(10 years, 11 months ago)
Lords ChamberRead Hansard Text Read Debate Ministerial Extracts
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, every Member of this House can recognise that working people should have proper protection from personal injury or disease arising during their work. When this principle is breached through negligence or breach of statutory duty, it is right that a person should be compensated by their employer or employer’s insurer.
We find ourselves presented with a situation that undermines these seemingly simple assumptions. Many sufferers of diffuse mesothelioma, caused by exposure to asbestos, are unable to find an employer or insurer against whom to make a claim. These people were negligently exposed to asbestos and subsequently developed a fatal disease, yet they must go uncompensated for their immeasurable loss because sufficient records do not exist to trace the responsible insurer or employer. The need to address this is apparent and urgent.
Government, media and public interest in asbestos-related diseases is long-standing. In 1965, the Sunday Times brought this issue to the spotlight and reported on research showing the fatality of exposure to asbestos fibres. Since then, this spotlight has rightly not gone away. Asbestos-related diseases have featured in the press and on television repeatedly, with dedicated programmes produced in 1967, 1971, 1975 and 1982. In 1979, the then Government legislated to make payments to those with certain dust-related diseases who had been exposed to asbestos at work but who could not find an employer or insurer to sue, although lump-sum payments under that were lower than civil damages. In 1999, the insurance industry created a code of practice for better tracing of employers’ liability insurance policies. Although success rates for inquiries on difficult-to-trace policies increased, more needed to be done. In 2008, the previous Government introduced a scheme to make lump-sum payments to all people with diffuse mesothelioma regardless of whether they were exposed to asbestos at work. I pay tribute to the work of the noble Lord, Lord McKenzie of Luton. In 2010, as Parliamentary Under-Secretary for Work and Pensions, the noble Lord issued the consultation that has led us to where we are now. Without his efforts, this matter would not have had the profile that it so rightly deserves, and due credit must be given for his continued efforts to obtain support for sufferers.
The focus of this Bill is diffuse mesothelioma, a fatal disease caused almost exclusively by exposure to asbestos. Diffuse mesothelioma has a long latency period, often of 40 to 50 years. Once diagnosed, the average life expectancy of a sufferer is short: between nine and 13 months. The long delay between exposure and developing the disease, combined with inconsistent record-keeping in the insurance industry, means that individuals often struggle to trace an employer or insurer against whom to make a claim for civil damages. The insurance industry and this Government recognise that this is unjust and that provision must be made for these people.
Despite the recognition of this market failure, the insurance industry alone has not been able to put this right. Disputes between insurers and the different interests of companies that still offer employers’ liability cover, which I shall refer to as “active” insurers, and those that no longer do so—I shall refer to them as “run-off” insurers—have prevented the industry agreeing on a voluntary levy. Industry representatives have therefore asked for legislation to impose a levy to support a payment scheme.
The Mesothelioma Bill will establish a payment scheme to make a lump-sum payment to eligible sufferers of mesothelioma and their eligible dependants. The scheme will be funded through a levy on insurers active in the employers’ liability market, meaning that the active employers’ liability insurance market as a whole will bear the cost. Timing is key; the number of diffuse mesothelioma cases is expected to peak around 2015. My aim is to launch the scheme as soon as possible—ideally in April 2014.
We expect there to be roughly 28,000 deaths from mesothelioma between July 2012 and March 2024. If the Bill is passed during 2013, first payments could be made around July 2014 to those diagnosed with mesothelioma on or after 25 July 2012. Around 300 people a year could receive an average payment of approximately £100,000.
The Bill is first and foremost a means to create a scheme to provide for those people who would otherwise be unable to bring a civil claim against their employer. In other words, it is a scheme of last resort. The driving principle is that, where adequate records are not available, those who have developed this disease as a result of their employer’s negligence, or breach of statutory duty, should still be able to access payment for their injury, and the process of applying for this should be as straightforward as possible.
Secondly, the Bill is part of the ongoing commitment of this Government, previous Governments and the insurance industry to correct a market failure. The Bill includes measures which will improve the tracing of employers’ liability insurance policies through the creation of a technical committee that makes binding decisions on insurance cover.
It is at this point worth reflecting on the work that the Ministry of Justice, too, is doing to support sufferers of mesothelioma. In December, a Written Ministerial Statement was issued confirming the Government's intention to consult on a range of measures, including a specific pre-action protocol for mesothelioma cases, a portal and fixed legal costs for such cases. None of these elements is beholden on our Bill and, similarly, our Bill is not beholden on them, but together they demonstrate the desire across government to help people with this terrible illness.
I turn to the question of payments. The scheme will make payments on a tariff basis to eligible people with mesothelioma, or to an eligible dependant if that person has died, where they cannot trace either an employer who exposed them to asbestos or that employer’s insurer and where they have not received civil damages or some other compensation payment in respect of mesothelioma. The scheme is not intended to be an alternative to civil damages, nor is it a compensation scheme. The scheme will be set up by the Secretary of State, who will make arrangements for another body to be the scheme administrator.
The Bill allows for the payment amount to be determined in regulations that will set out a simple tariff, basing payments at roughly 70% of the amount of average civil damages. Payment amounts in the tariff will be linked to an individual’s age. Calculating the amount of civil damages that a person is to receive is complex. However, published research shows that awards in civil cases decrease with the age of the victim. Regarding the amount of the payment, I ask your Lordships’ support in understanding that the scheme strikes a careful balance and does so in a way that is fair and lawful. It ensures a substantial payment to people who have mesothelioma and cannot trace the liable employer or insurer, while ensuring that the contribution made by insurers is fair and not excessive, since not all of them were in business at the relevant time. It will ensure that the scheme can get on with helping sufferers and not get bogged down in legal challenges from insurers.
There are four main criteria for eligibility. The first is that an individual was diagnosed with diffuse mesothelioma on or after 25 July 2012. The second is that they were employed at the time of exposure to asbestos and that this was due to negligence or breach of statutory duty on the part of an employer. The third is that they have not brought a claim for civil damages against an employer or the employer’s insurer and they are unable to do so. The fourth is that they have not already received damages or other compensation payment in respect of their disease, nor are they eligible to. I should point out that individuals who have received a payment under existing state schemes will be eligible to apply, but any such benefits and lump sum payments will be recovered when a payment is made under the new scheme. Eligible dependants of sufferers of diffuse mesothelioma may apply to the scheme where the sufferer has died before making an application. Calculating awards of compensation for dependants in civil cases can be complex, but under the scheme it will be simple and quick. The scheme will pay eligible dependants exactly the same amount as the sufferer would have received. We will set out details of the application process in the scheme rules. The scheme will give a right to an applicant to request a review of decisions taken and confer a right of appeal to the First-tier Tribunal against a decision taken on a review.
A sufferer must have been diagnosed on or after 25 July 2012 to be eligible under the scheme. A cut-off date will always be unfortunate for those whom it excludes. However, we must be pragmatic. The costs to the active insurers funding the scheme would be prohibitive if we were to make the scheme open-ended. It was on 25 July 2012 that the Government announced that they would set up a payment scheme and so created a reasonable expectation that eligible people diagnosed with mesothelioma on or after that date would receive a payment.
The Bill does not—and cannot—look to respond to all asbestos-related disease. The issue of individuals who have developed other asbestos-related diseases through negligence or breach of statutory duty and are unable to bring a civil claim for damages of course needs to be addressed. However, this Bill is not the appropriate instrument to do that. Mesothelioma is distinctive, and its link to asbestos exposure is undeniable. This allows for the fast processing of cases because there is no doubt that asbestos exposure caused the disease. The Bill supports the administration of a simple and streamlined scheme. It could not cover other diseases, where there could ever be a question as to the cause, because the lengthy investigations required in order to prove these cases would choke the scheme, preventing the comparatively simpler mesothelioma cases being administered with the necessary speed. Again, I ask noble Lords to look at this emotive issue from a pragmatic perspective and focus not on what is impossible but on what can be achieved. This legislation is a huge step forward and should be recognised as such.
The establishment of a technical committee to handle disputes relating to cover is key. The technical committee will be distinct from the scheme and will deal solely with disputes related to insurance cover. If a question arises between an insurer and an individual about whether an employer maintained employers’ liability insurance with the insurer at a particular time, the technical committee will be able to make a binding decision on this issue. In practical terms, this means that if a person with diffuse mesothelioma has some evidence that an insurer was providing cover at the time they were negligently exposed but this evidence is contested by the insurer, they can ask the technical committee to make a decision. This will also benefit other mesothelioma sufferers exposed to asbestos by the same employer at the same time, who may wish to bring a claim against that employer in the future. The technical committee will ensure consistency in decision-making and allow more people to take a case to court, having had the issue of cover already decided. Where the technical committee decides that an insurer is not on cover in a particular case, and no other employer or insurer has been traced, the person with diffuse mesothelioma may then be able to apply for a payment under the scheme.
The Bill envisages a review process for any decision taken by the technical committee. Following a review, a person may refer a decision to arbitration, after which very limited recourse to the courts is possible under the arbitration legislation. Again, timing is key; undue delays in the decision-making process would prevent an eligible applicant taking further action while they are still alive, be it seeking damages in the civil courts or applying for a scheme payment. It is expected that the decisions and reviews will be undertaken by the technical committee with the utmost speed.
I now turn to the levy on insurers. The levy will be imposed on active employers’ liability insurers at large, not on the individual insurers who took the premiums and who were on cover in the cases that will come to the scheme. The levy will be fair and not excessive, and set at a rate that does not require the insurers to pass on increased costs to business. The scheme could be jeopardised if the levy were set disproportionately high, which might invite legal challenges from the insurance industry. This would delay the introduction of the scheme, preventing a payment mechanism being in place at the time of the peak of mesothelioma deaths around 2015. Once more, we must be pragmatic and recognise what can be achieved.
The cost of the scheme in the first year will be considerably higher than in subsequent years because of the number of cases dating back to 25 July 2012. To avoid the first period’s levy being unaffordable and risking costs being passed on to current employers through higher premiums, the costs will be spread over four years.
Existing government provision is available for those who are unable to claim damages or receive payments from elsewhere. Where a person has received government benefits or lump-sum payments for diffuse mesothelioma and subsequently becomes eligible for a payment under the new scheme, the benefits recovery legislation will apply. This is because people should not be compensated twice for the same condition or compensated in excess of their loss. This means that an eligible applicant will receive a scheme payment after the deduction of relevant social security benefits and lump-sum payments, which the scheme administrator will repay to my department through its compensation recovery unit. Similarly, the Bill includes amendments to the existing lump-sum payments legislation to prevent an individual receiving such payments after they have received a payment under this new scheme.
