with a doctor or nurse and throughout their lives as a stroke survivor. This whole approach takes the needs and wishes of stroke survivors and their carers into account when delivering these services. I should like to reassure the noble Baroness, Lady Wheeler, about funding of the networks. Funding is in place for 2012-13. The future of the networks is being actively considered as part of the development of the NHS Commissioning Board.

The stroke improvement programme and the stroke networks have made good progress in getting the stroke strategy up and running, and they have done the same with the NICE quality standard. Patients now see better acute care as a result of both. Attention is now being focused on improving care for patients who have left hospital. The accelerating stroke improvement programme was developed specifically to improve care in areas where progress needs to be made faster and is looking at improving post-hospital and long-term care. The stroke improvement programme, working with the stroke networks, is delivering this.

Accelerating stroke improvement is concentrating on four key areas of post hospital care: that is, providing early supported discharge; making sure patients and carers have a joint care plan on discharge from hospital, which was mentioned by my noble friend Lady Browning; making sure stroke survivors have a review six months after leaving hospital; and making sure psychological support is provided for those who have mood, behaviour or cognitive disturbance.

One example of where a stroke network has been working well with commissioners to improve access to stroke community services is south London. Through the ASI programme, the network has developed a service specification for early supported discharge and community services, and has helped commissioners to make the case for change. What is more, analysing data from the CQC review, the stroke network was able to identify areas that needed to do more in the provision of post-hospital services. This has resulted in one of the care trusts commissioning a stroke community rehabilitation service, which is an excellent example of how the CQC review has actually driven improvements in services.

A number of questions were put to me. The noble Baroness, Lady Wheeler, asked about clinical leadership in this area, a point also raised by the noble Baroness, Lady Thornton. The replacement of the National Clinical Director for Heart Disease and Stroke is being considered as part of the development of the NHS Commissioning Board, but I would just say generally that improving stroke services is a priority for the Government, and there should be no doubt about that. It is a priority against which we shall hold the NHS Commissioning Board to account. Tackling premature mortality from stroke is an area for improvement in both the NHS outcomes framework and the public health outcomes framework.

The noble Baroness, Lady Wheeler, mentioned the Stroke Association, and again I pay tribute to its work. My officials meet its representatives on a very regular basis. The local stroke networks are working with clinical commissioning groups and PCT clusters to ensure that improvements are made in stroke services, including those recommended by the CQC. I was asked how improvements in quality will be monitored. There are two audits running this year. The Sentinel Stroke Audit and SINAP will both publish their results, which will help commissioners and providers of stroke care to monitor and improve their services, helped by the local stroke networks. The noble Baronesses, Lady Wall and Lady Thornton, asked whether we agree with the hyper-acute model that has been adopted in London. We certainly acknowledge that the reconfiguration of stroke services in London has produced very good results. The Stroke Improvement Programme works through local stroke networks, which are responsible for disseminating good practice across the country. They have done so with the London example very much in mind and, indeed, other examples where reconfiguration has delivered better stroke care.

The noble Baronesses, Lady Masham, Lady Gould and Lady Rendell, my noble friend Lord Rodgers and the noble Lord, Lord Clinton-Davis, all spoke of aphasia services and speech and language therapy. Stroke survivors should receive care and support from staff with the skills and competence to meet their needs, ensuring that those with communication difficulties such as aphasia have opportunities to return to a full life back in their communities. A good example of working with those who have aphasia is the Access to Life project in Cornwall, run by Connect. Twenty people with aphasia have been trained to provide one-to-one support to others with aphasia at home or in hospital, which helps those with aphasia grow in confidence in the way they communicate, and so reduces their risk of social isolation, a point well made by my noble friend Lord Rodgers.

The noble Baroness, Lady Rendell, spoke about entitlement to reviews and reassessments. Patients should have reviews at six weeks and six months. The NHS outcomes framework will include an indicator in the recovery domain to ensure that patients are reviewed at six months, as I have mentioned. The noble Baroness, Lady Pitkeathley, referred to the needs of carers. Carers play a critical role in ensuring that stroke survivors enjoy the best possible quality of life. Local authorities, working with PCTs, should together make sure that appropriate services are available to support both stroke survivors and their carers. Health and well-being boards will in the future have responsibility for ensuring that these local needs are met. The noble Baroness, Lady Gould, asked about support for third sector organisations. It is for local commissioners to decide how to use the third sector in providing stroke services, but many local authorities and PCTs commission such services from organisations such as the Stroke Association.

We want our stroke services right across the pathway to match the very best in the world. As I have said, huge improvements have been made to that end, but significant improvements still need to be made. I have given a couple of examples of what is being done to address this, and there are many more examples from around the country of services continuing to improve. But we are not stopping here. Identifying how we can deliver better outcomes in cardiovascular disease, including stroke, is a key task. This is one of our biggest killers and causes of adult disability. That is why my right honourable friend the Secretary of State for Health recently announced the development of an outcomes strategy for cardiovascular disease, building on existing strategies and the national service framework. I hope that the noble Baroness, Lady Wheeler, will see this as good news.

The aim of the strategy is to create a joined-up approach across the NHS, public health and social care to improve outcomes for patients with CVD, which includes stroke survivors. This will mean even more stroke survivors living active and fulfilling lives.

20:51

Sitting suspended.

Legal Aid, Sentencing and Punishment of Offenders Bill

Monday 30th January 2012 Lords Chamber

Committee (6th Day) (Continued)

20:54

Amendment 137A

Moved by

[Lord Alton of Liverpool]

137A: Clause 43, page 30, line 23, at end insert—
“( ) The amendments made by this section do not apply in relation to proceedings which include a claim for damages for respiratory disease or illness (whether or not resulting in death) arising from industrial exposure to harmful substance.”

[Lord Alton of Liverpool]

My Lords, earlier in our Committee’s proceedings today, the noble Lords, Lord Beecham and Lord Newton of Braintree, were good enough to provide a curtain raiser for the amendment that we are about to consider. Amendments 137A, 156A and 156B fall in Clauses 43, 45 and 46 and happily enjoy all-party support from all parts of your Lordships' House. I am grateful particularly to my noble friend Lord Wigley and the noble Lords, Lord Avebury and Lord Bach, as fellow signatories to the amendment. I should also say that the noble Lord, Lord Newton of Braintree, asked me to add that he, too, is a firm supporter of the amendment, as are my noble and learned friend Lady Butler-Sloss and my noble friend Lord Martin of Springburn. The noble Lord, Lord Walton of Detchant, was also in the Chamber briefly earlier, and he asked me to say that he, too, has acute anxieties about the negative impact of these new arrangements on people suffering from mesothelioma. I think that the Minister would agree that this demonstrates that there is concern from all parts of your Lordships’ House, which I hope he will take seriously.

At the outset, I would like to pay tribute to the Asbestos Victims Support Group Forum UK and especially to Mr Tony Whitston, who took the trouble to come to Westminster to meet my noble friends Lord Wigley and Lord Avebury and myself—I know that he has also briefed the noble Lord, Lord Bach—and to set out the concern of mesothelioma victims, which he did with great clarity and with passion.

As the Bill currently stands, these mesothelioma sufferers, whose life expectancy is nine to 12 months from diagnosis, will be required to surrender 25 per cent of general damages—the damages average about £65,000—in success fees. These amendments would permit those suffering from an asbestos-related illness or other respiratory diseases to recover success fees and “after the event” insurance from a defendant in a successful claim for damages. However, I would like to split my remarks this evening into mentioning something about the background to this issue; secondly, something about the effects of these amendments; and, finally, four reasons why I hope that the amendments will commend themselves to the Committee and to the Government.

