Legal Aid, Sentencing and Punishment of Offenders Bill
(Limited Text - Ministerial Extracts only)
Read Full debate16:25 - Division on Amendment 119 - Ayes: 234 / Noes: 206 - Amendment 119 agreed.
17:25 - Division on Amendment 132A - Ayes: 189 / Noes: 237 - Amendment 132A disagreed.
19:05 - Division on Amendment 132AA - Ayes: 189 / Noes: 158 - Amendment 132AA agreed.
19:16 - Division on Amendment 132AB - Ayes: 168 / Noes: 163 - Amendment 132AB agreed.
Lord Bach
My Lords, I am proud to be associated with the amendment in the names of the noble Baroness, Lady Grey-Thompson, and the noble Lords, Lord Newton and Lord Pannick. The amendment is of the greatest importance, and many people outside the House are following it with exceptional interest.
It is perhaps important to remind the House that the mandatory gateway will apply only to those elements of social welfare law that are still in scope—including, of course, for the moment, welfare benefits because of a decision that the House took last week on an amendment moved by the noble Baroness, Lady Doocey. That is a statement of the obvious, because those areas of social welfare law that the Government intend to take out of scope will be quite irrelevant for these purposes. There is no possibility of legal aid in those cases. In effect, the Government are saying that people with those legal problems will have to fend for themselves if they have no money. That is a pretty shocking state of affairs.
We have had a short but powerful debate in this House today—and we had a very powerful one almost three months ago at the end of the first day of Committee, on 20 December 2011. Very powerful speeches were made. I have in mind that of the noble Lord, Lord Shipley, whose final words were:
“There are real dangers that some of those most in need of help will fail to secure it through a mandatory telephone gateway”.—[Official Report, 20/12/11; col. 1764.]
The noble Lord, Lord Phillips of Sudbury, made yet another powerful speech today. The one he made on that occasion was powerful, too. He said:
“If it is mandatory for those seeking assistance to go through a telephone gateway, we will cast adrift a significant minority of our fellow citizens who will never use a telephone gateway for the sorts of problems with which they are confronted”.—[Official Report, 20/12/11; col. 1766.]
The Minister says from a sedentary position that there is no evidence of that. What an unbelievable response. One only has to know from human nature—from living in the real world rather than the world of Whitehall—that that is how people are. It is about time that the Government started taking people as they are rather than as they want them to be. There were powerful speeches also from the Liberal Democrat Benches on that occasion.
I made the point that it was nearly three months ago because we have had no hint of a concession in all that time. We know from a letter that a telephone call will not be free, as was suggested at the time. There will be a cost to the client who has to make the call. It will not be huge, but it will be there—and that is another factor that will apply. It is simply common sense that to have a mandatory gateway for all clients seeking legal advice is absolutely inflexible and will almost certainly lead to a number of people who clearly should be helped receiving no help at all. It will lead to injustice after injustice.
The Bolton CAB is a large CAB which covers all these fields and has a legal aid contract. It runs an advice surgery from time to time. Yesterday it tried an experiment. Every client who came in had their tale told in general terms by way of a tweet, in other words on Twitter, so that one could read each one of these cases during the course of the morning and afternoon while this surgery lasted. One could see from reading these how the world of a busy CAB or law centre or advice centre actually worked in practice. There were 126 clients who sought legal advice on social welfare issues and they covered practically everything that you could think of. I have no doubt that some of those clients were well able to make a telephone call and start proceedings in that particular way, and I am an undisguised fan of telephone advice when it is appropriate. But are the Government really saying, as I suspect they are, that all 126 of those clients would have been able to do this? Are they saying it is not highly advantageous to have face-to-face contact in some cases? And are they really saying that someone who turned up to a CAB should be turned away and told to call a hotline, as will happen unless this amendment is passed? Can you think of a more bureaucratic, fussy and less efficient system and one that is less reflective of the way people actually live their daily lives? I would argue that it is an absurd proposition which is un-British in the sense that it is one-size-fits-all and too dirigiste and inflexible an approach.
Sometimes Governments just get things completely wrong and Parliament has some sort of duty to say so. It actually helps Governments in the long run if they do not charge off in the wrong direction. Here is a short story. I remember when I was a Minister sitting where the Minister is, in the same department, putting forward some foolish, to put it mildly, proposition and then seeing, when the vote was called, many of my own supporters walking past in order to vote in the Opposition’s Lobby and losing the vote for the Government by a large amount. It was the right thing for them to do. Actually, there was so many of them that none of them could be picked out and dealt with later. There is an advantage in numbers sometimes. And they need not even be afraid on this occasion of the noble Lord, the Deputy Chief Whip of the House. Frankly, I would argue that this is one of those instances. If the Government are defeated on this issue and if the Liberal Democrats could just bring themselves for once to vote against the Government, the world would not stop, the Government would not fall, but an enormous mistake might be averted and Parliament would have done the right thing.
The Minister of State, Ministry of Justice (Lord McNally)
My Lords, in case my colleagues on the Liberal Democrat Benches missed it, that was a subtle attempt by the noble Lord, Lord Bach, to woo them into the Aye Lobby. All that I can say in this technological age is, just think what the noble Lord, Lord Bassam, will be tweeting about them if they do not do as he suggests.
Throughout this Bill it has been very difficult to reply to a debate, trying to deal with very narrow, specific terms, when the noble Lord, Lord Bach, constantly makes his case in the broadest terms. We are not forcing everybody through a telephone gateway; we are doing a specific and very narrowly drawn test. I ask noble Lords to make their decision on the facts.
We make jokes about this House and its otherworldliness, but we are living in the most communications-savvy generation in our history. I do not just mean teenagers and young people; I mean silver surfers and people right through. They buy on eBay; they use telephones and new technology in a very broad way. It is patronising to assume that people cannot make use of it. Of course, we are aware that there may be exceptions. That is why, when noble Lords come to vote, it would be worth listening carefully to what we actually propose to do and what safeguards we are putting in place, rather than what I would call the broad-brush approach adopted by the noble Lord, Lord Bach.
There will be safeguards. Face-to-face advice will remain an option in the exceptional circumstances when there are callers for whom adaptations cannot be made to ensure that there is an appropriate level of service. Our starting point is that telephone advice is effective and efficient. The Community Legal Advice helpline figures for 2010-11 show that more than half a million calls were made to the service. The 2010 survey of clients who subsequently received advice from the specialist service showed that 90 per cent of clients found the advice given helpful.
The benefits of electronic services generally and the Community Legal Advice helpline service in particular are twofold. The first benefit is access. These services particularly help people with specific needs who find it difficult to get to face-to-face services; for example, those living in remote areas or who have a physical disability. Callers can access the Community Legal Advice helpline service at a time and place convenient to them. The second benefit is quality. Contrary to the assumption that face-to-face advice is always better, specialist telephone advice providers are currently required to meet higher quality standards than their face-to-face counterparts. For both these reasons, the Government believe that the Community Legal Advice helpline should be the mandatory gateway for applying for legal aid.
However, I can confirm today that the Government have listened to concerns and will not proceed with the proposal to include community care as one of the initial areas of law for which clients will be required to use the mandatory single gateway. We acknowledge particular challenges in delivering a quality service to community care clients. The Government have always recognised that this is a complex area of law and said in the impact assessment that around half of clients in this area would require face-to-face meetings with legal representatives even where only legal help is being provided.
We have heard since from stakeholders that individuals’ circumstances can be so unique that face-to-face meetings are frequently required to deal with problems in this area even where only legal help is being provided. We have accepted that the numbers of community care clients requiring face-to-face advice is in fact likely to be more than our original estimates, and we are therefore not proceeding with the proposal to include community care as one of the initial areas of law for which clients will be required to use the mandatory single gateway.
Lord Newton of Braintree
My Lords, I acknowledge that point. I would also like to acknowledge that I inadvertently misquoted the briefing. I referred to community care but I also said that debt, discrimination and special educational needs were covered—I got that wrong. However, I come back to my basic point. What distinguishes the potential recipients of community care from the recipients of welfare benefits and a lot of other things? The same people will have needs elsewhere, and they will need face-to-face help not only with their community care needs.