I hope that noble Lords can agree today that the principles driving the Bill are right and just; that it is right that we legislate to provide for people with diffuse mesothelioma who are unable to claim civil damages from an employer for negligence or breach of statutory duty; that it is right that the insurance industry bear the cost; and that it is right that we establish the scheme with the greatest possible speed.
The measures contained within this Bill will mean that people with diffuse mesothelioma or their eligible dependants will be supported financially at this most stressful time. Quick access to payments will allow victims to afford care and treatment costs so that they can die at home with dignity.
The Bill marks great progress and strikes a careful balance in a fair and lawful way between the rights of victims and the active insurers funding the scheme. Several active insurers funding the scheme will not have even existed at the time when the exposure to asbestos occurred. Several of these insurers will have also maintained good records for the periods when they were providing insurance services. The Bill demonstrates the commitment of the insurance industry to correcting a terribly damaging market failure, and I thank the Association of British Insurers for this commitment. I am encouraged by the support of the industry, and look to the Financial Conduct Authority to support this work further through vigorously pursuing any insurer that fails to comply with requirements relating to EL record tracing.
The Bill is timely and necessary. It is something that I believe we should all welcome, and I commend the Bill to the House. I beg to move.
Lord McKenzie of Luton
My Lords, I thank the Minister for his explanation of the Bill, for facilitating a briefing with officials and the follow-up notes, and indeed for his kind words. The core of the Bill, a lump-sum payment scheme funded by insurers for those diagnosed with diffuse mesothelioma who cannot otherwise access redress from their employer or an employer liability insurance policy, is one that we strongly support. The Bill has its shortcomings and we will outline our view on those in a moment, but they will come as no surprise to the Minister. Without this sounding too much like a love-in, we should acknowledge the Minister’s personal commitment to bringing forward this legislation, which I can well understand has involved difficult discussions with the insurance industry, which in times past has resisted such arrangements.
We must also take this opportunity to pay tribute to those who have campaigned tirelessly for those whose lives have been blighted and shortened by exposure to asbestos and other occupational poisoning, not least the trade unions and the Asbestos Victims Support Groups Forum. Doubtless the campaigns will go on, but their efforts have not been in vain.
Mesothelioma is a particularly pernicious disease of malignant cancerous cells in the mesothelium, creating great suffering. It is caused by exposure to asbestos, as we have heard, and is invariably fatal. Life expectancy post-diagnosis is between nine and 13 months. As we have heard, mesothelioma is a long-latency disease that might not be diagnosed until 30 or 40 years after exposure to asbestos.
As the Minister has explained, the passage of time between exposure and diagnosis might mean that the negligent employer cannot be located or might have gone out of business and, as important, that the employer’s liability insurance policy that should have covered the employee cannot be identified. Such individuals are currently thrown back on statutory schemes and benefits for support.
It is, then, entirely reasonable that the insurance industry, which has had the benefit of the premiums over the years, collectively funds by way of a levy a scheme that supports those who cannot make a civil claim. We have not seen the detail of the scheme and look forward to draft rules being available in Committee, together with some detailed indicative figures of payment values and the construction of the tariff, and indeed details of the technical committee.
However, on the basis of explanations given so far, we have some concerns and disappointment with the Bill. The suggested levels of compensation at around 70% of average damages awarded by the civil courts are too low and unfair; we reject the “careful balance” proposition. Coverage is inadequate; not all asbestos-related or other long-tail diseases are covered. The cut-off date for the scheme at July 2012 is too restrictive. And the prospect of the insurance industry running the scheme gives rise to possible conflicts of interest: on the face of it, insurers have been able to negotiate a proposal that excludes half of asbestos victims, liability for claims before July 2012 and a 30% discount on compensation levels. This must be challenged.
We should also like to see the insurance industry, through the scheme or otherwise, continuing with an earlier commitment to fund ongoing medical research into cancer. The ABI reminds us that in recent years the insurance sector has contributed some £3 million to the British Lung Foundation. Was the prospect of ongoing funding part of the negotiation surrounding the arrangements in the Bill? We make common cause with those who believe that the industry should commit to a further round of funding research.
The Government seek to justify setting payment levels at some 70% of average damage levels awarded by the civil courts. They argue that the level of the award should be below the 100% level as a means of encouraging claimants to seek to trace an employer or employer’s liability policy that could lead to higher compensation. We challenge this analysis, and certainly wish to examine in Committee the effect of using a tariff based on average civil compensation. The process for a claimant to establish exposure to asbestos and a relevant employment nexus and to seek to trace an EL insurance policy would be necessary for entry into the scheme, just as it would be for making a civil claim. Indeed, would not both have to go through the same portal in future?
That aside, though, it is surely indefensible to pay compensation at 30% less just because someone cannot identify an employer’s liability policy—a policy that existed but now, through no fault of the claimant, is lost or destroyed. As the briefing from the Asbestos Victims Support Groups Forum points out, reduced scheme payments are an invitation to individual insurers to see the scheme as a cheaper option. Why pay full individual compensation when you can pay 70% of average compensation? We will seek to get some improvement to the proposed compensation levels in Committee.
We support the imperative of getting the scheme for those diagnosed with diffuse mesothelioma in place as quickly as possible, and recognise that, in a way, the fact that the awful consequences of a disease that is invariably fatal must have been caused by exposure to asbestos and negligence, when an employment is involved, creates a scenario that makes for some administrative simplicity.
However, there is no moral reason why the scheme should just be limited to mesothelioma. For the future, the tracing office, ELTO, will improve access to compensation, although it is by no means yet perfect, but it will be a long while before it covers long-tail diseases. In Committee we will examine why the scheme cannot be extended to all asbestos-related and long-tail diseases, and at least see why the Bill does not provide for an extension of the scheme in future in a way that does not hold up the current proposals for sufferers of mesothelioma. Can the Minister say—I think he did in his opening remarks—whether the Bill currently precludes such an extension, and if so why, particularly as the technical committee can be expanded to cover diseases over than diffuse mesothelioma?
The Government have set the start date of the scheme as 25 July 2012, for the reasons which the Minister outlined, which is more than two years after the close of the February 2010 consultation. During that period, another 600 people will have died from this awful disease without them or their dependants receiving proper compensation. We will argue for an earlier commencement date but not an open-ended commitment. There are, of course, other things going on in this area. The ABI makes clear that it sees the pre-action protocol, fixed-cost arrangements, the central mesothelioma claims gate or portal, and improvements to ELTO as an intrinsic part of the overall arrangements.
Clearly, only a part of this package is before us when considering the Bill, so it is difficult to evaluate the overall effect. However, concerns have been expressed about whether the pre-action protocol might make matters more difficult for claimants by imposing a more onerous burden in upfront disclosure rather than streamlining the claims process. Can the Minister say how the emerging process will improve on the current civil litigation fast-track process operated by Senior Master Whitaker? Can he also say whether the Government see these other components as an intrinsic part of an overall package and how the terms of the support scheme might have been modified because of them?
Concerns in this area have been heightened generally by the Government’s tightened attitude to compensation for workplace injury, displayed by the denial of future claims of strict liability and breach of statutory duty for health and safety failures. The Bill allows for the scheme to be administered by the Secretary of State or for this to be undertaken by another entity. Our briefing sets out that the insurance industry itself is setting up a body to run the scheme, and this might have timing benefits because it can be developed while the legislation is proceeding through Parliament. This might be so, but we need to examine possible conflicts of interest as the scheme administrator is supposed to help claimants or their dependants to bring and conduct proceedings against insurers.
Moreover, the ABI expects the technical committee to be set up by ELTO, which has itself been set up by the industry. The technical committee will consider evidence of whether or not a particular insurer will provide cover. Its decisions in this regard are binding on insurers—active and in run-off—and claimants are subject to review and arbitration. Can the Minister say whether it is agreed that ELTO will set up the technical committee? We will want to test the balance of power in all this where the ABI expects that the insurance industry will administer the support scheme, has developed ELTO and expects to run the technical committee, and is developing and expecting to run the portal.
It is shocking to think that in this rich and sophisticated country of ours more than 2,000 people each year will continue to die from this terrible disease, which is a consequence of past negligent employer health and safety practices. It is also important to recognise that the problem has not gone away. We need to support the HSE and others in current awareness campaigns. Despite some misgivings, this Bill is a welcome step forward. It will get compensation to some 300 sufferers of mesothelioma or their dependants each year who previously could rely only upon support from the state. It will enable benefit recovery for the Government of some £50 million net. We will work with the Minister to seek to improve the scheme where we can but will do nothing to frustrate its speedy passage on to the statute book.
Lord German
My Lords, first, I congratulate my noble friend the Minister on bringing the Bill forward in this form today. If noble Lords read the response to the consultation from the insurance industry, they will see an almost opposite view to that expressed within the Bill. I congratulate my noble friend on turning the British insurance industry around to support this Bill. It builds on a voluntary code and the consultation. I also echo the tribute to the noble Lord, Lord McKenzie, who has been steadfast in bringing these matters forward. I see this as a continuation of his work.
There are issues where this Bill needs questioning and we need to develop our understanding further. However, the other important factor resulting from this Bill is that the process will be speeded up. Where a civil process now takes perhaps two years, we should see a much more speedy process in place for all claimants of around four to five months when it is put together. That is the ambition of this Bill and the opportunity that arises from the portal.
Unfortunately, we need this Bill for a longer period. It may have a finite lifespan but that may be 30 years or even more. The British Lung Foundation suggests 30 years but it may well be that this Bill needs to be in place longer. For that reason, it is important that Parliament maintains its connection with the scheme. There will undoubtedly be inevitable changes and tweaks over the coming decades as the scheme beds in and the initial detail on the implementation will require careful scrutiny to minimise the potential for future change and to maximise certainty as far as possible. Therefore, it is a little strange to see that Clause 1 makes no reference to Parliament when we know that there is much detail still to be determined. I hope that my noble friend Lady Thomas’s Delegated Legislation Committee will be able to report on this matter before we reach the later stages of the Bill.
There are some scoping issues which need discussion. First, there is the date of implementation. It is inevitable that some sufferers and their dependants will fall outside the timeframe for involvement in the scheme. We have already heard that from the noble Lord, Lord McKenzie, and my noble friend the Minister. I understand, of course, that the insurance industry had to be brought onboard with these proposals and it was essential to attain its commitment to the funding levy. However, with average claims coming in at £150,000 plus costs, it is a bitter blow to those who may fall just outside the dateline for the new scheme. I would be grateful if my noble friend the Minister could inform your Lordships’ House of the balance of issues which led to the choice of 25 July 2012 as the starting date for this new scheme. It is, of course, the date on which the Government announced their intentions in respect of the scheme but that in turn was more than two years after the department’s consultation had ended.