Up until 1995, when conditional fee agreements were introduced, most mesothelioma sufferers, along with many personal injury claimants of modest means, used legal aid to seek justice in the courts. In 1949, an estimated 80 per cent of the population satisfied the income criteria for legal aid, but by 1990 only 48 per cent qualified. As middle-income claimants were increasingly denied access to justice and given the Government’s determination to cut the cost of legal aid, in 1995 CFAs were introduced. Between 1995 and 2000, the success fee and “after the event” insurance were paid by claimants, take-up of CFAs was understandably limited and, wherever possible, mesothelioma cases were still run under legal aid. Trade unions then stepped in to provide additional support for many victims.

When the Access to Justice Act 1999 became effective, on 1 April 2000, the new CFA regime allowed for recovery of success fees and ATE insurance to make up for the abolition of legal aid for most personal injury cases. Under the previous legal aid regime, solicitors were paid for their work even if they lost the case, which allowed them to take on difficult but meritorious cases. The new CFA regime changed the funding arrangements by making provision for success fees, which in many cases have been fixed.

Without doubt, access to justice was certainly improved for everyone, including mesothelioma sufferers, under the new CFA regime from 2000 onwards. Put bluntly, solicitors and barristers were willing to take on riskier cases because the rewards were greater. Be that as it may, the important aspect is that those potential litigants who, due to their lack of funds, were hitherto prevented from accessing our courts were empowered by the new arrangements and able to bring their case. This is a conclusion with which the Ministry of Justice itself agrees. Its consultation paper, CP 13/10, Proposals for Reform of Civil Litigation Funding and Costs in England and Wales, states:

“There is general consensus that CFAs have increased access to justice for those who might otherwise not have been able to afford to bring a claim since they became enforceable in 1995, and particularly after the Access to Justice reforms which made CFAs an especially attractive funding method for claimants”.

21:00

It is against this background of change that we are considering the Government's proposals on legal aid, success fees and “after the event” insurance and, in particular, how the new dispensation, as set out in Clauses 43, 45 and 46 will impact on those who suffer from mesothelioma; and why these amendments, tabled with all-party support, deserve the support of the Committee. I hope that the Government, at least in these particular circumstances, despite what the Minister said earlier—that he was inclined to reject any derogation at all from that which has been laid before the Committee—will be prepared to think again.

As currently drafted, Clause 43 provides for success fees to be paid by the winning claimant, not the losing defendant. A success fee is not, as is frequently implied, a bonus for winning the case, or a serendipitous stroke of luck like an unexpected windfall or a win on the lottery. The award of a success fee represents two things. First, on an obvious but important point, it says that the claimant has succeeded in winning their case. The claim is found to be justified in its inception and vindicated in proceeding through its course. Conversely, by extension, the defendant is found to have been wrong as regards the substance of the claim; wrong to seek to defend the claim; and wrong to pass over the opportunity to settle the case at some point in the proceedings—a point which my noble friend Lord Martin made earlier. Their conduct is penalised by having to pay the claimant's costs. Secondly, the granting of a success fee is a reward for the risk that those acting on the claimant's behalf have borne in pursuing the claim. The success fee underlines the importance of giving the claimant financial support at some of the most difficult times in people’s lives—and times do not come much more difficult than when you are diagnosed as having a disease that will give you just nine months more to live.

Success fees are calculated as a percentage of base costs. Hitherto, CFAs have enabled meritorious but difficult cases to be investigated and pursued. Most importantly, this meant that test cases, many of which are launched by defendants, may be properly contested. Our common law system that is so cherished depends upon such cases. It is worth reflecting on how many cases over the past decade and more have come before not only the High Court, but the Court of Appeal and Supreme Court under CFA arrangements. These funding arrangements serve to advance and develop case law, but, most of all, ensure that the claimant has access to justice in the highest courts, as well as at the lower end of the justice system. It is precisely when test cases and appeals are brought or responded to, upon professional advice, that CFAs are most crucial.

It would be iniquitous if in future claimants are to pay the success fee and will have to underwrite the investigations into cases that are not pursued, or cases which are lost. As a matter of justice, it is fairer that wealthy insurers, more able to spread the risk, should fund a system whose purpose is to ensure access to justice, without which solicitors would be too risk-averse and many cases not undertaken.

At Second Reading, I cited the experience of the President of the Liverpool Law Society, Mr Norman Jones, and a benchmark case which he pursued to the Supreme Court. Hugely significant in the development of the common law concerning mesothelioma, the judgment has given hope to many thousands of asbestos victims who probably would not been entitled to compensation had the Supreme Court appeal by the defendants not been dismissed. The judgment in Sienkiewicz and Greif (UK) Ltd was given in the Supreme Court on March 2011. Mr. Jones handled the action under a conditional fee agreement. There were CFAs for the county court proceedings, the Court of Appeal and the Supreme Court. Norman Jones told me:

“Without the 100 per cent success fee payable under the CFAs the risks of handling this case would have been totally beyond my firm”.

He said that had the new regime been in place and the case had been lost, putting it bluntly,

“my firm may have been facing bankruptcy!”.

Under the new dispensation, lawyers such as Mr Jones would simply not be prepared to act on behalf of asbestos victims. All the dice would be loaded against them.

The second of my amendments is to Clause 45, which provides for “after the event” insurance to be paid by the winning claimant, not the losing defendant. ATE costs are currently paid by the defendant if the claimant wins a case. ATE premiums increase as a case progresses, especially where defendants push a case to trial. Respiratory disease cases are complex cases, and most of them involve asbestos-related diseases. The average ATE cost for mesothelioma is around £2,300. Under these arrangements, claimants will simply not be able to afford the risk of challenging inadequate offers, as the ATE cover of going to trial would simply be prohibitive. Also, the incentive for defendants to make reasonable offers will be diminished. It will become unaffordable to fight test cases run by defendants, or for claimants to run a test case. ATE insurance keeps unmeritorious claims out of the system, at no cost to the defendants, as cases are risk-assessed by the ATE insurer. My amendment would preserve the status quo, which works well.

My third amendment is to Clause 46. The effect of Clause 46 is to prevent the recovery by membership organisations, such as trade unions, of insurance premiums from a losing party. The majority of respiratory disease cases are occupation-related and many are assisted through trade unions. Just as it is wrong to penalise an individual claimant, so it is wrong to jeopardise cases run on behalf of trade union members or to discourage their involvement in championing the cases of sick or terminally ill members.

I hope that the Government will consider the following four questions as they reflect on these amendments: the nature of these respiratory diseases; the argument about costs; the winners and losers; and the impact on justice. Anyone who has served as a constituency Member of Parliament will have met desperate victims of asbestos exposure, and will have assisted bereft widows only months later. The life expectancy of a worker diagnosed with mesothelioma is a shocking nine to 12 months from diagnosis to death. Before their cases can be laid before a court, stringent medical reports and exhaustive investigations will be required, especially as most respiratory diseases are long latent diseases—a point made by the noble Lord, Lord Newton of Braintree, in his earlier intervention.

Asbestos disease is primarily found in the trades associated with construction, and silicosis, or Potter’s Rot, among tunnellers and masons. It is known among many miners as the widowmaker. In 2010, asbestos-related diseases accounted for 93 per cent of all industrial injuries disablement benefit payments for respiratory disease. Mesothelioma accounts for 52 per cent of asbestos disease. It is a matter of official record that nearly 50 per cent of respiratory disease claimants paid IIDB suffer from mesothelioma and will die within approximately one year of diagnosis. Most people who develop mesothelioma have worked in jobs where they inhaled asbestos or were exposed to asbestos dust and fibres in other ways. There is also some evidence, as the noble Lord, Lord Beecham, pointed out in his earlier intervention, that even things such as washing the clothes of a family member who worked with asbestos increases their risk of developing mesothelioma.