Lord McNally
That is what I call a second bite of the cherry on Report. However, I was in fact about to clarify, for the benefit of the House, that indeed the noble Lord was wrong, and that the first gateway areas of law will therefore be debt, discrimination, and special educational needs.
As the House is aware, the Government have been working with a range of groups, including equality organisations, to discuss the many adaptations and adjustments already in use through the existing community legal advice helpline. As a result of this work, we are comfortable that meaningful access to legal aid services for the majority of callers in the areas of law that are to be covered by the mandatory gateway is very much achievable. The mandatory gateway will, therefore, be relatively narrowly drawn, and we will proceed sensibly and prudently. This is precisely about ensuring that services remain accessible.
We believe that these are the right areas to begin with, because the community legal advice helpline already offers specialist telephone advice on debt, special educational needs and some discrimination cases. We trust that this provides sufficient knowledge on which to base our volume estimates and have a good sense about the realism of ensuring accessible services. Now that we have made further movement on the issue—a matter that I know the noble Baroness feels strongly about—I hope that she may be able to meet us halfway, particularly given the safeguards that we are also putting in place, which will apply across the three remaining areas.
The Government are not only committed to a review of the whole implementation, including operation, of the gateway in the three areas of law, but will ensure that face-to-face advice continues to be available where it is genuinely necessary. All callers will need to be assessed on a case-by-case basis to determine whether they should be offered advice only over the telephone. Those making the assessment will be required to have an awareness of the difficulties faced by callers, who may have various conditions such as learning impairments, hearing impairments, and mental health conditions. Where they assess callers as not being suitable, even with a reasonable adjustment, to receive telephone legal aid advice, callers will be referred to face-to-face providers. The key consideration will be whether the individual client is able to give instructions over the telephone and act on the advice given over the telephone.
As I have previously stated, specialist telephone advice providers are currently required to meet higher quality standards than their face-to-face counterparts. I understand that the LSC is reviewing the quality standards of all contracts in order to ensure that they remain appropriate and fit for purpose once this Bill is implemented. However, while the precise detail is still being developed, I can assure the House that the tender process, overall quality requirements and contract management approach for the specialist telephone advice providers will mean that they will continue to meet a higher service standard than that expected of equivalent face-to-face advice providers, and that this will include a specific requirement for appropriate training both in relation to understanding individual needs and the assessment process itself. Noble Lords should therefore rest assured that access will be protected under these plans.
A number of specific points were made. My noble friend Lord Roberts argued that the face-to-face guarantee for under-18s should be extended to age 25. Again, I must say to him that those aged 18 to 25 must be the most telephone-friendly generation in our history, and I do not think that we would extend it to 25.
The noble Baroness, Lady Grey-Thompson, made the point that helpline operators are not legally qualified. No, but they are fully trained to identify key words or issues from the client’s description, and then—and this is important—pass the client on to the appropriate legally trained adviser. She also asked how we will assess whether a person is in need of special attention. As I have said, all callers will be assessed on a case-by-case basis to determine whether they should be offered advice over the telephone or assessed for direct face-to-face advice. It is also possible for callers to have an authorised third party to make the initial call for them. Therefore, one should look past the broad brush swept by the noble Lord, Lord Bach, and the suggestion that this is a fundamental bar to access to legal aid.
I say to the noble Lord, Lord Pannick, that earlier this year I went to the Law Society awards ceremony for the best law officers of the year. I was extremely impressed by how many of the prize winners gave distance advice either by telephone or via the internet. It is the age in which we live.
In this explanation, I hope that noble Lords will understand that this is a narrow scope attempt at using a telephone gateway. Built into it, in training the people undertaking it, is the discretion to refer to other specialists and the right of those specialists to offer face-to-face advice if an inquiry warrants it. Noble Lords can see that that is a far road from that painted by some of the speeches today. We have also made a significant move in response to the representations made to us. Based on the facts and the arguments, I hope that the noble Baroness will withdraw her amendment and that, if not, noble Lords will support me in the Division Lobby this afternoon.
The Earl of Listowel
Before the noble Lord sits down, I thank him for clarifying the guidance to those who will take these telephone calls. Will the Minister consider giving these people guidance on the fact that a disabled person may have parental responsibilities, so that if they have children additional thought might be given to a face-to-face meeting? If for some reason this does not work, we harm not only the adult but also the children.
Lord McNally
I would certainly consider that. As so often with suggestions from the noble Earl, that is well worth considering. However, to put it to him the other way round, if the person phoning has children the benefit of being able to get advice at a distance by telephone at a time of their choice could also be an advantage.
Lord Campbell of Alloway
I thank the noble Lord. His speech opened the gateway, for which I am grateful, to the face-to-face, one-by-one necessity which arises in a lot of desperate cases. Therefore, on that basis, I accept that the Government will do the right thing.
Lord McNally
I am very grateful that my eloquence has won the noble Lord over. I would ask the House to consider what he has rightly drawn attention to: namely, that some people may be in need of an hour-long chat, which is why the gateway is important for the volume that we are dealing with and for making sure that people get the right and the best advice as quickly as possible.
Baroness Grey-Thompson
My Lords, I thank the Minister for his response and I recognise that there has been much positive movement. I also thank all noble Lords who contributed to the debate and have expressed their support. I will not précis each contribution, but I feel that there is significant support on all sides of the House. Perhaps I may quote the noble Lord, Lord Wigley, who said that this section is controversial. It is about respect and dignity.
In his response to the noble Lord, Lord Bach, the Minister said that there is no evidence that people will be reluctant to use the telephone gateway. I am afraid that I disagree, and I do not believe it is patronising to say that people will have difficulties with or will be put off from communicating in certain ways. The noble Lord, Lord Pannick, said that it is about access to justice. People should be able to access justice in the most appropriate way. I still do not feel that we are in the right place yet because some cases are incredibly complex. While I welcome the clarity on the training of operators—it is very positive news that the operators of the telephone lines will be better trained than those who do face-to-face interviews—it still comes down to the ability of the client to use the right keywords. If they do not do that or are not able to express things in the right way, I am very concerned that we will be doing a great disservice to a huge number of people.
Again, I thank the Minister, but I do not believe that he has gone far enough, and I wish to test the opinion of the House.
Lord McNally
Lord McNally
Lord McNally
My Lords, with the implicit trust that the House has in me—I am glad to see the noble Lord, Lord Bach, nodding vigorously—I assure the House that these are minor technical amendments. They are really a belt-and-braces exercise to ensure that there are no gaps between the Bill coming into force in April 2013 and various contractual arrangements that we must have. They are minor technical amendments to cover an eventuality in which things did not quite knit together in passing from one Bill to another. I hope that the House will accept that assurance. I have written explaining in detail, and the letter is in the Library of the House. I beg to move.
Lord McNally
Lord McNally
“(2) Where the Lord Chancellor considers it appropriate as part of the arrangements for effecting the transition from the operation of Part 1 of the Access to Justice Act 1999 to the operation of this Part of this Act, the Lord Chancellor may by regulations make provision requiring or enabling prescribed 1999 Act services to be made available to individuals or other persons under this Part for a period specified or described in the regulations.
(3) In subsection (2) “1999 Act services” means services which, immediately before the day on which the first regulations under that subsection come into force, may be funded under Part 1 of the Access to Justice Act 1999.
(4) Where the Lord Chancellor considers it appropriate for the Legal Services Commission to cease to exist before this Part is brought fully into force, the Lord Chancellor may by regulations make provision for the purpose of requiring or enabling the Lord Chancellor and the Director, or persons authorised by the Lord Chancellor or the Director, to carry out LSC functions for a period specified or described in the regulations.
(5) In subsection (4) “LSC functions” means functions conferred or imposed on the Legal Services Commission by or under Part 1 of the Access to Justice Act 1999.