I listened very carefully to my noble friend’s explanation about other diseases and I very much appreciate that mesothelioma is a unique disease that has a long tail and is virtually always fatal but there are some similarities with other industrial diseases, not least pneumoconiosis. This scheme could therefore act as a model for others. Indeed, the Association of British Insurers said:
“If it proves successful then the Secretary of State can make provisions to extend it to look at other disease types”.
Does my noble friend the Minister support that view, and can he give an indication as to whether a new scheme would require primary legislation?
The second issue referred to is the 70% threshold. We need to understand how this figure has been arrived at. Why is it not 75% or 80%? I understand the need for a tariff-based system, but surely this would keep the incentive to go through the solvent employer/known insurance route even if it was higher. There is a curious statement from the Association of British Insurers on why this level was set:
“As the payments will be made based on a straightforward tariff, some people will receive more compensation under the scheme than they would have received in civil compensation, and the aim is to set the tariff at a level that means this will only happen in a small number of cases”.
This indicates that the overall level of the tariff in the proposed scheme, expressed as a percentage of civil claims, will always be set at a level where very few claimants will get more than a civil claim. Would it not have been better and fairer to raise the percentage value but to put a cap on the amount which would have kept it at or below a civil-system payment? I am told that the current average payment under the existing system is in the range of £150,000 plus costs. A 70% tariff will mean that the average payment under the proposed scheme will be £105,000 to £108,000. Surely that is far more of a differential than what is required simply to avoid claimants taking this new scheme course, rather than following the solvent-employer or known-insurer route?
There are some issues relating to legal matters. Although my noble friend the Minister said that they were not interdependent, they are closely related. Two of them involve information that noble Lords might need at this stage. One concerns up-front costs. Legal costs are not a part of the Bill, but the MoJ is about to make an announcement on its proposals. However, the successful outcome of a claim under the current system is virtually certain of having an award of costs with it. Implicit in the new scheme is support from a solicitor. The very helpful diagram from the ABI of how this will all work actually puts the instruction of a solicitor into the structure. Given that there is always a cost to instructing a solicitor, it would appear that this scheme structure is an encouragement to participation by no-win no-fee lawyers.
Secondly, will the level of evidence needed be the same as in civil proceedings? Cases do not always succeed and the Court of Appeal ruled in 2007 that workers making a civil claim for compensation for mesothelioma must first prove employer negligence. I would be grateful if my noble friend the Minister could tell me whether that judgment has been overturned subsequently by the courts. If not—and more generally—proving employer negligence where neither the employing company nor the insurer are traceable will certainly be a more difficult task.
The British Lung Foundation points out the appalling record of investment into research into this terrible disease prior to 2010. Four insurance companies then put money into a three-year scheme investing £3 million in total. Now, with that scheme near its end and the four insurers saying it is unfair that this research funding is spread so thinly across so few insurance companies, surely my noble friend would agree that it is time for a rethink. Naturally, the insurance industry will say that the Government must play a big part but the Bill provides a new impetus for insurers to work collectively in the broader public interest. A small annual contribution from each would secure consistent and long-term research into this dreadful disease and its consequences. Perhaps it is time to add a small top-up levy to secure this fundamentally humane objective.
This is a milestone Bill. It provides the architecture for an end to the current compensation process, which is rather like a lottery. It provides a response which is the sign of a compassionate and caring society. The architecture of the Bill is correct. The direction of travel is absolutely correct. I commend my noble friend the Minister for bringing it before us.
Baroness Taylor of Bolton
My Lords, I think—I certainly hope—that every speaker in the debate will welcome the introduction of the Bill. I acknowledge and pay tribute to those who have worked so hard to get us to this stage, including the Minister and, obviously, my noble friend on the Front Bench, who has campaigned for so long, but also those outside this House, the trade unions and campaign groups, who have been unhappy with compensation arrangements for many years. I regret the fact that industrial diseases and compensation for them are always recognised only slowly, usually very late and often tragically late for many of those who are involved. We should acknowledge that one of the drawbacks in what we are trying to do is the insurance industry being so much stronger than the other interested parties.
I will say a word on the previous Labour Government and what they did. I am proud of many things that the previous Labour Government did, and we should shout about them and apologise less. However, I am sorry that more progress could not be made on this issue. I am pleased that my noble friend Lord McKenzie was able to do so much of the groundwork for the Bill, and glad that the Minister acknowledged that in his opening remarks.
My interest in this subject stems in part from my former constituency of Dewsbury. A number of people worked in Leeds at Turner & Newall. I knew quite a few people with family or friends who had been affected by asbestos-related diseases; they had either suffered themselves or known people who had. I also know what a difference compensation could make to the peace of mind of those who were afflicted in that way.
It was also a coal-mining area. We therefore had quite a lot of contact with the schemes for compensation for pneumoconiosis. Something that strikes me from working with people over those years is how important it is that people who are entitled to compensation not only receive it, but receive it in full. I recall the sterling work that my good friend the late Lord Lofthouse undertook in this House to ensure that he could stop solicitors taking a huge cut out of the compensation claims of miners who were clearly entitled to it, and who still suffer because they lost a chunk of the money. I was interested that the noble Lord, Lord German, made this point: I am still concerned that when you type the words “asbestosis” or “mesothelioma”, or the name of any industrial disease, into a search engine, the first thing that comes up is a list of lawyers wanting to act on your behalf on a no-win no-fee basis. We must be careful that we make sure that people know how to access compensation when they are entitled to it, and do so without having to pay fees in that way. In the debate in the other place the other day, my honourable friend Kevan Jones, who had been a trade union legal officer, talked about how he had to fight for compensation and how that could be done.
Going slightly further back, in the 1970s I was involved with the campaign to try to get compensation for those affected by byssinosis which, as the noble Baroness opposite will know, is the cotton-dust disease. I mention this, although it perhaps seems a slight diversion, because it illustrates how government, industry, society and insurers have never really acted together as they should. Our record as a country on compensating people with industrial diseases is not good. Compensation for byssinosis started in the 1940s—only for men, only for those who had worked for 20 years and only for those who had worked in a very specific part of the cotton industry, in carding. Bit by bit, although every bit was a struggle, it was extended first to women, then to a 10-year limit, then to other branches of the cotton industry and eventually to everybody who worked in it. It was piecemeal because of all the barriers that came down from the industry, from insurance, from problems with record-keeping and from legal difficulties. Although Labour Governments made very significant headway in health and safety throughout that time, I do not think that any Government have fully acknowledged the need for a totally comprehensive approach to industrial diseases. There is still a shame—a record that we cannot be proud of because we should have been acting much more quickly on all these issues.
The Minister outlined some of the difficulties that he can see, and some of the difficulties in the piecemeal approach to this particular disease. That could give us a case for a no-fault compensation scheme, but while that could avoid many of the barriers and delays, it is a bit late for that in this context, and now is not the time to argue that.
I welcome the Bill and congratulate the Minister on getting to this stage. However, as my noble friend Lord McKenzie said, there are deficiencies and issues that we will want to address as the Bill progresses. Questions have already been raised as to why this particular date was chosen. I understand where the Minister is coming from but we will have to look at that again, because to have that kind of cut-off and affect so many people’s lives so significantly is a very severe decision.
The 70% compensation figure was also mentioned. I feel some attraction to what the noble Lord, Lord German, said about perhaps having a different approach, and if there is a problem there, having a cap on the figure rather than an automatically lower figure than people might get in civil courts.
On the question of why other similar diseases, such as asbestosis and so on, cannot be included, I understand that the Minister wants a simple and streamlined scheme, as I think he called it. However, having a simple and streamlined scheme and extending the process to other diseases are not mutually exclusive. We could have an incremental approach so that this comes into force as soon as possible but the door is left open for other diseases to join this scheme in the future. Other people will be worried, and I do not see why they should have to wait and suffer the diseases that they have at the moment, and perhaps in the future.
I also hope that the Minister can give some assurances about the other point that my noble friend made about awareness campaigns through health and safety, and an increased emphasis on medical research. The Minister said that a balance had to be struck, and I think we all accept that that is the case. However, in Committee we have to ask ourselves whether this is the best balance possible, or whether we could make some improvements.
As others have said, we are talking about a horrible, debilitating, deadly disease caused by the workplace environment. We are talking about people whom the Government, in their current parlance, would describe as strivers. These people worked hard and deserve the best we can give them. While we want the Bill to have a swift passage, I hope through both Houses, we have to try to improve it for their sakes and for all that they have suffered so far.
Baroness Masham of Ilton
My Lords, I will say just a few words in support of this Bill. Mesothelioma is not an easy disease to diagnose. The earliest signs of the disease are quite vague. The most common symptoms are breathlessness, chest pain, fatigue and weight loss. This occurs as a result of an effusion, when fluid accumulates in the pleural cavity, the space between the two layers of the pleural lining. The patient will often visit their GP at this stage. The cancer can spread to different parts of the body.
Mesothelioma is a cancer caused by exposure to specific types of asbestos, which are present in many homes and workplaces but no longer used for any purpose. On average, people do not develop symptoms for 30 to 40 years after exposure. Few people survive for more than two years after diagnosis. The majority of victims today are former industrial workers who were exposed before 1980. Around 2,400 people a year die from mesothelioma. Around 56,000 people are expected to die in the next 30 years unless a cure is found. No change in lifestyle will help them.
Until recently, very little was spent on research into mesothelioma in the UK. If there is to be progress and hope in treating mesothelioma, there will have to be an increase in research. I am told that the insurance industry leaders would like to see their industry continue to fund research, but it is felt that the long-term funding solution needs to see the burden shared more widely.
I hope that this Bill will pass through Parliament quickly and that the Government will accept my noble friend’s amendment when he moves it. Also, with such a devastating disease, and the rising costs of everything, I sincerely hope that the Government will not reduce compensation by 30%. In these changing circumstances, it should be increased.
Baroness Donaghy
My Lords, I congratulate the Minister on his commitment to the Bill and thank him for promoting it—I expect against considerable odds.
I understand the reasons for the severe limitations, and I believe it is important that the Bill becomes law as soon as possible. We will have the opportunity in Committee to examine some areas, which have already been raised by noble Lords, to see whether those limitations can be stretched. I am interested in trying to extend the eligibility date and the coverage, and genuinely do not understand why compensation would be less than 100%, rather than the 70% figure.