Symptoms or signs of mesothelioma may not appear until 20 to 50 years, or more, after exposure to asbestos. Shortness of breath, coughing and pain in the chest due to the accumulation of fluid in the pleural space are often symptoms. Other symptoms include weight loss and cachexia, and, in cases of peritoneal mesothelioma, abdominal swelling and pain occurs due to a build-up of fluid in the abdominal cavity. Other symptoms may include bowel obstruction, blood-clotting abnormalities, anaemia and fever. If the cancer has spread beyond the mesothelium to other parts of the body, symptoms may include pain, trouble with swallowing or swelling of the neck or face. It is a wretched disease—a death sentence with fatal consequences.

All over this country, men and women were exposed for decade after decade to toxic substances, mostly at work, which ruined their lungs and cost many their lives. In the Greater Manchester area last year alone there was an increase of 38 per cent in the number of victims, up to 117 from 85 the year before. It is expected that mesothelioma deaths will peak in 2016, but recent studies suggest that they may peak earlier. Nor is the suffering caused by this tragic legacy of exposure over yet. According to the latest projections, about one in 70 of all British men born in the 1940s will die of mesothelioma, while one in 10 carpenters born in the 1940s, with 10 years’ working experience before the age of 30, will die of mesothelioma or asbestos-related lung cancer.

To date, over 30,000 people in the United Kingdom have died from mesothelioma and over 60,000 more are yet to lose their lives due to past exposure. Let us not forget that the vast majority of respiratory diseases are contracted at work. Sufferers sacrificed their health and often their lives working to pay for their families and contributing to the wealth of this country. It seems iniquitous that such people should have to bear the costs of litigation.

I shall illustrate the sort of situation that I have in mind. While I was a Member of another place during the 1980s, the then Member of Parliament for Leeds West, Mr John Battle, raised in the House of Commons the Armley asbestos disaster, which involved the contamination with asbestos dust of an area of around 1,000 houses. The contamination was the result of the activities of a local asbestos factory, part of the Turner and Newall group, often referred to by the name of its founders, JW Roberts Ltd, and occurred between the end of the 19th century and 1959 when the factory eventually closed. At least 300 former employees are believed to have died from asbestos-related illnesses, and I was struck that when the new Member for Leeds West, Rachel Reeves, made her maiden speech after the most recent general election, this was one of the issues that she mentioned.

I turn to the argument about costs. As currently drafted, the Bill misses the point. It purports to tackle a compensation culture, fraudulent and frivolous claims and disproportionate costs. Ministers have acknowledged that there is only the perception of a compensation culture, but, that aside, the Bill does nothing to tackle the identified problems such as fraudulent whiplash claims, which I am told total a staggering £2 billion annually, while it highlights issues such as this one. Mr Nick Starling, the director-general of the Association of British Insurers, giving evidence to the Bill Committee in the House of Commons, made the point that the Bill is tackling the wrong target; it should be about the £2 billion of whiplash claims, by far the greatest in Europe, not,

“people who have been injured or they are ill and it is not their fault”.

It is cases such as mesothelioma, he said, that need,

“speedy and correct redress”.—[Official Report, Commons, Legal Aid, Sentencing and Punishment of Offenders Bill Committee, 14/7/11; col. 148.]

Why then do these three clauses shoot the wrong fox, a metaphor used earlier by the Minister, and put at risk litigants who have, as Mr Starling said, genuine claims and have been injured or are ill? Furthermore, the Law Society has estimated that these changes will not save the Exchequer money but will result in a net loss of some £70 million. When all the cases that would have gone forward under the current system no longer proceed—perhaps as many as 50,000—the Exchequer will be unable to recover, for example, the lump sums that it has received via the Pneumoconiosis etc. (Workers' Compensation) Act 1979 and the 2008 diffuse mesothelioma scheme. The Treasury recovered over £16 million mesothelioma lump sum payments in 2010-11 alone. Much of that recovery, plus the recovery of benefits, will be lost to the Government. Where are the savings to the public purse?

Incidentally, prior to the Government recovering lump sum payments in 2008, the insurance industry in effect recovered the payments by taking those payments into account when paying compensation. Over a 10-year period prior to 2008, insurers gained a windfall of at least a staggering £100 million. Nor should we forget the widely acknowledged advances that Senior Master Whitaker has made in the case management of mesothelioma claims, speeding up the resolution of those claims in the Royal Court of Justice and, through his practice direction, improving the management of claims in other courts. Much has been done to reduce litigation costs and much continues to be done in fixing costs, which does not and need not add to government costs and punish asbestos victims.

There are winners and losers here. The winners will be the insurance industry in particular. I refer the Minister to the report that appeared in today’s Guardian newspaper under the headline,

“Insurance lobbyists were briefed by mandarins over legal reform”,

where Desmond Hudson, the Law Society’s chief executive, said:

“This looks like being legislation for the insurance industry, by the insurance industry”.

I am sure the noble Lord will want to disabuse us all of the idea that that might be so. However, he will understand that while there are issues such as this one before the House tonight, it is easy to see why such headlines might be written. The Moritz and Gavan report shows that there will not be a saving to government as a result of the proposals in the Bill. Claimants will also be the losers. Public liability and employer liability claimants will lose compensation under the proposals.

21:15

Lastly, what will be the impact on justice? If these amendments are not accepted, Parliament will make responsible for litigation costs those who have suffered grievously and require them to surrender a quarter of the compensation awarded to assist them and their families. It would be a tragedy and a profound injustice if, without serious objection, we did not seek to rectify that injustice.

When he was Lord Chief Justice, Lord Bingham said that,

“the laws of our country exist for the benefit of the poor as well as the rich; that equality before the law is a pretence if some citizens can assert and protect their rights and others cannot; that the rule of law, to be meaningful, must ensure that justice is available to all”.

If that principle is not to be extended to victims of mesothelioma, to whom is it to apply? There are key questions which the Government need to answer. How would it be possible to bring a fraudulent mesothelioma case? How would it be possible to bring a frivolous mesothelioma case? The Minister knows the answers as well as I do. The answers are self-evident, which is why, as a matter of basic natural justice, I hope that the Government will be persuaded to accept these amendments and that noble Lords will give them their support. I beg to move.

[Lord Avebury]

My Lords, the noble Lord, Lord Alton, referred to the curtain-raiser debate we had a few hours ago in which, among others, the noble Lord, Lord Newton, spoke. He told your Lordships that the nature and problems of mesothelioma called for special treatment. It took us a very long time to recognise the immense dangers to public health caused by mesothelioma. It took us even longer after that to take steps to ban the use of asbestos and, finally, to get under way with proper means of compensation for the victims of this frightful disease.

In the 1970s I was privileged to have a lot to do with the late Nancy Tait, who was described in her Guardian obituary two years ago as a,

“tenacious campaigner for the victims of asbestos diseases”.

Nancy was the founder of the Society for the Prevention of Asbestosis and Industrial Diseases, which lobbied hard for tighter controls on asbestos, and she fought for the rights of victims to adequate compensation. In 1976, the Silbury Fund published a booklet entitled “Asbestos Kills”, written by Nancy, exposing the failure of Governments to act against the risks, even though the Department of Health had known, at least from 1968 onwards, that,

“mesothelioma can be produced by slight exposures, and … We must assume that no amount of exposure is completely free from risk”.

Water pipes were still being made of asbestos cement; electric toasters were still being made with the element wound around a piece of asbestos, and in people’s homes, sheet asbestos was being cut for partitions, to block fireplaces or to line doors. Thirty-six years later, people are still being diagnosed with mesothelioma, which is, as we have heard, an extremely unpleasant disease which kills the sufferer within an average of something like 12 months from the date of diagnosis, as the noble Lord, Lord Alton, has said.