(6) Regulations under subsection (4) may not include provision requiring or enabling the Lord Chancellor—
(a) to take decisions about whether services should be funded in individual cases, or(b) to give directions or guidance about the carrying out of functions under Part 1 of the Access to Justice Act 1999 in relation to individual cases.(7) Regulations under this section—
(a) may amend, repeal, revoke or otherwise modify Part 1 of the Access to Justice Act 1999, this Part of this Act, any other Act and any instrument made under an Act;(b) may describe a period, in particular, by reference to the coming into force of a provision of this Part of this Act or the repeal of a provision of Part 1 of the Access to Justice Act 1999.(8) The requirement for regulations under this section to specify or describe a period does not prevent the making of further regulations under this section.
(9) The powers to make regulations under this section are without prejudice to the generality of the powers to make regulations under the other provisions of this Part and under section 138.
(10) In this section “Act” includes an Act or Measure of the National Assembly for Wales.”
Lord McNally
Lord McNally
Lord McNally
My Lords, the amendment deals with matters on which I have written to colleagues; the letter is in the Library of the House. It is in response to the report of the Delegated Powers and Regulatory Reform Committee, which recommended that the procedures for regulations under Clause 10(1)(b) should be subject to the affirmative resolution procedure. These regulations will set out the merits criteria for civil legal aid and set out rules around the prospects of success and cost-to-benefit ratios. The Government accepted this recommendation subject to allowing for a provision as in the Access to Justice Act to allow changes to be made without delay where appropriate. I hope that noble Lords will see this series of amendments as putting those recommendations into place. I beg to move.
Lord McNally
“( ) regulations under section 10(1)(b), other than regulations in respect of which the Lord Chancellor has made an urgency statement;( ) regulations under section 12(9);”
Lord McNally
“( ) regulations under section 38 that amend or repeal a provision of an Act (as defined in that section), other than regulations revoking such regulations or inserting or repealing provision previously repealed or inserted by such regulations;”
The Advocate-General for Scotland (Lord Wallace of Tankerness)
My Lords, we have, as the noble Lord, Lord Beecham, indicated, moved on to Part 2, but I open by saying that on my walk from Dover House to the House this afternoon, I, too, fell. I went over on my ankle on what I think was a crack in the pavement, so I have every sympathy with him and I trust that he will need neither medical nor legal assistance as a result. Indeed, I hope I will not either.
Part 2 implements the Government’s reforms to civil litigation funding and costs following, as has been discussed already in this debate, Lord Justice Jackson’s recommendations. These reforms have a number of important components. Abolishing the recoverability of success fees and “after the event”, or ATE, insurance is key to the Government’s aim of returning a sense of proportion and fairness to the current regime. My noble friend Lord Thomas of Gresford talked about premiums going sky-high. I will return to these issues in more detail in the course of responding to specific amendments.
As part of these reforms, the Government will introduce QOCS—qualified one-way costs shifting—for personal injury cases. This is an area of law where most claimants are individuals, acting under CFAs, and most defendants are insurers or other well-resourced organisations which can well afford to defend themselves. My noble and learned friend Lord Mackay of Clashfern asked a very specific question, to which I hope that by the time I conclude my remarks I can give him an answer, about those who are funding themselves and not acting under a CFA. The Government agree with Lord Justice Jackson that QOCS in these cases is the right way forward and strikes a fair balance between claimants and defendants. In particular, it means that in many cases claimants will no longer have to take out expensive ATE insurance.
On ATE insurance, the noble Lord, Lord Beecham, asked what engagement there had been with the insurance industry on these matters. I am advised that insurance both “after the event” and “before the event” can certainly help. It is self-evident that it could help with legal costs. The “after the event” insurance market has developed alongside the current CFA regime and, of course, there is substantial financial interest in seeing that regime continue. It is not surprising, therefore, that the ATE industry’s public stance is to lobby hard against the proposals that we are bringing forward. Ministry of Justice Ministers and officials have met a significant number of different insurers as the proposals have been developed since Lord Justice Jackson’s recommendations were published early in 2010. Although we acknowledge that some ATE insurance 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 new market needs as the details of these proposals are finalised. We are also introducing a 10 per cent increase in damages for non-pecuniary loss, such as pain, suffering and loss of amenity, which is being taken forward by the senior judiciary.
Lord Ramsbotham
My Lords, before the noble and learned Lord sits down, perhaps I may ask whether he has considered the position of two groups of families who may be considering making civil claims against the Government following inquests. I refer to the families of members of the Armed Forces and of those who die in either police custody or prison.
Lord Wallace of Tankerness
My Lords, this may not be quite what the noble Lord was thinking about, but in some cases, as my noble friend Lord Faulks indicated, if there is a question of a claim following a bereavement, we have indicated that we intend that there should be an uplift in these cases.
On the question of why we are not introducing QOCS for judicial review claims—this may be the circumstance to which the noble Lord was referring—the responses to the consultation indicated that conditional fee agreements were less commonly used outside the area of personal injury and were not frequently used in judicial review proceedings.
Lord Thomas of Gresford
I hope my noble and learned friend will forgive me for mentioning that I have tabled an amendment dealing with precisely that point. It is for debate at a later time and proposes that QOCS should apply in cases where, for example, there is a death in custody—and to other matters referred to by the noble Lord, Lord Ramsbotham.
Lord Wallace of Tankerness
I am grateful to my noble friend. Debate on his amendment might allow a better exploration of the important point raised by the noble Lord, Lord Ramsbotham.
Lord Beecham
My Lords, that exchange was quite useful because it illustrated the argument against what the noble and learned Lord seeks to persuade us to agree to; namely, the proposition that these are matters for the Rules Committee. The noble Lord, Lord Thomas, has tabled a sensible amendment that covers the situation raised by the noble Lord, Lord Ramsbotham. However, under the Bill these will not be matters for Parliament. The scope of access to justice will not be in the Bill and will not be the subject of legislation. The matter will be in the hands of the Rules Committee. That is a delegation of responsibility too far in a very significant area of public policy. Therefore, I cannot accept the arguments of the noble and learned Lord.
The noble Lord, Lord Thomas, has tabled amendments that we will debate later. I say in advance that I have sympathy with some of them, including the one to which he referred. Perhaps he will forgive the obvious pun: we understand that there are not many doubting Thomases on the government Benches. He will also understand that we do not necessarily share that perspective and that a degree of scepticism is more naturally to be found on this side.
In respect of one or two other matters, the Heil v Rankin decision is based on a particular level of damages. It is not a binding provision, applicable across the piece, as is suggested in terms of the 10 per cent uplift. It seems to us, and not only to us, that it is imperative, given that we are now dealing with the matter of principle of access to justice via this particular method, that the legislation should encompass the range of issues that arise. It can do so in the form of a starting position and provide for additional regulations to be approved by Parliament later. That would have been an option. I would like to think it might still be an option but I am not getting much encouragement from the noble and learned Lord. I cannot accept that the Government’s position is satisfactory. I am grateful up to a point for an indication that one object of these amendments will take place—that is to say that change will be synchronised. I wish that the noble and learned Lord and I had not synchronised our stumbles today. But in terms of legislation, that is a welcome assurance. Nevertheless, there are significant points of principle here and in the circumstances I wish to test the opinion of the House.
Lord McNally
My Lords, I should first say to the noble Lord, Lord Newton, that if he is thinking of joining the Liberal Democrats he would fit in very well.
This is not a debate about those who care about mesothelioma sufferers and those who do not. We all care, and many of us have been trying to address the problems associated with that dreadful disease. Indeed, the Department for Work and Pensions is working closely with all 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 their insurer cannot be found.
It is true, as has been mentioned, that Governments of all parties have taken action to aid sufferers of industrial injuries and illnesses, and the legacies of our industrial past. However, it is also fair to put on record that legal aid was removed from this area of litigation by the previous Administration in 2000.
Before turning to the detail of these amendments, I wanted to say a few words about the importance of the changes we are introducing in Part 2. As we heard in the earlier debate, the changes we are proposing to no-win no-fee agreements were recommended by Lord Justice Jackson after his year-long review, and supported by the senior judiciary. The Lord Chief Justice said that the report addressed civil costs as a comprehensive, coherent whole. Our proposals were welcomed by the previous Lord Chancellor, Mr Straw, and by the opposition Front Bench in the other place when the current Lord Chancellor announced them on 29 March last year. The shadow Justice Minister said at Committee stage:
“the intention of part 2 is perfectly sound, and it is one with which we have a great deal of sympathy”.—[Official Report, 13/9/11; Commons, Legal Aid, Sentencing and Punishment of Offenders Bill Committee, col. 501.]