My reasons for being interested in this Bill are threefold. First, one of my sisters-in-law died of mesothelioma. She was a nurse and would push trolleys through the basement of Scunthorpe Hospital. In the 1950s and 1960s, hospital basements were probably among the most dangerous places to be. The mother of a colleague also died of mesothelioma. She did not work in a hospital but washed the overalls of someone who did. So this is about very personal tragedies.
Secondly, I became interested in this disease when I conducted my report into construction fatalities and found out how many construction workers were affected. My third reason is that, as a former trade unionist and president of the TUC, I witnessed the tireless and continuing efforts of the trade union movement over decades to claw, inch by inch, some concessions for affected workers, despite the strongest possible resistance from employers, the insurance industry and some in the legal profession. It was as recently as 1968, only 45 years ago, that the British Medical Journal suggested that mesothelioma was a primary cause of death rather than a secondary cancer. This is not an area, as my noble friend Lady Taylor said, in which we can take pride in the UK, and we know that the worst is yet to come.
I will concentrate on the administration of the proposed scheme and the potential impact of Ministry of Justice streamlining of the overall claims procedure, as it affects mesothelioma suffers. If the administration of the scheme is to be contracted out, I ask the Minister what safeguards will be written into the tender to ensure absolute independence and integrity. This would apply in particular if the insurance industry were to be the scheme administrator. The conflict of interest would be obvious, even if we were looking at an industry with a benign record. However, we are looking at one more commonly characterised by delaying tactics, spurious arguments and obfuscation. The Bill allows for the scheme administrator to,
“help a person to bring relevant proceedings (for example by conducting proceedings or by giving advice or financial help”.
Surely it would be unacceptable to allow this particular fox into the chicken run.
A comment in the departmental briefing indicated that the insurance industry,
“is currently to set up a body, at its own financial risk, that could deliver the functions of the scheme”.
If the industry satisfies the DWP’s requirements,
“we would be able to start making payments more quickly than if DWP work to establish the scheme following Royal Assent”.
That is beginning to sound like a done deal to me. I am very concerned about the implication that any other scheme administrator might be slower at paying out when we know that time is of the essence for these sufferers. Why not put it out to tender without delay? If it is a done deal, what guarantee will there be that awards will not be cash-limited? I appreciate that the department will remain responsible for overall performance, financial accountability and oversight of the scheme, but I wonder what it will mean in practice if the department does not have the resources to carry out that responsibility.
I understand that the scheme will be funded by a levy on remaining insurance companies. We do not know the total sum of money available. How can we be sure that the cost will not be met by the insurance companies making considerable savings elsewhere? I appreciate that this area is not under the direct purview of the Minister, but will he give an assurance that nothing in the MoJ’s “streamlined” procedures will be allowed to worsen access to compensation or increase the administrative burden on claimants and their families? Will he ensure that the insurance industry will not receive its payback in this area?
We should remind ourselves that, as the Minister said, it is only 14 years since the retention of information by insurance companies was introduced. Although tracing has improved, it is still unimpressive. Insurance companies should not be allowed to profit from their own incompetence. Neither should they be allowed to slide out from under the extremely efficient and effective procedures in the Royal Courts of Justice, presided over by Senior Master Whitaker, as my noble friend Lord McKenzie mentioned. Insurance companies collected the premiums that were meant to cover,
“all bodily injury and disease”.
Their record in honouring this cover is a disgrace. They consistently resisted efforts to centralise information to improve the success rate for tracing, using business confidentiality as their reason.
As I said, we do not yet know what the total cost of the new scheme will be. The impact assessment indicates the possibility that the industry might pass any extra costs on to customers, and that premiums might increase by 2.24%, although the impact assessment stated that this was unlikely. One way of preventing this would be to cash-limit the awards. I am not in favour of this and I remain concerned about a scheme that is financed and administered by the insurance industry.
On a separate matter, the impact assessment refers to an independent NIESR feasibility study, and the fact that the full report and survey findings will be published in the summer of 2013. Will there be an opportunity to benefit from the report’s findings before the Bill completes its stages in the House? I mentioned the impact assessment on a couple of occasions and make the point that it is a very substantial piece of work. Of course it contains assumptions and uncertainties, but I congratulate the department on its thoroughness.
Finally, despite my concerns and questions, I feel sure that the whole House will agree that this is a very important piece of legislation, and will be a fitting tribute to the Minister when it becomes law, as I sincerely hope it will. I look forward to the rest of the debate and to Committee.
The Earl of Courtown
My Lords, I admit that this is not the sort of area that I would normally speak about in your Lordships’ House, but there are a number of reasons why I decided to speak tonight. I have had the experience in the construction industry of dealing with demolition work that involved the safe removal and disposal of asbestos insulating board and corrugated sheeting. Another reason that hit me harder was the death of the former MP, John MacDougall, whom I knew well and counted as a friend. Only after he had died did I hear that he was certain that he had contracted cancer in his past career in the shipyards of Rosyth. At this point I pay tribute to his daughter, who after his death set up a charity in support of mesothelioma sufferers.
The Bill, as ably described by the Minister, is intended to help sufferers who are unable to trace any insurance cover that might exist—or, in certain cases, their past employer—after being exposed to asbestos. As I understand it, the disease may take many years to develop and be diagnosed. As other noble Lords said, diagnosis does not occur until the latter stages of the disease.
In describing the Bill, the Minister outlined the two key measures: first, to establish a payment scheme to make payments to those with mesothelioma; and, secondly, to create a technical committee that will make binding decisions where there is a matter of dispute over whether an insurer was providing employer liability cover at the time of the negligent exposure to asbestos. As I understand the Minister, the technical committee will have the ability to speed up many proceedings that can get bogged down in the courts, such as decisions on an employer’s liability cover and on disputes over the existence of such cover. I was glad to see that the committee’s decision may also be used in future court cases. As such, the existence of the committee will lead to greater parity around standards of proof in relation to employers’ liability. This should result in more people being able to bring cases to court.
Having looked further into past compensation claims concerning mesothelioma, I am informed that case law refers to a considerable number of cases concerning this disease. As I understand it, the main problems associated with this have been the difficulty of proving negligence by the employer, the difficulty of proving that the mesothelioma was contracted as a result of the negligence of the employer, and the length of time it can take such cases to be settled. I was also glad to note that the Bill states that claims will be also considered from eligible dependants. It is so important when people are suffering from this fast-acting disease that their dependants can also claim some form of compensation.
In addition, I have noticed that my noble friend’s department will bring forward draft scheme rules in Committee. Will he tell the House whether these rules will be included in the Bill? I also understand that they will apply to the compensation tariff. Will this be included in the Bill or form part of secondary legislation? Will the Minister also tell the House how any changes to the tariff and the scheme rules will be managed in future?
Many noble Lords have expressed criticisms and concerns about the types of cancer that will not be covered by the scheme. However, due to the unique nature of diffuse mesothelioma and the often short period of life expectancy after diagnosis, it is very important that we have a simple and fast way of helping sufferers and their families.
I have also noted concerns about the insurance companies’ actions in this situation. We would not be where we are unless we were actually able to speak to the insurance companies in the first place. We are also looking at concerns about how the insurance companies will set up the company to administer the scheme themselves. I understand the concerns, but the Government have the final say, should these matters not work out. They can actually reclaim the scheme to work in-house or put it out to other people to run. I am looking forward immensely to many other speeches that will be made before the end of this debate and especially to the Minister’s response.
Lord Giddens
My Lords, I should like to begin by expressing my heartfelt sympathy to anyone who has, as I have, lost a loved one to this horrendous disease. It is essentially a death sentence for anyone who contracts it. I would like to correct my noble friend Lady Taylor, who is not in her place. It is not always contracted in the workplace. You can contract the disease in other contexts too, and that is true of the person in my family. It is important to say that. It is relevant in this debate not just to concentrate on this country but to look around the world at the eccentric, problematic and tortured history of this disease and the response to it of the legal system and the building and insurance industries. There is a lot to learn here that is relevant to our debate.
Asbestos was originally called a “magic dust” and it was used extensively with that in mind in all sorts of installations around the world, where, of course, it still remains. There is still an enormous amount of asbestos in many buildings in very many countries across the world, especially developing countries, where it is still in a lethal state. There is a very interesting book on this and—my noble friend just referred to this—on the resistance of industry and government to accepting liability. It is by Geoffrey Tweedale and has the appropriate title Magic Mineral to Killer Dust. That is what it is today. As noble Lords have said, it can take 20 to 50 years to appear, and in that sense tracks to some degree the history of tobacco, the diseases from which also take a long time to come out and took a long time to identify. It just makes me wonder what other lethal diseases might be lurking out there in the world, a point I will come back to later on, because we now eat so many foods with additives that no one has ever experienced before and we ingest all sorts of substances from the air that have never existed before because they are new forms of synthetic materials. It just makes me wonder what lies in store elsewhere if diseases like this take such a long time to come out and therefore to identify.
It is difficult to establish the aetiology of diseases that come to light after many years. Tracking the history of mesothelioma is really intriguing in this respect because there was enormous resistance at first to identifying it as a single syndrome or disease, and secondly to identifying its causation. Again, this tracked the tobacco industry. The disease was known in some sense since just after the turn of the century, but it was not until the 1960s that a vital set of researches was published in South Africa that changed the consciousness of the medical profession, and then, quite a long while after that, the other authorities involved.
As often with these sorts of things, publicity was gained for mesothelioma by the fact that the film actor Steve McQueen died of it. He worked with racing cars and he apparently ingested asbestos from their brake linings. That brought it to the public consciousness in America, but it is important to stress that there was very strong resistance from the building industry, from the asbestos industry and particularly from the insurance industry in most countries. They just picked apart the research in much the same way in which the tobacco industry tried to pick apart the research on lung cancer. Hence, in all countries, it was a long time before either business or Governments accepted any liability at all. In most countries, there was an endless turmoil of lawsuits, which meant that most people who brought the cases got no benefit from them at all, and neither, often, did their dependants. I am sure noble Lords know that in America there was a complete bottleneck of such cases. That is in nobody’s interest. It is partly for that reason that I join other noble Lords in welcoming this legislation and congratulate the noble Lord on his part in it.