Now the Government have decided, according to yesterday’s Independent on Sunday, that in a major survey to be undertaken of England’s 23,000 schools to plan a huge refurbishment programme, asbestos is to be ignored because of cost implications. The system-built schools of the 1960s were riddled with amosite brown asbestos sheeting, which is one of the reasons why we have the highest incidence of deaths from mesothelioma in the world. As a result of this possibly illegal exclusion from the survey, compounded by the stripping of funding needed by local authorities to carry out their survey responsibilities under the Control of Asbestos Regulations, instead of the decline in mesothelioma deaths—the noble Lord, Lord Alton, said that that decline was expected to occur from 2012 onwards—as they tail off over the next 40 years, they may continue for the rest of the century.

I urge your Lordships to look at the website of Mesothelioma UK, the resource centre that provides information and support to patients and carers, allowing them to exchange their experiences and thus to cope better with the situation they face. The practice nurse in that organisation, Liz Darlason, told me that in 2004, when she started work at Mesothelioma UK, there were 1,850 new cases, and in 2010 there were 2,500. The idea that all these people sentenced to a lingering death should have to pay towards the legal costs of making a claim for compensation is intolerable, and some 400 hostile comments from patients and their families on this provision have been received by the Asbestos Victims Support Groups Forum UK, chaired by the eminent Tony Whitston, who has been mentioned by the noble Lord, Lord Alton, and has briefed many of your Lordships for this debate.

Industrial injury disease benefit payments numbered 3,940 in 2010, of which 3,680 were for asbestos-related illness. More than half of these were mesothelioma cases, and the figure has increased, year on year, for decades. As the noble Lord explained, the reason for this is that mesothelioma can take 40 or 50 years or more to develop after exposure to asbestos, and patients are still succumbing to the disease long after its use was first prohibited in 1985. This disease is fatal on average within 12 months of diagnosis, and only one in four survive for two years or more.

Due to the time that it takes for the disease to emerge, it is sometimes difficult to trace the employer against which a claim is to be lodged; and before 1972, when employers’ liability insurance became compulsory, some 10 per cent of such employers were not insured. Urged on by the All-Party Parliamentary Group on Occupational Safety and Health, the Government at last agreed to set up an employers’ liability insurance bureau, ELIB, analogous to the Motor Insurers’ Bureau that compensates victims of road accidents involving uninsured drivers. The consultation on the proposal closed in May 2010 but the DWP has sat on it since, even though all respondents were in favour of the ELIB. The asbestos victims forum had a meeting with my noble friend Lord Freud to press him to act, and I should be grateful if the Minister could tell your Lordships what needs to be done to get the ELIB under way.

I gather that the Government may be waiting to see what happens in the so-called trigger case in the Supreme Court before deciding on whether the liability of an employer’s insurer to indemnify the insured dates from a sufferer’s exposure to asbestos or from the onset of mesothelioma. The case is likely to be heard in May, and if the next step is primary legislation, it would not be ready for the next Session of Parliament. We could be talking about some time in 2013 before these forgotten victims are able to claim compensation, and those who have already been diagnosed by that time will no doubt be excluded by reason of retrospection.

The typical mesothelioma patient will have been exposed to asbestos in their early adult life. Thirty or 40 years later, they experience shortness of breath and chest pain, and visit their GP. Painkillers or antibiotics may mask the problems, until the GP finally calls for an X-ray, which then confirms a pleural effusion—a build-up of fluid between the layers of tissue that line the lungs and chest cavity. However, this is not an easy disease to diagnose, and several further investigations involving procedures such as thoracentesis—the extraction of fluid from the pleural cavity using a cannula—may be needed before the disease can be confirmed. From then on, chemotherapy is the only treatment that has proven to be effective in ensuring some degree of survival in randomised and controlled trials, although claims are made for surgery combined with chemotherapy and radiation, which is referred to as trimodality therapy, among patients with favourable prognostic factors. As the disease takes hold, the patient has to cope with extreme shortness of breath, intractable pain and debility.

Those are the dramatically unpleasant experiences of mesothelioma patients, who know that inevitably they face death within a few months anyway. They are trying to cope with the physical and emotional phenomena of a terminal illness, vividly described in the literature of Macmillan Cancer Support, and your Lordships can imagine the likely frame of mind of such a person trying to put in a claim for compensation. Many have said they would not have incurred the extra worry and anxiety of claiming if the payment of costs had been required at the time, and it is surely unconscionable to dock someone who is terminally ill of up to a quarter of the damages he may be awarded.

Unless these amendments are accepted, the victim will have to pay two separate fees. Initially, there is the after the event insurance, amounting, as the noble Lord said, to an average of £2,300, to indemnify the claimant against having to pay the defendant's costs if the claim is lost, which up to now has been recoverable from the losing defendant but is now to be deducted from the claimant's award. Then there is the success fee, the amount of which is to be specified in regulations, understood to be 27.5 per cent of base costs—the cost actually incurred by the solicitor in conducting the claim. This has also been paid by the defendant in the past, but is now to be borne by the claimant. Assuming that the case is a simple one, with base costs of £10,000, the claimant would pay the solicitor £2,750 out of the total sum agreed. The knowledge that he is liable to pay that sum on top of the ATE insurance fee will be enough to deter many terminally ill patients from bothering to pursue their claim.

Suppose the defendant makes an offer that is manifestly inadequate or there are complex issues that can be determined only by the court, one of which happens in just 2 per cent of cases—only one in 50 cases goes to trial? The base costs rise steeply, with counsel's fees and court costs, and a further payment of ATE insurance, many times larger than the original £2,300, which the claimant now has to pay. The premium for one of the claimants in the Sienkiewicz case, decided in the Supreme Court in March 2011, was £219,000, and it is obvious that now the claimant is responsible for ATE, no test case of that kind will ever be taken again.

Another factor comes into play at that point. The defence solicitor is entitled to 100 per cent of base costs as success fee whichever way the case goes, but the downside from their point of view is that if they lose, they probably get nothing. In the Sienkiewicz case, the solicitors for one of the two parties involved incurred base costs of £300,000 and there was a success fee of the same amount. The success fee is capped under these proposals at 25 per cent of general damages, providing the solicitor with a substantial disincentive to pursue cases in which success is less than certain. There will be a strong temptation for the solicitor to recommend settling for what may be a totally inadequate sum, and the victim, in the last few months of his life and probably enduring severe pain, will not have the strength or the will for a long and traumatic court case.

None of that is revealed by the Explanatory Memorandum, and I deplore the Government's failure to spell it out. That means that solicitors will be deterred from pursuing cases where the defendant has even a small chance of winning, and there will be temptation to settle for what may be a totally inadequate offer.

Let us think again about this mean-spirited, callous fine imposed on the victims of mesothelioma, asbestos cancer and other very nasty respiratory diseases. It is wrong to deter people from pursuing claims they have every chance of winning, and immoral to take thousands of pounds from the amounts they win. I shall be very surprised if, now that the facts are out in the open, the Government do not beat a hasty retreat before they suffer a defeat on Report.

21:30

[Lord Wigley]

My Lords, Amendment 137A stands in my name, as well as in the names of the two noble Lords who have already spoken. Back in the 1970s, as a young Member of another place, I was very involved in campaigning on respiratory injury caused by slate dust in the slate quarries in my area. Slate dust, of course, causes a progressive disease similar to asbestosis. I was also involved in the asbestos battle—and I also knew the late Nancy Tait very well—in that I had a Turner & Newall, or Ferodo, factory in my constituency and had constituents who were affected by asbestos. I also gave evidence to the Pearson commission on these matters in the 1970s.

In the debates on this Bill I have already made clear my feelings about how proposals to cut the Ministry of Justice’s budget will have a disproportionately negative effect on individuals who have been injured or disabled. During the debate on Part 1, I argued against removing access to legal aid from those injured due to clinical negligence. My comments today will, for the most part, centre on the legal implications for another group—those injured due to exposure to harmful substances such as asbestos. The case for mesothelioma has been made graphically by the noble Lords, Lord Alton and Lord Avebury, so I shall concentrate on the provisions of the Bill.