So there is broad agreement on the principles of our reform.
Part 2 addresses the way that the present system is—as I think that the noble Lord, Lord Faulks, described it—distorted. The agreement is perhaps not surprising given the high costs that have arisen under the current regime and the unfairness that has resulted between claimants and defendants.
I remind the House of that, because I am concerned that in making the position fairer between claimants and defendants, as we seek to do, we should not make the position less fair between different classes of claimants, as some of the amendments would, as the noble and learned Lord, Lord Mackay, just reminded us. The current regime of recoverable success fees and insurance premiums allows for risk-free litigation from claimants and substantial additional costs for defendants.
Allowing exceptions, so that the regime continues in relation to certain cases only, would introduce unfairness for those claimants in an otherwise similar position where the exception does not apply. Allowing an exception for defamation claims, for victims of industrial diseases or for claims of corporate harm by multinational companies, for example, would introduce an advantage to claimants in those specific categories which would be unfair to those in otherwise similar positions whose claims fell into a slightly different category. Clauses 43 and 45 are a fundamental element of the Government's reform in ensuring proportionality and fairness across the board. That is why we resist any substantive amendments to them.
I will take Amendments 132AA, 132AB, 132D, 136, 141, 141ZB and 142 together, as they are intended to retain recoverable elements in claims dealing with respiratory diseases or industrial diseases caused by an employer’s breach of duty to an employee. Amendments 132AA, 136, 141 and 142 would retain recoverability of success fees after the event, or ATE insurance payments and membership organisations’ self-insurance costs for respiratory disease cases. Amendments 132AB, 132D and 141ZB would do the same for employers’ liability claims relating to industrial diseases.
Although I will address all industrial disease claims in my response, I am aware of the keen interest of the noble Lords, Lord Alton and Lord Avebury, in mesothelioma in particular. They have been tireless and dedicated campaigners on behalf of sufferers of that fatal and tragic disease, and I commend them on that. Although we can agree on the tragic nature of the disease and its impact, I cannot agree that those cases should be exempted from our reforms. Noble Lords have argued that industrial diseases, including mesothelioma and other less serious conditions, are not part of the compensation culture. The Government accept that—I did so in Committee. There is no suggestion that those claims are brought improperly. Our reforms are intended to address high cost throughout civil litigation. This is not just about driving out fraudulent or exaggerated claims but about ensuring that legal costs are proportionate to the sums at issue. For that, wholesale reform is needed. To be effective, it must apply across the board.
Specifically on mesothelioma, I said in reply to an Oral Question from the noble Lord, Lord Alton, on 29 February that I am not aware of anything associated with those cases which makes them particularly expensive to bring. I have not heard anything since which persuades me that there is anything particular about the nature of those cases—the cases, not the disease—which makes them any harder to bring in legal terms than any other case. Indeed, it is quite the reverse. As my noble friend Lord Thomas of Gresford and the noble Lord, Lord Faulks, pointed out, significant steps have been taken in recent years to lower the barriers to bringing compensation claims for those diseases. Senior Master Whitaker, who oversees these cases in the High Court, has helped to introduce a fast-track procedure for mesothelioma cases. That has been incorporated into a practice direction ensuring that those claims are dealt with as quickly as possible—again a point brought up by my noble and learned friend Lord Mackay.
Various legal changes over the past few years, including primary legislation such as the Compensation Act 2006, and judgments of the Supreme Court, have removed some of the hurdles for sufferers of respiratory diseases to bringing claims. The Department for Work and Pensions has undertaken various initiatives to make it easier for claimants to trace their employers’ insurers. I understand that it can be difficult and expensive for those with what the noble Lord, Lord Wigley, I think, referred to as long-tail diseases, such as mesothelioma, to track down the liable insurer. In April 2011, the insurance industry set up the Employers’ Liability Trading Office, or ELTO. Supported by the Government, the ELTO provides an online resource through which claimants and their representatives can search for the relevant policy, reducing time and costs for those involved in such searches.
The Department for Work and Pensions continues 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 their employer’s liability insurer cannot be found. A response to the government consultation, Accessing Compensation Supporting People Who Need to Trace Employers' Liability Insurance, which reflects further on possible solutions, will be published in due course. I recently met the insurance industry to discuss ongoing work. I can tell the House that, as a result of this issue being raised in discussion on the Bill, I will be taking the matter up with my noble friend Lord Freud at the Department for Work and Pensions to discuss what progress is being made and how it can be advanced. As noble Lords will be aware, my noble friend told the Grand Committee yesterday that we will be increasing the mesothelioma lump-sum payments by 3.1 per cent from 1 April this year. I welcome my noble friend’s statement and his commitment to working with interested parties to offer further help to sufferers who have difficulty in tracing their insurer.
Noble Lords have spoken of the prohibitive costs of bringing industrial disease claims against well resourced defendants. There is concern that claims will not be brought if claimants risk being liable for high defendant costs should they lose. In response, I remind noble Lords that in personal injury claims, including industrial disease, qualified one-way costs-shifting will apply—that is, a losing claimant will usually not be at risk of paying a defendant’s costs. We discussed QOCS earlier in the debate.
We turn, then, to the claimant’s own disbursements, which noble Lords have argued will be unaffordable should “after the event” insurance premiums no longer be recoverable. On respiratory disease claims, my understanding is that only one medical report is required by rules of court in order to issue a claim. This report will cover the diagnosis, basic causation, prognosis and what the life expectancy might have been without mesothelioma. In exceptional circumstances, a forensic engineering report may also be necessary to show causation. However, the majority of mesothelioma sufferers will not need reams of expert evidence to bring their claim and consequently are unlikely to face high up-front costs for expert reports.
Claims for industrial diseases are not unique in requiring expert evidence to show the nature and extent of the illness. The same is true of many personal injury cases, where there may be disputes, if not of the causation or liability, of the extent of the damage caused. It is not true to say that such reports will be unobtainable without a recoverable ATE premium, particularly as a claim may be brought on the basis of one report. A claimant may pay for reports through their own means; solicitors may decide to bear up-front costs themselves; or a claimant may take out ATE insurance and pay the premium themselves. In any of those instances, either the claimant or the solicitor will have a direct interest in the costs that are being incurred—which is one of the main principles underlying our reforms.
It should also be noted that general damages for non-pecuniary loss, such as pain, suffering and loss of amenity, will be increased by 10 per cent—a point emphasised by the noble and learned Lord, Lord Mackay, but not mentioned in other speeches when there was talk about a raid on damages. That will help claimants to pay any success fee that may be due once their claim has ended. I also point out that the proposed cap on success fees of 25 per cent of damages awarded is not compulsory. It is a negotiated amount and excludes those for future care and loss. We expect solicitors to compete for business by offering lower fees. We also expect those who specialise in this area to offer fair and realistic terms for their clients that take into account not only the risk of the case but also the needs of the individual claimants and their families at what, of course, will be a particularly traumatic time in their lives.
Lord McNally
My Lords, the noble Baroness, Lady Coussins, said that making this exception would not “gut” the Bill. But I hope that noble Lords who sit through these debates or perhaps read Hansard will see the pattern. Clauses 43 and 45 are a fundamental element of the package of reforms recommended by Lord Justice Jackson to deal with the problems of disproportionate costs in civil litigation under CFAs. I have called that the central architecture of the Bill. The clauses seek to reform and remove the inflationary defects introduced into the system by the previous Administration, which is the central point.
The Jackson reforms look at a specific part of our civil justice system. Throughout the passage of the Bill, we have had claims for exceptions to the central architecture. Certainly, in debates an adopter stands up and goes into the great clinical detail of an illness that we might be talking about, as if that is what the debate is about, and whether one should vote for or against it. Or the noble Lord, Lord Brennan, tells us of the suffering and the hardship of working in mines in South Africa as though that was the subject of the debate. Then everyone thinks, “Oh, we can’t be against poor women in South Africa in such conditions or people suffering from such terrible diseases”. In fact, that will remove the central reforms of the Bill.