However, I worry a lot about the cut-off date. It is clear that the scheme must have some kind of limitation, but I just worry that it is a recipe for bitterness because it has a wholly arbitrary element to it. I have seen someone at close hand dying of this disease. If you also consider that the cut-off date is 25 July 2012, it is clear that it is purely a date on which the Government responded to their consultation. It is an administrative date; it bears no relation to suffering, and there is terrible suffering from this disease.
I join other noble Lords in suggesting that, at least at some point, a further exploration with the insurance industry is surely warranted. Mesothelioma is not like the whiplash industry: there is no element whatever of moral hazard in it. However, we know that there are large areas like that in the insurance industry with lots of problematic claims. You could argue that mesothelioma sufferers are paying for this grey area of the insurance industry with this arbitrary cut-off. I hope the Minister will give some attention to the impact that that might have on a family before simply going ahead with it in other parts of the discussion of this Bill. If the Minister has not read it, I recommend reading Geoffrey Tweedale’s book. It is a salutary tale of resistance to regulation and the devious practices that can be involved in it.
In conclusion, I have two questions for the Minister. First, will the Government at least give some attention to the moral and psychological impact of a cut-off date of this sort? Could they see whether there is any way in which it could be neutered for the sufferer? As I said, it bears no real relation to the awful depth of suffering, not just for the person but for the dependants of that person. Secondly, will the Minister consider working proactively with the insurance industry to scan similar problems in advance? This is where I come back to the point I made at the beginning: that there might be lots of potentially lethal diseases stored up in our environment, so it would seem sensible to try to develop a kind of proactive response to this. I do not know whether the Minister has any scheme in mind or whether the insurance industry, the Government and medical research could work together. We do not really want this sad and sorry tale repeated elsewhere, because next time it could have even more devastating consequences.
Lord Howarth of Newport
My Lords, I, too, thank and congratulate the Minister on bringing the Bill to the House. He is a good man who has fallen into bad company. He has had to present a number of pretty miserable policies to the House. However, we should recognise that he has worked long and hard to develop this scheme and today he brings us, by his standards, very good news indeed. We should also express measured appreciation of the insurance industry and the ABI. Goodness knows, the industry has been grudging and obstructive in the past, but it has established the Employers’ Liability Tracing Office and is willing to go along with this scheme. It is, however, a scheme that needs improvement.
Credit should certainly be given to the previous Government for the preliminary work that they did. The Minister was rightly generous to my noble friend Lord McKenzie, who published the consultation document in February 2010 on accessing compensation. Credit should also go to this Government for pursuing the process, and I think that means that credit should go to the permanent Civil Service. Credit should, of course, also go to the campaigners. It is right that we should do all we reasonably can to support those who are victims of the horrors of diffuse mesothelioma because of their employers’ negligence. This long-latency illness incubates for perhaps three to four decades but at the end inexorably causes great suffering and death. It is right that we should do what we can to support the dependants of people who contract the disease. It must be grim for all of them in the circumstances that follow diagnosis to struggle to achieve compensation. I am not convinced that that process will be much eased given that the new scheme is a scheme of last resort, but at least it will yield better financial outcomes for more people.
I also ask why the scheme is to be limited to mesothelioma alone. Other asbestos-related diseases of the lung and the pleura caused by the inhalation of asbestos fibres ought surely to receive equal consideration such as asbestosis, diffuse pleural thickening, pleural plaques, pleural effusion, rounded atelectasis and asbestos-related lung cancer. With all these illnesses, employers’ liability is equally disputed and equally hard to trace. Natural justice tells us that people who suffer from this range of asbestos-related illnesses should be treated alike. They all have in common that they suffer from their employers’ negligence in relation to asbestos. The Minister said in his opening speech that these problems also need to be addressed but he thought that if they were addressed straight away too many cases would spoil the scheme.
I echo the question asked by the noble Lord, Lord German, because I am not clear whether the Long Title allows the flexibility to introduce under this legislation further schemes to support people suffering from other asbestos-related diseases. If it does—I understand why the Minister is unable to proceed with introducing schemes in relation to other diseases now—will he indicate when he expects to do so? If the legislation does not permit it, and is not susceptible to amendment to enable it to do so, will he pursue his mission and introduce further legislation? As my noble friend Lady Taylor said, we need a comprehensive approach. In the mean time, we must address the project that the Minister has placed before us.
The Government have said that their overarching aim is to ensure that employees who are injured or made ill in consequence of their employment should not be denied fair compensation. The scheme, in providing compensation where the employer or the insurer cannot be identified or traced, goes a long way to achieving that objective but does not go far enough.
I would like to probe the Minister on a number of points. I would be grateful if he would clarify the position on legal costs which I do not understand very clearly. The Government’s aim in the Legal Aid, Sentencing and Punishment of Offenders Act 2012—the LASPO Act—was to remove personal injury from the scope of legal aid. On that basis, legal aid would generally not be available to a person diagnosed with mesothelioma who seeks advice from a solicitor, as he or she is bound to do.
Part 2 of the LASPO Act implements the Jackson reforms to no-win no-fee arrangements. However, the Government have deferred implementation of the measure in relation to mesothelioma claims pending the findings of a report which they have commissioned. When will we have the findings of that report? If Sections 44 and 46 of LASPO are applied in mesothelioma cases, as I understand it, lawyers acting under conditional fee agreements will be able to charge a success fee payable from the damages. Does the Minister think it is appropriate that that should be so in mesothelioma cases?
How does the new scheme that this legislation enacts take account of the new position on conditional fee agreements? The 2013 impact assessment assumes that a scheme payment would include an amount to cover legal costs in making an application. The 2012 impact assessment estimated that would be £7,000 for a successful case and £9,000 for an unsuccessful case. The overall legal costs for the scheme are put at £24 million to £27 million. As with civil actions, will they be paid out of the scheme award, which is already reduced to 70% of the level of civil damages, or will they be paid by the scheme over and above that 70% award? Will the payment take account of a personal injury solicitor’s fees incurred for work prior to the application being made to the scheme? Who decides these matters? As far as I can see from Clause 1, the Secretary of State does. There will be no legal aid for appeals to the First-tier Tribunal following the review scheme decision, unless they are exceptionally to secure the claimant’s rights under the ECHR or under European Union law. Are the Government content with that situation? Are the Government going to control the fees that the lawyers charge? The statement by the Minister for Employment, Mr Mark Hoban, on 13 May indicated that the Ministry of Justice is going to consult about a fixed-cost regime for mesothelioma claims. It would be helpful if we could be told what he has in mind. It would also be helpful if the Minister could give us, either today or in Committee, a clear statement in relation to what, if any, legal costs incurred under the new arrangements by claimants, either pursuing their own case against an employer or an insurer or claiming from the scheme, will be met under the arrangements that he has designed.
The interaction of the scheme with the benefits regime will warrant careful consideration. The Bill would permit the Secretary of State to recover benefits and other sums from scheme payments. The impact assessment tells us that the Government expect to recoup a net £69 million after the first year. However, in their briefing to us the ABI has stated:
“We have suggested that mesothelioma sufferers should be able to access financial support in addition to the benefits they are entitled to.”
What benefits will continue in payment after an award has been made? If an award under the scheme is to average £87,000, as we are advised it will, what benefits will be left for the claimant? Will income support and housing benefit be swept away? What will happen to industrial injuries disablement benefit, which is a major benefit, and very important in the budgets of such families? Is it correct that the payment of benefits would not be affected during the first year after an award? That is the case, I understand, where civil compensation is concerned. Would it still be the case with this scheme? Is pension credit to be ignored indefinitely? What will be the developing position under universal credit?
It would also be helpful if we could be told whether lump sums, payable for example under the Pneumoconiosis etc. (Workers’ Compensation) Act 1979, or the diffuse mesothelioma scheme under the Child Maintenance and Other Payments Act 2008, will be recovered where payments have already been made. Or will it only be the case that someone who receives an award under the scheme will no longer be eligible in the future for such payments?
Schedule 1 contemplates the recovery of benefits on a scale such that the whole award could be negated. However the schedule amends the recovery of payments legislation to permit, but not to require, the Secretary of State to claw back payments. What does the Minister intend? What scope is there for discretion? For example, will the DWP refrain from clawing back any payments that have been made in relation to pain and suffering? Is he able, and will he be prepared, to limit to a certain percentage the amount of benefits to be denied or recovered? Will he take a lenient view of the treatment of carers under the benefits regime in these circumstances? Past practice has been to an extent discretionary and compassionate. I am quite sure that the noble Lord will want to be as compassionate as he can in the appalling circumstances that these families face. I hope he will err on the side of generosity in relation to both benefits and legal aid.
I had hoped to have time—but I have gone on too long on these subjects—to say that I, too, can see no justification for the limit of 70%. I will just briefly say that it cannot be right to discriminate against claimants where employers and insurers have lost or destroyed the documentation. It is no fault of the claimant that the employers and insurers are in that difficulty. If all claimants are to go through a single portal to be followed by a rigorous search to trace the documentation, then surely all claimants ought to be treated equally. There will be a temptation for the industry not to trace the documentation if failure to do so means they will only have to pay 70% rather than the full amount of compensation they anticipate the court will award, so there is a real risk of the industry being conflicted here. Certainly employers’ liability insurers are not in a position to plead poverty. They did very well for decades. Up until 2008 they even kept the lump sums that were awarded by the tax payer, aggregating to over £20 million a year to offset the cost to them of compensation. We can be sure, notwithstanding what the Minister has said, as sure as eggs is eggs, just as soon as market conditions permit, the insurance industry will pass on the additional cost to them of this scheme by way of increased employers’ liability premiums.
So, pragmatism and practicality, as he said, are very important, but I am not convinced that the Minister has struck the best bargain that he could in the interests of mesothelioma sufferers and their dependants in agreeing to limit payments under the scheme to 70%.
Lord Avebury
My Lords, perhaps I may begin by mildly disagreeing with the noble Lord, Lord Howarth. The Minister is in excellent company because he has built on the work done by the noble Lord, Lord McKenzie, and I thank both of them for their excellent work, for the processes which have led up to this Bill and for the actual construction of the Bill by the Minister. We owe them an enormous debt of gratitude for what has been an extremely long and arduous task.
The Bill allows the victims of this horrible disease, contracted as the result of working in environments that contained asbestos many years ago, to recover compensation even if the former employer, through whose negligence the patient was exposed to the asbestos, has gone out of business and the employer’s liability insurance, which would have covered a claim against the employer, cannot be traced. This is partly because the insurers irresponsibly destroyed policies taken out by firms that went bust, even though it was known right from the start of employers’ liability insurance in 1972 that mesothelioma has a very long latency period. A pamphlet entitled Asbestos Kills by Nancy Tait, which I published in 1976, quoted evidence going back to the 1930s to show that asbestos causes a wide range of diseases and that some of them have a latency period of as long as 30 or 40 years after exposure. There is absolutely no excuse whatever for what is now being euphemistically termed “market failure”.