Under the proposals in Clause 43, a success fee under a conditional fee arrangement will no longer be recoverable from a losing party in all proceedings. This fee will instead have to be paid for out of the modest damages awarded to the injured person, meaning that they may lose up to 25 per cent of their damages. Clause 45 removes the recoverability of the after-the-event insurance premium from the losing defendant, and this will probably result in this premium also being taken out of the damages awarded to the injured party. To put this in context, an ATE insurance premium for an employer’s liability case, such as for industrial disease, can cost up to £12,000.

Both clauses will have an adverse effect on individuals attempting to bring cases against companies or organisations as a result of an illness or respiratory disease they developed after being exposed to a dangerous substance. For this reason, I support the amendments before us, and perhaps I may set out why I think this is necessary.

As it stands, the present system, which comprises both conditional fee arrangements and ATE insurance, allows an individual to proceed with a case against a corporation or organisation which has caused them harm without the fear that they will in some way be left worse off after bringing the claim. There is sometimes a feeling that no-win no-fee claims are bogus and encourage mercenary behaviour. This conveniently ignores the fact that many meritorious cases, including those brought by victims of industrial disease such as asbestos poisoning, rely on the no-win no-fee system to access compensation.

I draw to your Lordships’ attention a case brought to my notice by the Access to Justice Action Group involving an industrial disease claim for silicosis. The deceased person was employed in a local quarry. He worked in the vibrating shed and blast shed, where he was exposed to high levels of silica. As a result of this exposure, the deceased developed silicosis and lung cancer. He died due to his illness and a claim was brought by his widow. Initial prospects were put fairly high, at 65 per cent to 75 per cent, with potential damages assessed at over £100,000. The ATE insurer, ARAG, a German company, agreed to provide cover. The initial medical evidence obtained was very supportive, and a subsequent admission of liability was then made subject to medical causation.

The outcome was that despite the initial optimistic prospects for the case and liability being admitted, further medical evidence could not prove the necessary causal link. Based on the expert medical advice, the case had to be abandoned. The disbursements incurred totalled £2,019. ARAG settled these in full. Under the Government’s qualified one-way costs shifting proposals the claimant widow would be responsible for these disbursements, as QOCS makes no provision for the payment of claimants’ disbursements in failed cases and the ATE system will not survive to cover these claims. The net effect is that the widow would not have been able to pursue that case.

It would perhaps be beneficial to remember that accident cases are not limited to those accidents which occur on the roads. If Clause 43 is taken forward without amendment, these victims will no longer have a right to redress for the wrong done to them. Likewise, ATE insurance protects an individual from having to pay the costs of the other side if he or she loses a case. In cases which centre on industrial disease, the other side will usually be a multimillion pound organisation with access to teams of solicitors. ATE insurance also pays for additional expenses, such as medical reports, without which cases alleging illness as a result of exposure to a dangerous substance would flounder at the first hurdle.

If Clause 45 is agreed and the recoverability of ATE insurance is removed, the injured person would face losing a hefty proportion of his or her damages to pay for the premium. Thus, without recoverability, both the uplift required to allow a solicitor to take a case on a conditional fee arrangement, and the ATE premium necessary to pay for the costs risk if the case loses, will be paid from the claimant’s damages. That will inevitably mean that many solicitors will be unwilling to take on cases where the chance of recovering their costs is low, without the client having to lose most of their damages. This is particularly pertinent on noting that in lower value cases, the additional liabilities may even exceed the amount of damages awarded. One consequence of people being unable to afford solicitors’ fees will be an increase in litigants in person taking on large corporations which, as well as demoting access to justice, will have an inevitable toll on the courts system. In cases which do proceed, the increased risks for claimants, who will have to pay additional liabilities from damages, will result in a perverse incentive to compromise cases at below full value. This can hardly be said to be promoting access to justice.

It is vital that the present system be kept in place for genuine claimants who have developed illnesses resulting from industrial exposure. I should note that in preparing for this debate I have been assisted by First Assist Legal Expenses, the Association of Personal Injury Lawyers, the Access to Justice Action Group, and by Mr Tony Whitston, to whom the noble Lord, Lord Alton, has already referred. What they all hold in common is a firm view that access to justice should not be barred for those with legitimate grievances who would not otherwise be able to gain the compensation that is due to them.

Cases which involve asbestos poisoning and other industrial disease cases often have more than one defendant and are highly complex. Unsuccessful cases can thus be extremely expensive if there are multiple defendants whose costs would need to be covered if the case is lost. Without a recoverable insurance premium, these cases could not be brought by an individual unless that individual had access to substantial private funds. If an individual is diagnosed with asbestosis, this clearly indicates that they have been in contact with asbestos. Even so, due to the complex nature of these cases in establishing liability, pleural thickening and asbestosis cases attract only modest damages. Most solicitors will not be able to take on the risks involved in these cases without being able to recover the ATE insurance premium. Those suffering from industrial illness thus face being additionally victimised by the justice system.

Equally, and as the Association of Personal Injury Lawyers argues, individuals who are diagnosed with asbestosis are at a greater risk of developing a fatal disease like mesothelioma later in life. Currently, a case for asbestosis must be brought within three years of gaining knowledge of the disease. If a case is not brought within that time frame due to an increased risk of costs, and in the mean time mesothelioma develops, the injured party may well be unable to bring a claim for the disease. He or she would then be denied compensation twice—both for the asbestosis and mesothelioma.

In summary, the reforms proposed in Clauses 43 and 45 would have a disproportionately harmful effect on claimants bringing cases against corporations and organisations as a result of illness incurred after exposure to dangerous substances. The notion that the Government intend to remove the means currently in place that allow individuals to pursue justice in such distressing situations makes a mockery of the principle of equality of arms—a complaint that I brought against the proposals in Part 1 of the Bill. One of the principal reasons that the then Government introduced recoverability was so that meritorious cases could be proceeded with without potential claimants having to face undue costs if a complex case were lost. The then Government also recognised that victims having to pay additional liabilities from their damages put them at a disadvantage compared with claimants who were eligible for legal aid. If these reforms are implemented, the system will no longer be able to deliver compensation to individuals whom the law is designed to protect.

There is a related anxiety that without the deterrent of individuals being able to bring claims for compensation, breaches of the law will increase. Most pressingly, the Bill injects yet more uncertainty into cases that are already complex and distressing. Many individuals will not be able to proceed with legitimate claims, regardless of their merits, because they will not be able to find solicitors willing to take on their cases. These groups or individuals have already suffered grave wrongdoing at the hands of others. Surely our legal system should do all it can to redress that wrong rather than put up further barriers to justice for them.

[Lord Martin of Springburn]

My Lords, I support the amendment and the noble Lords who spoke. My thoughts turn to a lawyer, the late Frank Maguire, who died recently. He was a campaigning lawyer on behalf of asbestos sufferers north of the border. He took on very difficult cases. Many of them were test cases. The important thing for his clients was that he offered a no-win no-fee arrangement. We may be perhaps comfortable in our lives, but it should be remembered that a disease of the lungs creeps up on a person. They feel breathless gradually. They might put it down to smoking or something else around them. Also, because of their shortness of breath, they lose time at work if they are lucky to be employed, so they are not very well off financially by the time they go to see a solicitor. When they see the solicitor, it is a great relief to have a no-win no-fee arrangement.

I was in a room with a constituent who was being questioned by the late Frank Maguire. Frank would go back to a time when they were 15 or sometimes 14. Like a police officer, he would ask about every place of employment where the person had worked. The person suffering from the disease and difficulty had to recall all the places they had worked because—let us face it—an employer is going to deny liability and a lawyer has to ensure that the right person or company is being claimed against. That is not easy with all the closures that have taken place over the past 50 years. Many companies have closed down and others have changed their name. Some companies that have stayed in business have changed their address, so it is hard for a lawyer to track them down. It would be a great help if the Minister would say that in this instance the Government will make sure that they do not create any more difficulties not only for sufferers but for their families.