In most of the examples that we have had so far, when one looks at what we are actually doing, they do not stand up to examination. It is of course always possible to make the case for an exception in a particular class of case, as noble Lords have done. But we believe that our changes must apply across the board. However, let me make it clear at the outset that we support claims arising from allegations of corporate harm in developing countries being brought and we support the protection damages for personal injury. No-win no-fee conditional fee agreements will continue on the same basis on which the noble and learned Lord, Lord Mackay of Clashfern, introduced them. Indeed, if the noble Lord, Lord Brennan, was referring to a case in the 1990s, it was probably brought under this regime, which is the basis on which it still operates in Scotland. We are also extending the availability of damages-based agreements, which are sometimes called contingency fees, to enable their use in civil litigation. Some of the objections to DBAs from the representatives of big business make me feel that they are a much more potent weapon than people give them credit for.
As I have said, we recognise how important these cases can be. We recognise also that, following the Rome II regulations, the damages in these cases can be relatively low. But the costs have been extremely high, as demonstrated in the now notorious Trafigura case, in which the Court of Appeal criticised the claimant lawyers for seeking costs of £100 million in a case which resulted in £30 million in damages. I should add that the defendant’s costs were only approximately £14 million, which was about one-seventh of the costs claimed by the claimants.
The reforms in Part 2 are about making costs more proportionate, while allowing meritorious claims to be pursued. As has been recognised by the noble Baroness, Lady Coussins, I and my officials have met on several occasions with representatives of NGOs which support these cases but we are not persuaded that they cannot be brought when our changes are implemented. We have asked for examples of further details of costs. If noble Lords want to engage between now and Third Reading, I will be happy to do so.
However, I continue to come to this Dispatch Box to answer attacks on this legislation that do not stand up to examination of the reality. It often means that the Opposition cleverly erase their own record in these areas and immediately adopt whichever hard case is being brought forward as the exception that will not damage the whole architecture of the Bill. We believe that Jackson was right in his reforms. We do not believe that those kinds of cases—I think the number referred to is about 10 such cases in the past 15 years —will be prevented from being brought.
We have listened carefully and we have sought to engage with relevant NGOs on this issue. As I said I would in Committee, I have now discussed this matter further with the Secretary of State but for the reasons that I have given we remain unconvinced that these cases cannot be brought under the new regime, as was suggested by the right reverend Prelate the Bishop of Newcastle.
Lord Brennan
The noble Lord is most gracious to give way. The points I was making were illustrated with cases. My principle point was that these cases are so expensive to run that you need a capital base which is not available to lawyers in this country. I should like the Minister to consider—if not now, later—in explaining to the House how it is that his advisers are telling him that lawyers in this country can raise £2 million, £3 million, £4 million or £5 million to run a case for three or four years. How will that be done?
Lord McNally
I will certainly take note of that. I realise the experience of the noble Lord, Lord Brennan, in these areas. When we asked the NGOs for hard facts and figures on costs, they were not forthcoming but perhaps there is time between now and Third Reading to re-engage. I also think that part of the problem is that whatever we have in civil law, conditional fee agreements or anything else, some of the problems raised by the noble Lord, Lord Brennan, in illustration will not be solved in British law courts or by changes in the British legal system. We are trying to reform what everyone who comes to the Dispatch Box acknowledges is a defect in our civil legal system and for which Lord Justice Jackson has produced a reform package that we are trying to put into law. Everyone agrees that we are right to do so, but for this, that and the other exception. Again, I am willing to discuss this further, but I do not think the case has been made—
Lord McNally
I am sorry, but I am not going to take questions. We are hard-pressed for time. I have offered to re-engage, but as I said before, the evidence we asked for has not been forthcoming and I do not believe the argument that without this amendment, it is going to be catastrophic for these particular cases; that is, for those which people want to take through our law courts. I ask the noble Lord to withdraw his amendment—
Lord McNally
I am sorry, the noble Baroness, Lady Coussins. I am happy to re-engage between now and Third Reading, but at this point we are not convinced.
Lord Beecham
My Lords, I thought the party of the noble Lord, Lord Thomas, was a party of conscience and reform. Conscience appears to have taken a back seat. I have a good deal of sympathy with most of the amendments to which he has spoken and I shall briefly comment on them.
Although we would prefer that the success fee were not deducted at all from a successful claimant, the noble Lord’s proposal is clearly better than the Government’s proposal. So, to the extent that the Government might be disposed to listen to him on this, we would support that in lieu of what we regard as an even better position.
The other amendments to which the noble Lord spoke largely depend on matters being determined by rules of the court, which would appear to have a discretion to make the necessary changes, for example, under Amendments 142B, 142BA and 142BB, with the Lord Chancellor, in the case of Amendment 142B, identifying the proceedings but not necessarily requiring the change to be made.
I entirely share the noble Lord’s view about environmental claims, and a subsequent amendment in my name covers much the same territory. In Committee, I quoted at some length the legal opinions to which the noble Lord referred at that time and dealt with the point about the Aarhus amendment and the points made by his noble friend Lord Lester, which, I agree, misstate the position in respect of protective costs orders. The noble Lord, Lord Thomas, is absolutely right to say, as I said on that occasion, that they do not offer a sufficient defence, as it were, to those in that position.
I similarly agree in relation to the civil liberties claims and, again, we have tabled an amendment in somewhat similar terms, with the exception that under the opposition amendments the Lord Chancellor would effectively take the decision which would change the nature of the position in relation to those claims. As that would have to be, as the noble Lord implied at one point, through secondary legislation or affirmative resolution, it is a more accountable way of dealing with matters than simply leaving it to the courts to determine.
In these circumstances I apprehend that the Government will not be disposed to accept these amendments. Perhaps the Minister will be willing to undertake further discussions with his noble friend, if not with anybody else. If not, as the matter clearly will not be put to the vote tonight, I can only record our unfortunate disagreement with the position in which we will end up because it will not be satisfactory. I do not accept that it is undesirable and wrong to look at particular instances which might fall outside the general rules. The Government have acknowledged to some degree that this should be the case in relation to recoverability under clinical negligence. If they can do that in respect of clinical negligence, then they can equally extend a similar principle elsewhere. Having said that, we await the noble and learned Lord’s response.
Lord Wallace of Tankerness
My Lords, I thank my noble friend for his amendments. It will come as no surprise to the House if I yet again echo what has been said on numerous occasions on Report: the architecture, as my noble friend Lord McNally referred to it, of this part of the Bill seeks to ensure that there is fundamental proportionality and fairness across the board in these claims, and that is why we have adopted the proposals of Lord Justice Jackson.
The cumulative effects of Amendments 132B, 132C, 132E, 133B, 133E, 139D, 140A, 141ZA, 141ZB and 142B would be, as my noble friend said, a refinement on what has been proposed. When the noble Lord, Lord Beecham, talks about my party and my noble friend’s party as being a party of conscience, it is because we feel that some of the fees that have been charged have been unconscionable under the existing scheme. That is why we wish to address the issue.
My noble friend wishes to introduce staged success fees. I am very grateful to him for his complex set of amendments; he has set out what the fees would be at different stages, on the multi-track approach. His proposals would introduce staged success fees in ATE insurance premiums, the cost of which would be split between the losing defendant and the successful claimant. Some recoverability of success fees in ATE insurance premiums would therefore remain.
I assure my noble friend and the House that we have given the amendments careful consideration, even at this late stage. They are proposed as a compromise and are supported by some but not all personal injury claimant representatives. It is fair to recall that these proposals are not entirely new. In his report, Lord Justice Jackson made primary recommendations that have essentially been adopted by the Government in Part 2. He also made an alternative set of recommendations which, while not identical, bear some considerable similarity to the proposals put forward by my noble friend.
Lord Beecham
My Lords, in fairness to the Government, they did not do what the noble Lord, Lord Martin, suggested. They did not put the whole report on the table and say, “We will have it”, but chose which bits suited them and left out the part of the report that dealt with legal aid, which we have debated at some length, among other matters. However, that is a little beside the point.