The Minister referred to work being undertaken by the Ministry of Justice on a range of measures, which include a pre-action protocol, and several noble Lords have referred to the work being done by Senior Master Whitaker. Will the Ministry of Justice examine that work carefully because the administration of these mesothelioma cases by Senior Master Whitaker, his practice direction and his use of the “show cause procedure”—whereby once a claimant has established that he was exposed to asbestos in breach of the employer’s duty, the evidential burden shifts to the defendant to produce evidence to demonstrate that it has a real prospect of success in its defence—have been major causes of accelerating the progress of these cases through the courts. Rather than having a pre-action protocol, I wonder whether it might not be best to allocate a special court for the conduct of these cases, where the experience and wisdom of Senior Master Whitaker could be developed and extended to other judges.
Of course, the scheme does not go as far as the Asbestos Victims Support Groups Forum UK would have liked. I shall refer to two of its main concerns. It was unfortunate that the forum was not invited to any of the consultations held over the two-year period during which the scheme was being negotiated, and I would be grateful if the Minister could explain why the forum was not allowed to have its say. As I am sure he knows, the forum would have preferred a scheme like the one that applies to the motor accident victims of uninsured drivers. Representatives of the forum say, as every noble Lord who has spoken so far has also remarked, that it was wrong to apply the scheme only from 25 July 2012. As has been mentioned, it was a purely arbitrary date, although I imagine that that would have meant squeezing more money out of the insurance industry. The Government have decided to go for the best settlement they could get the industry to agree to voluntarily, and inevitably that was bound to be less than perfect.
The same applies to the 30% reduction, which, again, all noble Lords have condemned, from the average compensation paid to claimants of the same age who can identify the relevant employers’ liability policy. It is not clear how the 30% figure was determined, although I understand that it was intended to be a disincentive to claimants opting for this scheme when they could have identified the insurer and made a claim accordingly. I agree with the noble Lord, Lord McKenzie, who said that this was manifestly absurd—those were not the exact words he used, but that was their meaning—because the claimant who is unable to pinpoint the relevant insurer has no option but to apply to the Employers’ Liability Tracing Office, whose remit is to conduct the search, so the matter is entirely in its hands. A litigant cannot enter the scheme without ELTO being involved, a point to which I shall come back later.
I turn to the Bill itself. I do not believe that the scheme should be left to the unfettered discretion of the Secretary of State, as my noble friend Lord German has already said, but rather that it should be subject to approval by Parliament, as should any amendment, replacement or abolition of it. I have a couple of questions for the Minister. In Clause 2, is the definition of “relevant employer” intended to make a claim possible against any pre-1972 employer on whose premises it can be shown that there was asbestos? Is negligence to be assumed in these cases, irrespective of the circumstances in which the victim now finds himself? How can you establish negligence when the employer has gone out of business and there is no direct evidence of what he was doing in the period before 1972?
In Clause 4(2), is the age referred to the age at the date of diagnosis or the age when the claim was submitted? They may not always be the same. In Clause 4(3)(a) in what circumstances is it envisaged that conditions would be applied to the payment? I was advised that what may be in mind is a situation where the payment falls to be made to the trustees of a dependant who is a child or mentally disabled, but if that is the case, should that not be spelt out in the Bill rather than allowing the Secretary of State to impose any conditions whatever at his absolute discretion?
It is just a small point, but Clauses 11 and 12 appear to be superfluous because they merely repeat parts of what is already in the schedules. On Clause 13, the Government have found it necessary to defend themselves against the potential criticism of the levy as an infringement of the property rights of the insurers under Article 1 Protocol 1 of the ECHR. One would have thought that securing the agreement of the Association of British Insurers to the scheme would protect it against litigation by an individual insurer. One of the factors which they say is relevant in considering whether transferring to the insurance industry the cost of remedying the market failure to keep adequate records is that the compensation is limited to a percentage of the amount that would have been payable if the records had existed. In order to remedy this market failure comprehensively and restore mesothelioma victims to the position they would have occupied if the insurance records had existed, the figure would, of course, have had to be 100%. Would my noble friend consider aiming for a lower reduction—as all noble Lords who have spoken so far have recommended—than the planned 30%, preferably with the industry agreeing to an increase in the levy to fund the difference? I am advised that the Financial Services Compensation Scheme pays 90% compensation in a situation where the negligent employer is no longer trading and where the insurance company for the defunct company is also no longer trading. The FSCS is authorised by the Financial Conduct Authority and, so far as the asbestos-related disease claims are concerned, FSCS coverage is not limited to mesothelioma. Is this not a model for the scheme that is to be launched under this Bill?
Mesothelioma is an excruciatingly painful disease, and the struggle to get fair compensation for those who are struck down by it has been excruciatingly slow, having taken 40 years so far. As my noble friend Lord German said, the Bill is a milestone, but it is not the end of the road either for the beneficiaries of this scheme or for those who suffer from other asbestos-related diseases.
Lord Jones
My Lords, I am glad to follow the committed remarks of the noble Lord, Lord Avebury. Nowhere in the Bill, nor in the Explanatory Notes, can the awful consequences of this disease be adequately described. One might read the entire Bill, one might read the helpful, detailed Explanatory Notes, one might have visited a Turner & Newall factory in the north-west, but the sheer human impact of the disease on the sufferer and the sufferer’s family is virtually impossible to place on the public record.
I welcome this measure and wish its speedy enactment as delineated by my noble friend Lord McKenzie. In this instance, we can see a positive trail. The Gordon Brown Government began consultation; the coalition Government carried matters forward to today’s second reading. I thank the Minister for his comprehensive introduction of the long overdue legislation because employers and insurers are not the easiest people to deal with in compensatory matters. The victims of this dreadful disease and their families surely deserve both justice and generosity. In my noble friend Lord McKenzie the victims have had a most reliable champion who remains their friend to this day. I acknowledge his detailed, industrious, conscientious and successful ministerial style. He had compassion and capability and got things under way. The noble Lord, Lord Freud—a parliamentary midwife perhaps—has brought matters very patiently to a head. His departmental Bill team must be very pleased with events today.
The Asbestos Victims Support Groups Forum UK—Messrs Whitston and Gordon—supplied a timely and cogent brief to Members of your Lordships’ House. It was helpful. My wish is that, before long, their proposals to embrace those excluded from the Bill might be acknowledged positively by the coalition. There are, for instance, quarrymen in Wales who may still seek claims and may yet get some help. We are not dealing with huge numbers and this dastardly disease is, literally, accompanied by death—there are reasons for moving quickly. In yesteryear, as this disease was stealthily advancing, there were still great British manufacturing industries. In steel, shipbuilding, railways, defence and defence-related industries, the construction industry and many more, asbestos was in use. The power stations and steel works always had their laggers. Asbestos products even entered our schools and hospitals.
In Grand Committee, we have annually debated orders relating to this asbestos-related cancer and similar orders. I recollect in Grand Committee describing the miserable happenings in a Hebden Bridge factory. The workforce had compressed deadly blue asbestos particles and proceeded to play snowballs on the factory floor, innocently and unknowingly. Such was the state of health and safety matters in the then industrialised British state of the late 1960s. This happening was described to me in the Commons by my fellow Front Bench colleague and occasional mentor, the late Harold Walker MP, who became Chairman of Ways and Means and then Lord Walker. He was from the shop floor. He was both a Minister and an opposition spokesperson.
The root of this helpful legislation lies in two Administrations in the 1970s: that of Prime Minister Harold Wilson and the one that followed it, that of Prime Minister James Callaghan. That is something to be proud of. I am glad to have served in their Administrations and to have helped. At that time, the Secretary of State for Employment, the late Michael Foot, successfully presented two Bills, which are the root of our discussions today: the Employment Bill and the Health and Safety at Work etc Bill. Despite much opposition and minuscule government parliamentary majorities, these Bills were, in the end, passed and enacted, with the help of a deeply committed TUC. The two Acts had a considerable impact on the economic, political and social history of Britain. That remains the case today, I am glad to say.
With this Bill, the Minister presents a long-awaited and much needed measure. Health and safety is, today, self-evidently a prime responsibility of every major company in the country. Those companies wish to have good health and safety measures and it is because of those endeavours by those Prime Ministers and Cabinet Ministers in those Administrations that I have talked about. There is no going back. Much has been gained but there is more work to be done. This measure is long overdue. Let us improve it. It might also be described as an historic measure.
Lord Monks
My Lords, I am pleased to add my voice to those congratulating the Government on moving forward. Some of us intend to ensure that this movement goes forward a bit more. Correctly, generous tributes have been paid to the Minister and to my noble friend Lord McKenzie. As my noble friend Lord Jones mentioned, others have been involved over many years in the battle to combat the damage that asbestos has done: people from the trade unions, the media, the medical and legal worlds, as referred to by the Minister, and many in this House and the other place.
I would have preferred the Bill to go further than it does and to address more purposefully some of the concerns raised by noble Lords tonight. I live in hope that we can make some improvements in Committee and that perhaps we will get some assurances about action in the future. My concerns are those of others—I will not labour them at this time of night. Limiting the Bill only to mesothelioma excludes 50% of those who suffer from asbestos-related diseases. I understand it would cost about 20% to 25% more if the levy included those and I do not think that this is an impossible ask—if not now then shortly in future.
The more immediate problem is the cut-off date of 25 July 2012. Comparing the treatment of someone who is diagnosed the day before with that of someone diagnosed a day later seems a sheep and goats distinction, which will be hard for some people. If the date is pushed back, then because of the short life expectancy of many sufferers, the problem will be a little easier. I hope that this will be a problem we can discuss.
My third major concern is about this 70% limit. It is unfair discrimination, as my noble friend Lord Howarth so ably put it, against people who cannot find their employer or insurer. Maybe it will be in the interests of some of the less scrupulous insurers to hide a bit and not volunteer all the information that they might. In those circumstances, to discriminate in the compensatory award against the individual concerned is not right. Fourthly, the insurance industry has helped a little in funding research into the treatment of these diseases and I hope that the levy on them will include provision for them to help research even further into the treatments available.
I worked in a brake lining factory more than 40 years ago and was one of the lucky ones. I worked there for six weeks. Many of my contemporaries are not around now. Male life expectancy in the ward where the factory was located was only 59 in 1993. That shows the pernicious effects that this substance has had. Congratulations on continuing the battle against it and let us go a little further than we are at the moment.