I did not set out to be an asbestos worker, but these things happen when you go into a factory. As an apprentice metal worker I was expected to drill metal; I made electric heaters. As in the case of the toasters that the noble Lord mentioned, the elements of the electric heaters were wrapped around light asbestos board. When I was 16, my boss used to instruct me to cut and drill the asbestos. There were many young women in the factory who drilled the asbestos. In fact, because it was white board instead of metal that was covered in oil that got on your denims, you quite liked this white powder that you could just wipe off, not realising the dangers involved. The relatives come into this because in those days, you did not send your clothes off to the laundry, mum did the washing. In some cases, there could be two or three daughters in one family working with that asbestos and going home. Their mum was exposed to the asbestos. Then if mum was ever feeling breathless, a good doctor—there are many good doctors around—would probably ask a man where he worked before he retired and if he said he worked in the shipyard there might be a possibility that he was using asbestos that was the cause of the breathlessness, but for a mother, a housewife, it might not dawn on the doctor that she had any contact with asbestos. That makes it all the harder for the lawyer to fight the case when it finally comes.

21:44

I am proud of the fact that a company in my constituency went from asbestos board to non-asbestos board. It did a lot of research because it knew the dangers. The boards were used for fire prevention in buildings. It decided to get the non-asbestos board which would not be harmful to workers, but at the time that it was producing that board, in Poland, the shipyards in Gdansk were receiving orders from that company and from other parts of the United Kingdom where asbestos board was going from here to Poland. The Polish workers—that was before Lech Walesa became the president—were having to work with asbestos boards in those shipyards. The reason I mention that point is that it might be the case that some of those old ships would come into repair yards in the United Kingdom, and it is not until they start to do repairs that the workers discover that they are being exposed to asbestos. In fact, even in this building, where the heating system is very old—in fact, I would say this evening that it is non-existent—if any repair has to be done in the basements, it would probably be the case that they would come across asbestos substances. The point I am trying to make is that some people know that they are going to work with asbestos. Other people, when they go out to a day’s work, do not know that they are going to work with asbestos, but before the day is out, that is what is going to happen.

[Lord Thomas of Gresford]

My Lords, I am glad to follow the noble Lord, Lord Martin, in what he has just said because I am concerned about the relatives of the victims of this terrible disease. We were addressed here in one of the committee rooms in the House by the Greater Manchester Asbestos Victims Support Group. One of the people who came with that group was Mrs Marie Hughes, who comes from my home town of Wrexham in north Wales. Her husband had worked as a youth in the Brymbo steel works, which is close to the town, but had gone into teaching and died of this disease at the age of 57 when he was head teacher. It had afflicted him a great deal later. I am very familiar with the Brymbo steel works, as was, because I worked there briefly during vacations as a young man.

What she told us about the effect of the disease upon her husband was that while attempting to come to terms with his diagnosis and his bleak prognosis he underwent gruelling, unrelenting and debilitating courses of chemotherapy, intensive radiotherapy and invasive surgery in the form of an extrapleural pneumonectomy, which involved the removal of a complete lung, half the pericardium and half the diaphragm in a desperate effort to delay the cancer’s ultimate grasp. He lived in constant pain and it was a vain attempt to improve the quality and extend his life. By the final three months, tumours had also developed on his spine, resulting in paralysis from the chest down, and all this while fighting to breathe. That is the effect of this disease on an individual who suffers it, years after he had been exposed to asbestos. Of course, from diagnosis to death is quite a limited period with mesothelioma: it is only about nine months, leaving behind a widow and a family who have to live with what has happened to their loved one.

I am very much in support of the amendment that the noble Lord, Lord Alton, has moved with such great force, and the supporting speeches, because I have seen the effect on a widow of this terrible disease.

[Lord Bach]

My Lords, I am proud to have been allowed to put my name, as an opposition Front-Bencher, on this amendment, which has been moved so well by the noble Lord, Lord Alton, and spoken to so well by all the other noble Lords.

Industrial disease and exposure to toxic substances; employers acting negligently, in breach of their duty to employees, and often causing them great harm; and then outlawing and ensuring redress for these violations speak to what I consider the historic mission of the party I belong to and of the trade union movement. I know they are subjects that are of huge interest and concern to many people beyond that.

Health and safety in the workplace is something that we in these Houses of Parliament should be as proud of as we were of banning slavery. Instead, this year the Prime Minister chose for his first speech a comment that hoped that this was the year that killed off the health and safety culture forever. He cited a case where a teacher made children wear safety glasses to play conkers—a myth that the Health and Safety Executive cites as a prime example of the kind of mischief played by some to denigrate health and safety.

Health and safety in the workplace has nothing to do with conkers. Lack of health and safety has led to tens of thousands of avoidable deaths in the workplace. These amendments would ensure that in these cases—they have been described in detail and I am not going to go into that detail—employers pay their full redress and employees who have been harmed get their full restitution.

These are serious cases. There is no compensation culture here. Whereas motor claims increased by 43 per cent between 2007 and 2011 to nearly 800,000—which is why we on this side back my right honourable friend Jack Straw’s campaign—employer liability claims were down by 6.6 per cent to one-tenth of that. No one is faking mesothelioma, or coal lung. This is as far from the problems of undiagnosable whiplash as we can possibly get.

Industrial disease provides the most emotive and powerful examples of how health and safety is something we have had—and still have—to fight for. Despite the fact that we know so much about the clinical aspects and the impact on individuals, communities, and families, asbestosis is still being fought over in the courts. Insurers, sometimes not to their credit, are still fighting liabilities. Why is there this difference between these highly contested, difficult-to-prove cases that we have been debating tonight, for which people have been fighting year after year and, on the other side, clinical negligence? Why is there no sympathy from the Government for what are pretty analogous cases?

Do they not deserve a deeper consideration of the economics of bringing these cases? If the argument is proportionality, of course there are problems with proportionality when you are fighting some of the entrenched vested interests, such as the insurance lobby, and companies for which it is difficult to prove ownership and liability years after the event. We are at risk of abandoning these cases and these victims, not because they cannot bring the cases any more, but because they will not find lawyers to bring them. These are families and widows of workers who were exposed through no fault of their own.

I have in front of me the comments of a lady, Mrs King, whose husband died of mesothelioma. She says, “My husband died of mesothelioma as a consequence of asbestos exposure during the course of his employment. David and I received considerable assistance from the Derbyshire asbestos support group”. She arranged to see her constituency Member of Parliament. She received letters from her Member of Parliament, and wrote to him as well. I have to say that that Member of Parliament showed real concern in those letters about the tragedy that she had undergone. I pay tribute to him for the sympathy which he genuinely showed.

However, the exchange of correspondence, in Mrs King’s view, raised a number of points. The first was that the Member of Parliament seemed to accept that, in certain aspects, we are going to an American-style system. Mrs King’s view is that is not a good thing. That relates to a successful claimant having to pay some of their damages in costs. Secondly, the Member of Parliament, according to Mrs King, said that if a claimant loses the claim he will pay no legal costs at all. She points out that that is wrong: the losing claimant would pay disbursements. Thirdly, the Member of Parliament says it is not about whether claims will be brought, but about what lawyers get paid, and who pays those costs. Mrs King’s comment is that there must surely be genuine borderline cases today that will not be brought tomorrow because lawyers will not take the risk of not being paid.