I support the noble Lord’s amendment, if only because subsection (4), which it seeks to delete, effectively locks and bolts the door to any subsequent change to the provisions on success fees without primary legislation. That is a formidable obstacle. The subsection is unnecessary and the Government could have dealt with the matter in a way that would have allowed them or a subsequent Government to review the situation without primary legislation. The way that the Bill is drafted does not allow that, and for that reason, if no other, I support the noble Lord’s amendment.
Lord McNally
Did the noble Lord, Lord Martin, say “crabby”? My goodness; I have always been thought of as a little ray of sunshine. Of course we have not accepted the Jackson report lock, stock and barrel. We have honed and polished it, and brought it to the House. We have of course accepted the proper role of this House, which is to revise and advise. I listened with a good deal of sympathy to the experience of the noble Lord, Lord Martin, although I have to say that I am not a lawyer, and I would have taken up the case of Christopher Jefferies, never mind anyone else. I think it was the Daily Mirror that accused him of being a Liberal Democrat, which would have been—I had better not say it.
Lord McNally
The noble Lord has come to my aid, because I think these cases are still going on, and I had better say no more. Whenever I hear the Opposition on the wickedness of the press, I have to remind them that from those Benches more than a decade ago I proposed a minor amendment on press accountability, and was told from this Dispatch Box by the Labour Minister of the day that I was proposing the “slippery slope” to a state-controlled press. We know today what slippery slope we were actually on.
I say to the noble Lord, Lord Martin, as I have explained in dealing with other amendments, that abolishing recoverability of success fees and insurance premiums from the losing side will rebalance the CFA regime to make it fairer for defendants by reducing the substantial additional costs which they have to pay under the current regime. Amendment 133 would retain the recovery of success fees from the losing side in all cases. I am not sure whether Amendment 133ZA was spoken to, so I shall not refer to it, but the noble Lord, Lord Martin, made it sound as though we were abolishing CFAs. I emphasise that CFAs will still be available to fund the same cases as they were under the original arrangements introduced by my noble and learned friend Lord Mackay of Clashfern.
However, I understand the concerns of the noble Lord, Lord Martin, about the press. I am not sure that they are best dealt with in this Bill. As the noble Lord will know, I hope that parliamentary time can be found to introduce a defamation Bill. It is in that Bill that we will look at the question of the balance of arms between the individual and large media interests. I hope that we can do that reasonably soon. In the light of that and what I have explained, I hope that he will withdraw his amendment.
Lord Martin of Springburn
My Lords, I am very pleased that the noble Lord has said that he hopes to bring in a defamation Bill. That at least is something, because my worry is that there is a great imbalance. I will not detain the House any longer. I beg leave to withdraw the amendment.
Lord Bach
I am happy to put my name to this amendment with the noble Lord, Lord Thomas of Gresford. I cannot think of anything he said that is not right on this. It seems an open-and-shut case—as it did in Committee, I have to say, when the noble and learned Lord, Lord Mackay of Clashfern, made the first speech in the debate on this subject. I have nothing to add to what the noble Lord, Lord Thomas of Gresford, said: he made the case. If the Government are to reject this, I very much hope that it will come back for final decision at Third Reading.
Lord McNally
My Lords, the Government accept that insolvency proceedings are untypical of our reforms to CFAs in an important respect. Across many areas of law—for example, in clinical negligence cases against the NHS—the Government are on the sharp end of our dysfunctional CFA regime as it is the defendants bringing cases against claimants, sometimes speculatively. However, as the noble Lord, Lord Thomas, has said, insolvency stands apart because it is one of the few areas where CFAs sometimes work to the advantage of government departments; for example where an insolvency practitioner recovers moneys for the taxpayer and other creditors. So if these amendments were to be accepted, they would effectively constitute a carve-out for the key place where CFAs can be useful to the Government—this at a time when we are asking everyone else to adjust to a new, more sensible regime.
We debated insolvency proceedings in Committee and I said then that we were considering this issue within government. I can report that we have thought about it carefully, but we do not agree that an amendment along these lines is the right way forward. I do not believe it is acceptable to say that CFA reform is good for everyone else, but is not good for the Government.
Lord Bach
I am sorry to interrupt, but it is not so much that this is good for the Government—it is good for the taxpayer. Surely that should be one of the main considerations. If it is good for the Government, that is fine; but if it is the taxpayer who will benefit, because creditors get their money, as it were—the HMRC gets its money by taking advantage of the amendment—I cannot see why the Government are resisting this.
Lord McNally
As the noble Lord will know, the interests of the taxpayer and the Government are synonymous, because one is working for the other.
Lord McNally
It is far too late in the evening for such repartee. As I say, we have reached agreement across government, in respect of insolvency proceedings, that new ways will be implemented to deal with these cases without recoverable success fees and insurance premiums. We are working on a programme of implementation and we will set out the details in due course.
As with other areas now subject to a new CFA regime, the effect will be that claims occur at more proportionate cost, as claimants will have a stake in the legal costs being incurred on their behalf. We believe that the exemption proposed by the amendments in respect of insolvency proceedings is unnecessary and would breach the basic rationale of our reform policy. I therefore urge my noble friend to withdraw his amendment.
Lord Thomas of Gresford
Can my noble friend tell us when these proposals will be finalised and whether it will be during the currency of this Bill?
Lord McNally
I am trying to work out the vaguest reply that I can give to that. Discussions are going on and, as I said, we will make an announcement as soon as possible.
Lord Thomas of Gresford
I am very much enlightened by my noble friend’s formulation. The noble Lord, Lord Bach, made a very good point. It is the taxpayer’s money that we are talking about here, and not just the taxpayer but the worthy creditor, the small businessman or even the large businessman who has given credit to a firm that has gone into liquidation, sometimes through fraud and sometimes through incompetence. However, the taxpayer and the businessman are going to suffer because of this provision, unless my noble friend is saying that these proceedings are never going to be brought because there is some other way of doing it. The vagueness has left us all a little in the air. However, for the moment and subject to further discussions between now and Third Reading, I beg leave to withdraw the amendment.
Lord McNally
My Lords, I hope that my reply to the previous debate has shown our gritty determination to keep to the central architecture of the Bill. As I have explained, abolishing the recoverability of success fees and insurance premiums from the losing side is a key government reform which will reduce the substantial additional costs paid by defendants under the current regime. The reforms are intended to apply across all areas of civil litigation, and the Government do not believe that any exemptions are necessary, fair or desirable. If the amendments were accepted, claimants in these types of cases would have no incentive to control their lawyers’ costs. That cannot be right. Proposals to control legal costs should apply across the board. I urge the noble Lord to withdraw his amendment.
Lord Beecham
I decline the request to agree with the Minister. There is little incentive for the Government as a defendant to settle cases when they do not have the additional incentive of a success fee being awarded against them when they lose. However, in the circumstances I beg leave to withdraw the amendment.
Lord McNally
(a) the agreement was entered into specifically for the purposes of the provision to P of advocacy or litigation services in connection with the matter that is the subject of the proceedings in which the costs order is made, or(b) advocacy or litigation services were provided to P under the agreement in connection with that matter before the commencement day.”
Lord McNally
My Lords, the government amendments in this group are minor and technical and will ensure that changes to the recoverability of success fees and the insurance element will apply consistently to all conditional fee agreements, including collective CFAs. I wrote to all Peers last week about the amendment. A copy of the letter was placed in the Library of the House. I beg to move.
Lord Bach
My Lords, I am not getting to my feet just to be difficult. When the Minister moves government amendments and describes them as technical, usually I sit absolutely still in my place. However, on this occasion I have a couple of questions. If he does not know the answers tonight, he is welcome to write to me and to other noble Lords. Will he confirm that the effect of Amendment 135A will be that a success fee as part of a CFA under which work for the claimant commenced before the Bill’s commencement day will still be recoverable from the defendant on exactly the same basis as it is now?
The second question is similar but concerns collective CFAs. Will the Minister confirm that the effect of the amendment will be that a success fee as part of a collective CFA under which work for an individual claimant commenced before the Bill’s commencement day will still be recoverable from the defendant on the same basis as it is now? I will not object to the amendment being agreed, but I would be grateful if in due course I could have answers to those questions.