Lord Alton of Liverpool
My Lords, in his opening speech, the Minister benchmarked our knowledge of mesothelioma to 1965. In that year, the Sunday Times reported on how an epidemiological investigation by Newhouse and Thompson for the London School of Hygiene and Tropical Medicine had shed light on the origins and nature of mesothelioma, finally laying to rest the scepticism of some pathologists who had until that time disputed its existence or its long period of hibernation, although more than three decades earlier, in 1930, the Merewether report had warned of a latency for asbestosis of some 25 years. Therefore, no one can reasonably claim that the industry, the Government or employers did not understand the risks that workers faced, although, scandalously, insurers routinely destroyed records during that period. That was not market failure—the phrase used by the noble Lord, Lord Avebury.
The 1965 report to which the Minister referred found that the interval between exposure and development of the fatal tumour ranged between 16 and 55 years. One case highlighted the fate of a woman who had died after brushing the white asbestos dust off her husband’s dungarees and work clothes when he returned from work every night. In 1965, it was discovered that even very brief exposure to the dust could prove lethal.
That was 50 years ago and despite assurances that research would be undertaken, there is still no cure. As we have heard in today’s debate, most people die within two years of diagnosis. As the noble Lord, Lord Jones, reminded us, by 1970 Britain led the world in asbestos regulation, yet the British mesothelioma death rate is now the highest in the world and has yet to peak. As we have all said, it is a horrible disease, and all those who have seen it will confirm that it leads to great suffering.
Just over a year ago in March and again in April I divided your Lordships’ House on the Legal Aid, Sentencing and Punishment of Offenders Bill on whether those suffering from mesothelioma should lose up to a quarter of their compensation to pay lawyers’ fees, arguing that victims could not be regarded as part of the compensation culture. Eighteen of your Lordships also joined me in a letter to the Times, in which we insisted that the Government’s claims that the proposed legislation would,
“deter frivolous and fraudulent claims is, frankly, risible as far as dying asbestos victims are concerned”.
We contrasted the Government’s proposals with the failure to deal with increasing road traffic accident claims and alleged whiplash claims, with whiplash alone costing a staggering £2 billion annually.
Your Lordships will recall that the late Lord Newton of Braintree, in his last major contribution in the House, gave his support to my amendment. In response to a Question I put to him at that time, the Minister told the House:
“I am spending considerable time on mesothelioma currently and I hope to sort out the real problem, which is the large number of people suffering from the illness who are getting no compensation at all because they cannot trace who was insuring them”.—[Official Report, 23/4/12; col. 1549.]
This Mesothelioma Bill is a down payment on that promise. Like others, I pay tribute to the Minister, the noble Lord, Lord McKenzie, and the officials who have worked with them, who have invested considerable time and effort in trying to deal with mesothelioma victims who have been unable to trace their insurers. As we have heard, it is a down payment rather than a comprehensive solution; for instance, it does not include the many victims of other asbestos-related diseases. At the briefing meeting, the Minister confirmed to me that the title of the Bill prevents any other categories being included at later stages.
Like the noble Lord, Lord McKenzie, my reservations about the Bill are that average compensation payments will be reduced by approximately 30%—a point also made by the noble Lord, Lord Howarth—and that only mesothelioma sufferers diagnosed after 25 July 2012 will be eligible to apply for a payment. The Bill excludes all those diagnosed prior to 25 July 2012. At the very least, the three-year limitation period in law should apply. I hope that we will consider this in Committee.
This Bill addresses the needs of victims who cannot trace their insurers. As we have heard, that is about 300 a year, but what about all the other victims who know who their insurers are? Given that the consultation by the Ministry of Justice, which does not predicate this Bill but is certainly influenced by and connected to it, commences in July, I would be grateful if the Minister can tell us the timescale on which he envisages further changes being made, whether he can assure us that nothing will be done that will place additional burdens on the victims of this fatal disease and whether the Government see this Bill as a template that is likely to be extended.
The Mesothelioma Bill has been inextricably linked to the Ministry of Justice proposals, principally a mesothelioma pre-action protocol, which I understand that the Association of British Insurers wrote for the MoJ and which the ABI says will reduce the time of settling a claim to three months. Considerable scepticism has been expressed about the ABI claims, and I wonder whether the Government have tested those claims.
What really cut through the foot dragging, as the noble Lord, Lord McKenzie, said, was Senior Master Whitaker’s ground-breaking practice direction, and court procedure which gets liability resolved in most cases very quickly. Surely it would have been better to fund those specialist courts and have a more effective approach using those courts than allowing for delays inherent in the proposed protocol.
I was also surprised and disappointed that although the industry has been fully involved at a formal level with the Minister in drawing up these proposals, the victim support groups were not. Many will share their view that 100% compensation—that is the full age-based, average compensation—should be paid, although I know that the Minister will insist that 70%, which it has to be said is worth more than £300 million during the next decade, is better than no payment. I have some sympathy with that, but remember that for decades it was asbestos victims who bore the burden of untraced insurance and insurers have saved hundreds of millions of pounds avoiding liability for insurances that they wrote. For decades, the taxpayer has funded the government lump-sum payments for those who could not trace their insurer, and they have recovered those payments only when an insurer was found since 2008. Prior to that, insurers recovered all government lump-sum payments which offset the compensation they paid, worth hundreds of millions of pounds.
Let me turn to my final point. As well as adequate compensation, should we not be spending more of our time and money, as was alluded to by the noble Lord, Lord Monks, in finding a cure to prevent the ravages of this fatal disease? In 2011, the British Lung Foundation invested £1 million in research, the rest of the voluntary sector invested £400,000 and the Government invested nothing at all. These are scandalously small sums to spend on a disease which kills so many people. Let us contrast the £0.4 million from the not-for-profit sector spent on mesothelioma research with the £22 million for bowel cancer, the £41 million for breast cancer, the £11.5 million for lung cancer and the £32 million for leukaemia. Indeed, there are 17 other forms of cancer for which far more research resources are reserved than for mesothelioma. Mesothelioma is literally at the bottom of the list. In 2011, the voluntary sector invested £5 million in myeloma research and £5.6 million on malignant melanoma—the cancers immediately above and below mesothelioma in the table of mortality figures. Yet, even with such limited funds there have been some exciting developments, including the creation of the world’s first mesothelioma tissue bank for researchers, a transatlantic collaborative study of the genetic make-up of mesothelioma and work on overcoming resistance to drugs used to treat the disease. It shows what can be done with the right investment. This Bill offers an opportunity to create a sustainable fund for mesothelioma research to help ensure that future generations do not have to suffer in the same way that so many have in the past.
I have today given the Minister a letter, which will be circulated in your Lordships’ House tomorrow, which has been signed by 20 Members. They include the noble Lords, Lord Avebury, Lord Bach, Lord Crisp, Lord German, Lord Harris of Peckham, Lord Howarth, Lord McColl, Lord Monks, Lord Pannick, Lord Patel, Lord Tugendhat, Lord Turnberg, Lord Walton of Detchant and Lord Wigley, the right reverend Prelate the Bishop of Hereford, the noble and learned Baroness, Lady Butler-Sloss, and the noble Baronesses, Lady Greenfield, Lady Masham, and Lady Thomas of Winchester. Since the letter was written the noble Lord, Lord Kakkar, and the noble Baroness, Lady Morris of Bolton, have also indicated their support. The letter underlines the breadth of support throughout the House for an amendment which will be tabled for Committee stage on 5 June and which enjoys the support of the British Lung Foundation. It involves a small administrative or membership fee for those companies in the scheme and would raise £1.5 million annually. It would have no cost implications for the public purse, although I hope that the Government would consider providing match funding. It is, after all, receiving millions of pounds from the new scheme.
This Bill is a down payment in honouring the Government’s promise to respond to victims of mesothelioma. I welcome that, but I urge the Minister to see what more can be done within the scope of the Bill to bring justice and hope to those who are blighted by a disease that was none of their making. The truth is that we cannot eradicate all asbestos from our homes, schools, hospitals, factories and offices, but we can act justly towards those who have been afflicted by mesothelioma. The one certain way to prevent deaths from mesothelioma is to find a cure.
Baroness Whitaker
My Lords, when I worked in the Health and Safety Executive, mesothelioma was recognised as the most dread of all occupational diseases. It is as yet incurable. There is no safe threshold, so that the smallest exposure to crocidolite or blue asbestos could produce it. There are many cases on record of a few weeks’ work or less in which the tiny fibres lodged fatally in the lung cavity, producing a lingering, miserable death in breathlessness and pain. A little girl contracted it simply from being around her grandfather’s work clothes. It was diagnosed when she was in her 40s.
Almost worst of all, although the toxicity of asbestos generally was recognised at the very beginning of the 20th century, effective preventive regulations had to wait until the 1970s. The import and use of blue asbestos was not banned until 1985, after many hard fought legal battles. As it is a disease with a long latency period, those dangerous conditions from before the ban are still now producing cases of mesothelioma.
The disease is now recognised to be so clearly linked to occupational exposure that there have been arrangements for compensation for some time, but there are obvious difficulties when an employer or the employer’s insurer goes out of business. Any improvement on the present system, where invalids not infrequently die before their case is settled, is an important step forward.
The Government’s proposals are therefore welcome. While there are aspects of the Bill that could, and I hope will, be improved in the time-honoured way in which your Lordships’ House deals with legislation, I, too, congratulate the Minister on bringing the Bill before us.
As other noble Lords have said, we shall need to look at the rationale for making the cut-off date for diagnosis as of last year and for setting the compensation cap at 70% of the average. Both will result in arbitrary and inequitable decisions. Some victims of occupational exposure with an equally valid claim will not be covered, as my noble friend Lord Howarth of Newport explained. There is much to tease out in the proposed system itself. I look forward to the Minister’s further answers to these points. I hope that he will offer the possibility of adaptation in the interests of fairness.
Lord Wigley
My Lords, I welcome this Bill as a major step in the right direction but one that needs some aspects clarified and perhaps strengthened at later stages. I join the number of noble colleagues who have paid tribute to the Minister for his genuine commitment in these matters. I think that is recognised by everyone. I also want to put on record a tribute to the trade unions for the work that they have undertaken in this area. Very often, that is overlooked. The trade unions have played a major role over the years in trying to improve standards and safeguard people from such diseases.