Fourthly, Mrs King comments that the Member of Parliament says that defendants with a very strong defence pay out because of the costs they may incur if they lose. Mrs King does not understand that. She asks why they would settle in a case where they have a strong defence: if they have a strong defence, they will not lose. Lastly, the MP says that he may be cynical, but lawyers will not bring cases because they will not be paid as much as they are now. Mrs King thinks that that misses the point, the point being that lawyers will not bring cases at all if they run the risk in difficult, but genuine, cases that, if they lose, they will not get paid at all.

The Member of Parliament is in fact the right honourable gentleman the Lord Chancellor. As I say, he showed great sympathy for Mrs King and her predicament, but those were his responses and I suggest, respectfully, to him and to the Minister, that they are out of touch and do not meet the seriousness of the situation that has been described in Committee tonight.

Mrs King finishes by saying, “The chances of people like me or my husband being able to get justice would all change under the Government’s proposals. Even if my case has reasonable chances of success, I will struggle to find a lawyer to take it on unless it is virtually certain to succeed. The lawyers think the risk of losing is too great for the amount they will get paid for taking that risk. They simply will not take the case on”. That is the nub of this particular argument: people who have suffered a great deal will find that they will not be able to have their cases argued because of changes that are made. What I think that everyone who has spoken in this debate so far wants to see from the Government is a bit of flexibility, because these cases really stand out on their own.

22:00

[The Minister of State, Ministry of Justice (Lord McNally)]

My Lords, it is a long time since I pointed out that we had a whole series of amendments, each taking a different aspect of the Bill’s architecture, suggesting that on this case the Government should make an exception. Of course, had we conceded all afternoon, nothing would be left of the Government’s architecture. I listened to what the noble Lord, Lord Bach, has said and sometimes I feel that he is a little harsh on the legal profession. I cannot believe that lawyers would be so unwilling to take cases in the circumstances of what will be left in place after the Bill becomes law.

Let me make one personal point about mesothelioma. My sister Betty died of this disease. I do not need to hear the graphic descriptions that have been used in this House because I saw it with her. The family did not decide to take legal action, although undoubtedly she worked with asbestos two times in her life. Some 50 years ago she worked in an ICI plant. She also worked in what were then the asbestos-constructed Ministry of Pensions’ prefabs at Norcross. But the chance of providing proof in either case was very vague. Quite frankly, the family felt that no amount of litigation, proof or anything else would bring Betty back. She was dead. But that was a personal decision of the family.

Part of this debate turns on our industrial heritage and cleaning up the mess. Of course, I agree entirely with what the noble Lord, Lord Bach, said, and I see the noble Lord, Lord Monks. The Health and Safety at Work Act is about this issue and workers working in dangerous and dirty conditions. I was born on an ICI estate and I sometimes shudder at the thought of what went on as normal practice in chemical factories 40 to 50 years ago. Certainly, these cases are extremely difficult.

Before we put too much faith in lawyers, I was very proud to be involved in the Labour Government who gave the miners compensation. But, my God, was there not some abuse of that by the lawyers?

[Lord Martin of Springburn]

I know that the hour is late. There might have been abuse from lawyers but there was no abuse from the victims.

[Lord McNally]

I never said that there was. But I can say to the noble Lord, Lord Alton, that I am quite sure that the insurance industry has been lobbying on this Bill. However, I can also tell him that the lawyers have not been too bad at lobbying either.

[Lord Alton of Liverpool]

I have no brief from either the insurance industry or from lawyers. I simply make the point that this is not about money from the public purse or money being abused by this or that group. This is treading dangerously close again to the arguments about people manipulating or misusing the system, or claiming compensation to which they are not entitled. Surely the noble Lord would agree that, because of the very moving personal circumstances which he described, and as the noble Lord, Lord Bach, has said, no one can fake these circumstances where mesothelioma is involved.

[Lord McNally]

I am not treading anywhere near that. I am saying that we are trying to bring a structure to the civil side that squeezes out of the process what has been considered by the senior judiciary, and by Lord Justice Jackson when he looked at the issue, to be an inflationary element of the process. Listening to some speeches, it sounds as though conditional fee agreements would not be possible; they will be. It also sounds as though 25 per cent of the compensation has to go on the success fee. It is entirely discretionary. Lawyers could refuse to take a success fee. In fact, I think it was my noble friend Lord Thomas who said earlier that we may well find that lawyers make a selling point of not taking success fees. This is not a hard, uncaring Government picking out difficult cases. They will go ahead and they will be won. The Government are ready to take steps to try to help people in this area.

In April 2011, supported by the Government, the insurance industry set up the Employers’ Liability Tracing Office. ELTO provides an online resource through which claimants and their representatives can search for the relevant policy, reducing the time and costs that are often involved in such searches. This difficulty was referred to earlier: namely, the difficulty of identifying and finding the employer’s insurer. ELTO provides claimants with access to an electronic database of EL policies through an online inquiry facility, substantially enhancing the previous tracing service that relied on insurers checking against their own policy records.

With effect from 1 April 2011, the Financial Services Authority introduced rules requiring an EL insurer to publish tracing information for all newly issued or renewed EL policies, and for old policies on which new claims are made. Insurers may use ELTO to satisfy their own requirements or publish details on their websites. To date, more than 98 per cent of the active EL insurance market has joined ELTO, as have a large number of insurers in run-off who are not covering current employment but are still liable or potentially liable for past cover. Most of the tracing information for new policies and some historical policies is readily accessible on the ELTO central database.

The FSA is continuing actively to consider how best to address the issue of other historical policies. Some insurers have voluntarily included additional historical policies on the ELTO database. The answer is unlikely to be as simple as requiring details of all historical policies to be put on the database, as these are not always readily available, especially when searching archives from over 10 years ago. While ELTO will ensure that in the future more people can obtain civil damages for industrial diseases, it may still be very difficult to trace historical policies, especially for those individuals suffering from long-tail diseases such as mesothelioma. We understand the urgency of the situation in which injured people, after all other avenues have been exhausted, are still unable to find an insurer to claim against, and we are working hard to see what can be done for them. We are still working closely with all stakeholders to see what can be done to compensate people with mesothelioma who are unable to claim civil damages because their employer no longer exists and their EL insurer cannot be found.

If, for any reason, someone who contracts mesothelioma is unable to bring a civil claim because they cannot trace their employer or the relevant employers’ liability insurance policy, a number of other possible routes of redress are available through state schemes operated by the Department for Work and Pensions. I take the point made by my noble friend Lord Avebury about the discussions going on at the DWP. The department is continuing to work with stakeholders to see what can be done to compensate people with mesothelioma and similar conditions who are unable to claim civil damages because their employer no longer exists and the employers’ liability insurance policy cannot be found. In the light of this, I am not persuaded—

[Lord Wigley]

Is the Minister considering using the 1979 Act, which was set up for cases where it was impossible to find the previous employer, as a basis for a formula of compensation, or is that not practical?

[Lord McNally]

I would have to take advice on that. On that and the point raised by the noble Lord, Lord Avebury, I shall write to the noble Lords, as well as those who have taken part in this debate, to update them on where discussions in DWP have reached.

It is very difficult to overestimate the personal damage suffered by the individuals who have been highlighted. The Government are trying to reform the civil legal system in a way that retains access to justice. It was said that litigants would be responsible for defendants’ costs if they lost; this is not true. QOCS will apply in this kind of case, so that litigants will not be susceptible to defendants’ costs.

It is a difficult area, but our overarching aim is to create an architecture which squeezes inflationary costs out of the civil justice system. Without our reforms, high and disproportionate costs in civil litigation will continue.

[Lord Bach]

I was not claiming that losing claimants would have to pay winning defendants’ costs—I accept that QOCS would come into consideration; I was saying that a losing claimant would have to pay their own disbursements in those circumstances, which is a different issue. That was the point that I was trying to make.

[Lord McNally]

I take that point.