Lord McNally
My Lords, I am sorely tempted to show that after months of total immersion in the Bill I can leap to the Dispatch Box and give the noble Lord a detailed response. However, as he knows, I did only one paper on English legal institutions in part 1 of my degree. Therefore, I will not pretend that I can give him a definitive answer. However, I firmly promise that a letter will go to him and into the Library of the House in response to those questions.
Lord Pannick
My Lords, I am sure the Minister will tell us again that the general regime for success fees and “after the event” insurance must apply to all cases and one cannot have exemption for this type of case. But have the Government given any thought to whether it might be desirable to include in Part 2 a provision similar to Clause 8(2) of Part 1, giving some form of discretion to the Lord Chancellor to exclude from the scope of Part 2, in the light of experience of how Part 2 operates, any categories of case in respect of which it becomes apparent after this Bill comes into effect that the system is not working very well and is causing practical problems about access to justice? It might then be more sensible to go back, in relation to particular categories of case, to the old system under which the unsuccessful defendant would have to pay the success fee. Will the Minister give some thought to whether a general power for the Lord Chancellor to that effect might not be a good idea? Things might look rather different in a year or two from how they look now.
Lord McNally
My Lords, we have reached the stage of the evening when the noble Lord, Lord Pannick, not only asks the questions but gives the answers as well—cutting out the middleman, which is me.
I take note of his suggestion. As I do with all our deliberations, I will report back to the Lord Chancellor on this. I would have thought that his experience of the willingness of your Lordships to make exceptions, one after another after another, will make him think that giving such flexibility in the Bill will only encourage a constant stream of exceptions coming to his door.
We have thought very hard about this. We think that the architecture is right. We think that by going back to the system as it broadly was under the noble and learned Lord, Lord Mackay, repairs the damage that was done by the previous Administration—with the best of good will. I will report, and I will even tell the Lord Chancellor that it was an idea of the noble Lord, Lord Pannick, which I am sure will produce the appropriate response from the Lord Chancellor.
Lord McNally
Amendment 139C, in the name of the noble Lord, Lord Beecham, seeks to amend Clause 45 to require the Lord Chancellor to make regulations to allow the recovery of ATE insurance premiums taken out to cover the risk of paying one’s own disbursements within the relevant pre-action protocol period. As I have already made clear, the Government’s position on ATE insurance is that it should no longer be recoverable from the losing party. Amendment 139C goes against the Government’s reform and we will strongly resist it.
In the same vein, I cannot accept Amendments 136A to 136D, which would retain recoverability of success fees for judicial review, employers’ liability claims, professional negligence and clinical negligence. I have touched on some of these issues before and I do not intend to detain noble Lords further by going into the details of each particular area or trying to assess which litigants should be classed as more deserving than others. As I have said, it would be invidious and unfair to set out exceptions for some claimants and not for others, and we do not intend to do so.
I urge the noble Lord not to press the amendments.
Lord Beecham
With my customary reluctance, I beg leave to withdraw the amendment.
Lord Beecham
My Lords, I strongly support the noble and learned Lord’s amendment, which makes every conceivable sense from the financial to the legal and logical. I have to say that I do not at all blame the noble Lord, Lord McNally, or the noble and learned Lord, Lord Wallace, but it is a matter of some concern that those responsible were not courteous enough to ensure that the noble and learned Lord, Lord Lloyd, who, after all, is one of the most distinguished Members of your Lordships’ House, should have been supplied with a copy of the document lodged in the Library. Indeed, had I not chanced across it myself today and given him a copy, he might not even at this stage have known of its existence. That is not good enough and I hope that Ministers will have a word with the appropriate members of their staff.
More significantly, the noble and learned Lord makes an unanswerable case for this amendment and I hope that the Minister will be able to say that the Government will respond sensibly. It would assist justice and assist the finances. It seems to me that it would be absurd for the Minister not to accept this amendment.
Lord McNally
My Lords, if there has been any discourtesy to the noble and learned Lord, Lord Lloyd, I absolutely apologise and take responsibility for it. I should like to put that on the record. The noble and learned Lord has described our proposal in the past as expensive and inefficient, and has made much of the difference between his and the Government’s figures. As he knows, we have now put our calculations in the Library of the House and I can assure your Lordships that we have given careful consideration to the calculations that the noble and learned Lord has provided. In addition, I have met with the noble and learned Lord, as have my officials, and we have swapped calculations. We have explained that we believe that he is omitting some vital costs from his calculations.
The method we have used is open and transparent. Taking costs to legal aid and to public sector defendants, we believe that the costs to the public purse of the proposals from the noble and learned Lord, Lord Lloyd, to fund expert reports by legal aid is about £17.5 million a year, whereas the cost to the public purse of our proposal for recoverable insurance premiums is between £18.5 million and £19.5 million. The result is likely to be an additional cost of about £1 million to £2 million.
I understand that the noble and learned Lord does not accept our calculations, but we do not accept his. This is a matter on which we have to take a judgment. These additional costs, as he has said, will enable more people to gain access to justice than under his proposals, which are limited to those who are financially eligible for legal aid. For this reason, and for reasons that are set out in more detail in the paper in the Library, we believe that the powers in Clause 45 are the best way to support victims of clinical negligence in a relatively inexpensive and fair way. I realise that this is a clash of figures and a clash of judgments, but I am making my judgment and we are willing to defend it in this House. At this hour, I would urge the noble and learned Lord to withdraw his amendment.
Lord Lloyd of Berwick
My Lords, I am afraid that I do not find the answer satisfactory. I will withdraw the amendment, of course, but in the hope that the Government will think again and perhaps, between now and Third Reading, take further and better advice. On that basis, I beg leave to withdraw the amendment.
Lord Beecham
My Lords, we return briefly to the question of environmental cases which we also discussed under the amendments tabled by the noble Lord, Lord Thomas. The distinction between these amendments and the previous amendments are that, in this case, the amendments provide the Lord Chancellor with the opportunity to provide by regulation for the changes that are sought; namely, that in respect of Amendments 139 and 140, disbursements related to ATE insurance would be recoverable and, under Amendment 142BC, that qualified one-way costs-shifting would apply, as it should, to these cases. That was recommended by Lord Justice Jackson and I cannot see why the Government would differ from his view. Therefore, for environmental claims and judicial reviews connected with them, QOCS would apply, as indeed they should. This is an important area of policy and potential litigation. As the noble Lord, Lord Thomas, pointed out fully, it needs to be addressed. As I have said, we prefer this iteration of the remedy, but in one way or another the Government should be seen to move in the direction of facilitating these claims under the conditional fee arrangement scheme. I beg to move.
Lord McNally
My Lords, Amendments 139 and 140 seek to allow the continued recoverability of ATE insurance premiums in environmental claims to cover the costs of expert reports. Environmental claims will generally involve a number of claimants who could contribute towards the costs of any reports. Alternatively, the reports could be funded under a “before the event” insurance policy should claimants have one, or under an “after the event” insurance policy should claimants wish to purchase one. Further, the claimant’s solicitors might agree to fund disbursements in exchange, perhaps, for an increased success fee. A variety of means of funding disbursements are available in environmental cases without the need for an exception for recoverable insurance premiums.
So far as the other side’s costs are concerned, the Government’s view, as I explained in Committee, is that a protective costs order ought to provide sufficient costs protection in respect of the other side’s costs in environmental judicial review cases, as we set out in our recent consultation. Under a PCO, it will be clear from the outset what costs the claimant will have to pay if the claim is unsuccessful. The order will also ensure that some contribution is made towards the costs of public bodies that have successfully defended the claim. As I said earlier, environmental claims will generally involve a number of claimants and it is right that they should contribute together to costs, at least to some extent. The Government remain convinced that this is the right approach in these cases. We will shortly set out the details of the way forward in the light of our consultation. I hope, therefore, that the noble Lord will withdraw his amendment.
Lord McNally
Lord McNally
Amendments 141A to 141C relate to the self-insurance element where a body undertakes to meet a member’s cost liabilities. They are intended to have a similar effect to government Amendment 135A. I beg to move.