I think that I have said all that I am going to say on this. It is a tough case, but it would be just another concession within the range of issues that we have discussed today. The noble Lord, Lord Bach, almost gave the game away in saying, “Well, you’ve made the clinical negligence concession; why can’t you make this concession?” It would then be another, and then another, and then another, and Jackson would disappear.

[Lord Bach]

The two situations are pretty analogous, so will the Minister please answer his own question? Why cannot he do the same for this as he did for clinical negligence?

[Lord McNally]

My Lords, I do not think that it is analogous. The other actions that the Government are taking address some of the issues that have been raised tonight. We are exploring other initiatives that we can take. I do not think that it is necessary, therefore, to make the exception that is being argued for. It is admittedly being argued for very powerfully, but it is not enough to convince the Government.

[Lord Pannick]

Does the Minister seriously dispute that the provisions in the Bill will at least to some extent damage the ability of claimants in this area to obtain legal advice and assistance and will make it more expensive for them to do so? If he does not, is it really fair to impose these provisions?

[Lord McNally]

I do not know how lawyers will behave. I hope that they will behave a lot better than in some of the worst-case scenarios. People who go into litigation, even in cases like this, will to a certain extent be taking risks. If one were to listen to the arguments put by the noble Lord, we would have a legal aid system that paid for everything, and we cannot afford it. Therefore, we are trying to create with limited resources one that is fair. Of course, with his eloquence and ingenuity, the noble Lord can always pitch questions to me that make it sound as though I am saying, “No, let them eat cake”, which is certainly not our intention.

22:15

[Lord Pannick]

However, we are concerned here not with the expenditure of public funds but with a fair allocation of risks as between the defendant and the claimant. With respect, I do not understand the noble Lord’s point in relation to that. Is it really right that the interests of this group of claimants should depend upon the Government’s inability to predict how lawyers are going to behave? Surely this should not depend on how lawyers behave.

[Lord McNally]

This is not only about public funds, but it is about how you create—to use this term again—an architecture for this type of litigation that squeezes out from the system the inflation that went to the lawyers. That was identified by the Master of the Rolls, by the Lord Chief Justice and by Lord Justice Jackson. In trying to respond to that problem, I am fully aware of the hard cases, and I have spent most of the afternoon dealing with them. Of course hard cases are difficult to argue, but that is the central issue that we are trying to address. To succeed, we will have to stand firm against some of these hard cases, I am afraid.

[Lord Thomas of Gresford]

The issue really is this: should all cases be treated alike? Well, Lord Justice Jackson did not treat all types of litigation alike. For example, he specifically recommended that clinical negligence should stay within legal aid, for various reasons that we have gone through that I do not need to repeat. Nor did he suggest that all his proposals should be limited to personal injury cases; he thought that they should be broader but they could vary, depending on the particular circumstances.

The reason for that is that risk varies. For road traffic accidents, nine out of 10 cases will be won because it is fairly easy to determine in a road traffic accident who is at fault, to what degree and so on, and the quantum follows thereafter. In clinical negligence cases, three out of four cases will be lost, so the risk is very different. That is why Lord Justice Jackson decided that clinical negligence should remain within the scope of legal aid. We are not involving government money or public money here; what we are trying to discuss is what constitutes a fair balance in a particular category of case, which can vary from case to case. I do not think that we should approach this on the basis that there is an architecture that should apply to every particular type of claim that is ever brought.

In mesothelioma cases, for example, we are not so much concerned with the fact that the person has the disease; what we are concerned with, as the noble Lord will appreciate from the very moving story that he told about his own family, is causation. That is the issue in this type of case. You can easily show that someone has died as a result of this disease, but what caused it, when, how and whether the case has been brought within a reasonable period of time are at issue. Very often, that requires not the sort of expenditure on medical reports that you get in clinical negligence cases; it often depends on expert reports on where the asbestos was, how it was dealt with and whether there was a likelihood, which passes the threshold of more likely than not, that that particular presence of asbestos in the workplace at a particular time caused the disease from which, as in the case that I cited, many years later the particular individual dies. We can therefore see that in some cases it is a medical issue, while in some cases it is causation, but they differ—and it is quite legitimate for the Committee to consider the different type of case, as we have in our discussion of judicial review, for example. In our debate on the next set of amendments, I shall come on to the question of environmental law, where very different issues arise compared with other types of litigation. We are not looking for an architecture to involve everything; we are looking for what is right in a particular category of cases. I propose in a moment, when this amendment will I hope be withdrawn, to enlighten your Lordships a little about environmental law.

[Lord Alton of Liverpool]

My Lords, in his peroration the Minister relied on the phrase “squeezing inflationary costs out of the system”—a point to which the noble Lord, Lord Thomas, referred. The only people who will be squeezed as a result of this are those who suffered previously and who have fatal diseases. I cannot see the argument that the Minister put before the Committee this evening in the terms in which he has expressed it. As he implied at the end of his remarks, this is not about legal aid or public money; on the point about causation that the noble Lord referred to a moment ago, this is about people’s right to have access to the justice system, and not then to have to hand over any damages that they win. This is about people who have demonstrated successfully in the courts that they have become victims and who then have to hand over a quarter of the damages that they receive to pay for the action that they have been able to bring successfully.

The Minister showed enormous sensitivity to this issue as he described his own family circumstances to the Committee. When he reads the debate further overnight, he may want to reflect on some of the points that have been made. He was accused earlier of not showing flexibility. I understand the pressures placed on any Minister having to oversee a Bill of this kind, but we are only in Committee. I hope that he will share with his right honourable friend the Lord Chancellor the debate tonight and will look particularly at the questions raised earlier on by me and others about the costs involved to the public purse in not accepting these amendments. The reverse arithmetic and accounting to that which he has advanced at the Dispatch Box this evening would seem to apply, and in his refutation of the argument he did not deal with that point.

The Minister also implied that all lawyers would somehow be winners—that they would be the ones putting the inflationary pressures into the system. I remind him of the case that I cited today and at Second Reading of Norman Jones, the president of the Liverpool Law Society. This is a lawyer who is not part of a huge legal practice; he made it clear that under this dispensation it would be impossible for him to have fought the case that he successfully brought with CFAs through all the courts, right up to the Supreme Court. He would not have been able to bring that case. It is because of cases of that kind and the adverse effects on the victims as well that the Minister should reflect on this matter before Report.

During the debate, we have heard invoked the names of victims. Mrs King was mentioned by the noble Lord, Lord Bach, Marie Hughes by the noble Lord, Lord Thomas, and the Minister mentioned Betty, a member of his family. We have heard also of good lawyers; the noble Lord, Lord Martin, mentioned Frank McGuire, and vividly described his own experiences on the factory floor. We have heard about campaigners. The noble Lord, Lord Avebury, who has battled on this subject since the 1970s, and the noble Lord, Lord Wigley, both referred to Nancy Tait.

The noble Lord, Lord Bach, said to us that employers should have to make full redress and employees full restitution. He said that no one is faking mesothelioma. He also reminded us of the canards of the so-called health and safety culture, and of the compensation culture. The noble Lord, Lord Wigley, said that access to justice should not be the preserve of a few.

It is worth remembering that the mesothelioma death rate in this country is the highest in the world. That is why I do not think that the noble Lord, Lord Avebury, was overstating the case when he said that what we are doing is intolerable. He said that it is unconscionable, mean-spirited, callous and immoral. Although it is my intention now to withdraw this amendment, I give notice that it is also my intention to return with these amendments on Report if we are unable to make progress on this issue. With the leave of the Committee, I beg leave to withdraw the amendment.

Amendment 137A withdrawn.

Clause 43 agreed.

Amendments 137B and 137C not moved.

Clause 44 agreed.

Amendment 137D not moved.

Clause 45 : Recovery of insurance premiums by way of costs

Amendments 138 to 140 not moved.

House resumed.

House adjourned at 10.27 pm.