Lord McNally
Lord McNally
My Lords, I have said before that we are grateful to my noble friend for raising this issue. It is a possible problem and a number of noble and learned Lords and lawyers outside have given warning signals. At the moment we are looking at how voluntary regulation is working in the area. However, my right honourable friend the Lord Chancellor is very aware of the situation and is keeping it under review. We do not think that statutory regulation through this Bill is either the right place or the right time but we welcome the fact that my noble friend has put this issue on the political radar. Both lawyers and legislators will have to follow the matter closely to see whether we will need to return to it at some future date. In the mean time, I ask my noble friend to withdraw the amendment.
Lord Thomas of Gresford
On this occasion I am grateful to my noble friend for his reply. My purpose was to highlight the insidious advance of third party litigation funding. It is essentially an American concept that has advanced into this country. So far it has reached commercial litigation, with which I have no quarrel. It has also got into family law and I shall be extremely concerned if it were to get into personal injury cases. The fact that the Lord Chancellor now has it on his agenda and will monitor the way in which the voluntary code operates is of great comfort to me and it is on that basis that I beg leave to withdraw the amendment.
Lord Bach
The Minister would be well advised to give serious consideration to the amendment proposed by the noble Lord, Lord Thomas of Gresford. This is not one that he moved in Committee—he has moved it for the first time today. The House knows that he has become an expert in this field of litigation over the months that he has spoken to me about it. He may well be right that it is no good the Government taking a position that looks like it may take some time to develop. It is something that needs to be done and thought about pretty promptly. Therefore, as far as we can, we support the amendment.
Lord McNally
My Lords, I think it was the noble Lord, Lord Martin, who talked about the proper role of the House of Lords. Although the hour is late, my noble friend Lord Thomas has demonstrated one of the benefits of this House in bringing to the Government’s attention an area where there already is or could be a malpractice that will have to be dealt with. As he explained, this is a practice where an insurer approaches a claimant directly, usually immediately after a road traffic accident, with a view to settling the claim, where an insurer’s own policyholder is at fault in a car accident. As I understand it, claimant representatives refer to this practice as third party capture, whereas defendant representatives call it third party assistance. As I indicated in Committee, I shall continue to refer to this practice as third party contact.
Amendment 142D would make it an offence for an insurer to make such an unsolicited approach to a potential claimant in a personal injury case. The amendment also specifies those requirements which must be met before an insurer may make an offer to settle such a claim. This includes a requirement to obtain adequate medical evidence of injury and to advise the claimant of their right to obtain full legal advice before accepting the offer and making it clear to the claimant that the offer to settle is full and final.
It is unclear what my noble friend means when he says that this practice should be an offence. If he refers to this as being a criminal offence, I do not believe that a criminal sanction is appropriate or proportionate. You would have to prove beyond reasonable doubt that something amounted to an unsolicited approach. As I explained in Committee, the Financial Services Authority regulates the insurance industry and requires insurers to treat their customers fairly at all times and that this covers third party claimants.
Third-party contact does not in itself cause detriment to the consumer and may be to their advantage, as a claim can often be resolved quickly. In addition, this practice can allow insurers to reduce the legal costs associated with handling a claim and this in turn reduces costs for all policyholders. However, I am aware of the concerns around the potential risk of conflict of interest and the need for the claimant to have independent legal advice before any settlement is agreed. This matter was looked at by the FSA in its review of third-party contact during 2009-10 and it did not find conclusive evidence that unrepresented third parties could have achieved higher compensation had they obtained independent legal representation.
Following the FSA’s review, the Association of British Insurers published a code of practice in June 2010. The code contains specific guidance for insurers on contacting claimants. This limits unsolicited contact. For example, and I quote:
“Insurers will not make unsolicited visits to an unrepresented claimant at their current address, including hospitals”.
The code also requires that claimants are informed of their right to seek independent legal advice and other options available for them to resolve their claim.
Most of the issues which this amendment seeks to address in respect of the handling of third-party contact claims are already covered by existing regulation. The FSA rules require that insurers fully inform third party claimants of their legal rights, including to independent legal advice and alternatives to settling directly with the insurer. The Government do not believe it is right or appropriate to introduce further sanctions or regulation in this area, especially when a scheme already exists to monitor insurers’ activities. That said, I can reassure my noble friend that if a serious concern arises in the future in this area—and we will keep it under review—we will not hesitate to take this up with the Treasury and with the FSA.
I am therefore grateful to my noble friend for raising this issue with us, but for the reasons that I have mentioned I hope that he will agree to withdraw the amendment.
Lord Thomas of Gresford
My Lords, I am grateful to my noble friend. I am glad that some publicity has been give to this practice which I believe to be fairly widespread and causing a great deal of concern. As long as the Government keep their eye on this area, I shall be satisfied. I beg leave to withdraw the amendment.
Lord McNally
My Lords, I think that there is broad agreement across the House about the need to ban referral fees in personal injury cases, as we propose in Clauses 54 to 58. However, there is some disagreement about how it should be done, as this debate has shown.
It may be helpful if, in reply, I deal separately with those amendments with which we have some sympathy and those with which we do not. The Government agree with the intention behind Amendments 146A and 148A in the name of my noble friend Lord Hunt of Wirral. I give the House a commitment that we will bring back amendments at Third Reading to address the issues raised by those amendments. However, the Government cannot agree with Amendments 142E and 146. We believe that it is not in the public interest for payments in receipt of referral fees to be allowed in any personal injury cases, regardless of whether the recipient is a solicitor, a charity, a trade union or some other party. If the provision applies to solicitors who pay referral fees, it must also apply to the not-for-profit organisations which deal with them.
The Government intend to ban the payment and receipt of referral fees in all personal injury cases, and we are not persuaded that there should be special treatment for not-for-profit organisations, or for solicitors dealing with trade unions, to exempt them from the ban. However, trade unions will of course still be able to refer cases, without payment, to those best able to pursue them. Nothing in the clauses prevents lawyers providing services free of charge to registered charities.
A number of points were made in the debate. The noble Baroness, Lady Deech, made a powerful case in favour of what we are trying to do on referral fees. She referred to a case, which we all remember, which shows how the best of intentions can be misused when trying to deal with a problem. I say to the noble Lord, Lord Martin, that I certainly advocate the value of trade union membership, but that there is a danger of trade unions, charities and others having a sweetheart relationship with a firm of solicitors based on referral fees.
My noble friend Lord Hunt of Wirral asked me how much of the excess litigation costs can be taken out of the system. My right honourable friend the Prime Minister has announced that we will be extending the road traffic accident scheme to cover claims up to £25,000, and to cover employer and public liability cases. As part of that process, the Government intend to make an objective assessment of the existing costs involved in RTA schemes, and we expect fixed recoverable costs of £1,200 to be reduced significantly as a result. The new fees will come in when the Jackson reforms in Part 2 of the Bill and the ban on referral fees are implemented in April 2013. Although I cannot give a precise figure, the aim, as in other parts of the Bill, is to squeeze out of the system excessive costs, which are undoubtedly there.
I hope that, in the light of those responses, the noble Lord will withdraw the amendment.
Lord Beecham
My Lords, I will be withdrawing my amendment. I must disabuse the noble Baroness, Lady Deech, with whom I shared a law course at Oxford, on the question of the political aspect of union funding. Union funds for political purposes, of course, derive from their political funds and not from general income. The noble Lord, who has a long memory of these things, is acknowledging that, for which I am grateful. It is not just a question, however, of fees, as I have indicated. Other services offered to members, whether they be of trade unions or other organisations, would be caught, apparently, by the Bill as it currently stands. I cannot believe that that is really part of the Government’s intention. Not all unions have an arrangement of this kind, where a referral fee is paid, but unions do have extensive and expensive legal departments which have to be supported. It does not seem unreasonable that those organisations—and, indeed, other organisations; charitable organisations—should have a scheme. I agree that the noble Baroness has identified a particularly abusive situation which, of course, has been rightly dealt with, but that is very much the exception. Having said that, we will, up to a point, be returning to this matter on the next day of Report in a slightly different context. I beg leave, therefore, to withdraw the amendment.