Noble Lords may be aware from the debates last year of my interest in these issues. I had some involvement as an MP for a slate quarrying area in the 1979 Act, which is relevant to some mesothelioma sufferers. I represented an area that had a Turner & Newall/Ferodo factory that used asbestos.
As a number of noble Lords have stated, it can take decades for symptoms of this horrendous disease to surface, and it almost always develops as a result of exposure to asbestos. Those who contract mesothelioma are overly represented in construction and certain industrial sectors, although people can contract the disease, as has been stated by a number of noble Lords, by undertaking renovation work on buildings or even washing the clothes of those who work with asbestos. It has been stated that even teachers and pupils may have had an exposure from the decaying fabric of school buildings where asbestos was in the middle of walls and had become exposed.
The disease is notoriously difficult to diagnose, so it is often in its advanced stages by the time a diagnosis can be made. After diagnosis, however, the progress of the disease is usually rapid and the average life expectancy after this point is only two years, as has been said. Since the symptoms can take decades to develop, frequently employers have gone out of business by the time the sufferers are in a position to seek compensation and insurers’ records often have been destroyed, making it difficult to trace which insurer the employer was registered with.
Since the Employers’ Liability (Compulsory Insurance) Act 1969 came into effect, most employers have been required to obtain insurance to cover their liability for any bodily injury or disease acquired by their employees as a result of their employment. However, that did not solve all the problems by any means. The Pearson commission on civil liability and personal injury considered these matters, particularly that of no-fault liability. It is a shame, as the noble Baroness, Lady Taylor, suggested, that greater progress was not made during that time.
Eventually, the 1979 pneumoconiosis Act provided rough justice for a number of industrial lung diseases, including mesothelioma, that were not otherwise covered by the compensation provision. I would be interested to know how the Minister sees the compensation tariff levels provided by this new Bill compared with those provided under the 1979 Act. Can we perhaps have, for Committee, the draft scheme rules and an outline of draft orders indicating the levels of age-related compensation which the Government have in mind?
I am sure noble Lords on all sides of the House will be glad that progress is being made. However, the Mesothelioma Bill is narrower in its scope that some of us would ideally like to see. It offers recourse to those suffering from diffuse mesothelioma only—and eligible dependants, of course—and it is available only to those diagnosed on or after 25 July 2012. The Bill makes provision for a scheme that will make payments to these persons provided that they have brought no action against an employer or that employer’s liability insurer because they were unable to do so. Surely that date, as has already been suggested, should be three years earlier, in line with the three-year limitation period in law. That is an objective basis on which to make a change. I hope that we will have an opportunity to return to that point in Committee.
I draw to the Minister’s attention the fact that conditions excluded from this Bill’s provisions, presumably because of the difficulty of proving causation, have already been included in an administrative scheme that pays compensation to all asbestos victims at Turner & Newall asbestos factories. If they can do it, why cannot the Government do it?
Alongside this, the Ministry of Justice is, I understand, planning to consult on changes to the legal process for mesothelioma claims, including the introduction of a compulsory online gateway and other somewhat controversial measures. No doubt we will have an opportunity to return to this in Committee, as we shall to the implications of Schedule 2, where I fear the wording may inadvertently exclude persons who should still be included in the purview of the 1979 Act.
The proposed mesothelioma support scheme is the central plank of this new provision. Although it is of course welcome that the Government are making progress for many sufferers of this debilitating disease, a number of concerns have been raised by organisations with expertise in the field. The scheme has been criticised for having been drafted without consulting claimants, support groups and relevant trade unions. The fact that support will be limited to those suffering from diffuse mesothelioma has also been highlighted, in contrast to the Employers’ Liability Insurance Bureau proposal by the previous Labour Government in 2010. Thompsons Solicitors have also pointed out that hundreds of people have unnecessarily lost out on compensation due to the delay of more than two years between the 2010 consultation closing and the present scheme being announced in July 2012.
Most controversially, I think, and as the Association of British Insurers has recognised, the scheme will pay only approximately 70% of the average value of claims.
That is surely an injustice. If the suffering justifies the 100% figure, on what possible basis can a lower figure be offered in settlement of the liability? The insurance industry’s rationale for allowing this injustice to occur is apparently that it will maintain an incentive for people to attempt to trace insurers so that claims will be brought to this scheme only once all other avenues have been exhausted. I suggest that paying only 70% shows a flagrant disregard for the highly distressing and incapacitating symptoms that sufferers experience at a time when they are likely to be seeking compensation, as well as the very short life expectancy of these people. Expecting sufferers to exhaust all other avenues before bringing a claim to the scheme makes it quite likely that the person in question will have died before compensation is gained, and will put increased pressure on terminally ill people. I urge the Government and the industry to reconsider this aspect of the proposed scheme.
I would be grateful to hear the Minister’s thoughts, if not now then at a later stage, on comments that have been made by representatives of the insurance industry that the Recovery of Medical Costs for Asbestos Diseases (Wales) Bill currently under consideration in the National Assembly for Wales may undermine the provisions included in the Mesothelioma Bill. The Assembly Member under whose charge the asbestos Bill was presented has written to me stating that his Bill would have no adverse relationship with the legislation now under consideration. I would welcome the Minister’s comments on this matter and would like to know whether any discussion has taken place with Welsh government Ministers in Cardiff on the most worrying aspects of the interrelationship of the two Bills. Having said that, I welcome the step being taken.
Lord Browne of Ladyton
My Lords, it is a pleasure to follow the noble Lord, Lord Wigley. Characteristically, despite how late his contribution has come in the debate, he has identified fresh points that have not been raised by other speakers. That has added significantly to our consideration of the Bill and challenges me to do the same. I shall try to approach the next few minutes in a way that is not repetitive, but I start by joining the Minister in his generous words of praise for my noble friend Lord McKenzie of Luton and his consistent contribution to advancing the cause of mesothelioma and other asbestos sufferers—indeed, to health and safety law in general.
I couple the Minister in that praise, because I know from my own experience what challenges he faced in trying to deal with the insurance industry over this very issue. For a short time in 2003, I was the Minister for Employment and had responsibility for health and safety. I came into the job at the beginning of a summer when there genuinely was a market failure in relation to compulsory employer’s liability insurance, and I know exactly the nature of the challenge that he faced with the insurance industry over this insurance. I pay tribute to him for getting the Bill before us in this fashion.
Having said that, though—taking on board all his entreaties that there are challenges of pragmatism and speed, the fact that we must bear in mind the nature of this filthy disease and its effect on people, the fact that there are people out there who are waiting for justice and have been for some time, and that any delay will mean that people will die before they get it—we still have an obligation to be fair. Fairness and justice are important considerations in what we are doing with this legislation. Having listened to the debate thus far, I think that there is a very strong thread running through it: the judgment as to whether a payment scheme such as this, as opposed to a compensation scheme, serves justice has to be seen in a much broader context than those challenges, with respect to the Minister and the papers that are before us. It has to be seen in the broader context of what can be done to improve the ability of people to get full compensation through our courts.
That leads me to a point that I cannot resist the temptation to make, just because of the Minister’s initial words in introducing the Bill. He said in an early sentence—indeed, it may have been the second sentence that he uttered—that where a person is injured by negligence or a breach of statutory duty, that person should be compensated by their employer. I agree with them. I regret that that statement of principle did not inform the provisions of the Enterprise and Regulatory Reform Act, which we passed this year and which broke the link between breach of statutory duty and compensation by an employer. I invite the Minister to reflect on those words in a broader context, rather than just in relation to the matters before your Lordships’ House this evening.
The question of whether we are being just has to be seen in the context of why we need to address this issue in this way, at this stage. I do not intend to repeat the words of other noble Lords, including the noble Lords, Lord Alton of Liverpool and Lord Avebury, and my noble friend Lord Giddens, who pointed out in short that, for decades, employers, and indeed Governments, knew exactly what the risks of using this substance were and did nothing about them but spent a lot of effort resisting justice for those who were being afflicted by the substances they were deploying and using extensively throughout the country.
In relation to the long latency of this and other asbestos-related diseases, I do not think that we can describe what the insurance industry did in recklessly—and I am being kind in using that word—destroying its records as inconsistent record-keeping. These were deliberate acts. I cannot go so far as to say they were designed to have the consequence that they have but they were calculated to do so. If we had not had this combination of deliberate acts over an extensive period, we would not be facing the problems that we face now.
I share the concerns of many noble Lords about the arbitrary nature of the anticipated payment of 70% of average compensation and the cut-off date that will be very brutal to certain people who have suffered greatly. I want to make two points in particular, which I think will be additional arguments at least, if not completely new points in the debate. The first relates to the recovery of benefits. I accept the constraints that have been in place in these negotiations and because of that I am willing to accept that a payment scheme, as opposed to a compensation scheme, is the way forward, at least in the short term. However, that is entirely inconsistent with the approach that the Government plan for the recovery of benefits. My noble friend Lord Howarth of Newport asked a series of very detailed questions about benefits, to which I am sure the Minister will be able to reply. I can tell my noble friend that the answers will be extremely disappointing. It is very clear that the Government intend to recover benefits paid to those who have suffered. That may not affect continuing benefits because of the way the compensation recovery system works, but it will certainly be a significant injustice to people who have received benefits and find them clawed back from their payment.
I draw the attention of noble Lords to the Government’s impact assessment. I accept that this is an excellent document but it is also a quarry of very interesting information, as impact assessments always are. I refer particularly to paragraphs 13 and 14 of the impact assessment signed by the Minister on 2 May 2013. They set out in short how the compensation recovery scheme works. Paragraph 14 states:
“In a civil case, where an individual receives compensation from an employer or insurer, the government … recovers the social security benefits and lump sum payments it has made from the compensation paid”.
That is how it works, I agree with it and there is a justification for it, as the Minister explained: you cannot be compensated twice. However, as he is at great pains to explain, those who will get payments out of the scheme are not being compensated. This is a payment scheme, not a compensation scheme. It is not designed to compensate people for their loss and if it were these benefits would be restricted to the part of the loss that relates to income, not the part that relates to pain and suffering, because that is how the compensation scheme works otherwise. Therefore, there is an inherent unfairness in this. With respect to the Minister, the Government cannot have it both ways. This cannot be a compensation scheme for the recovery of benefits paid to those who have been paid out of it, but only a payment scheme for the nature of the compensation. Someone recently said to me in an argument that if you cannot ride two horses you should not be in the circus, but that is not a good enough answer to this issue.
Briefly, I believe that this scheme will end up in the same place as the Motor Insurers’ Bureau scheme, which on its website says that it is,
“a central fund to provide a means of compensating the victims of road accidents by negligent uninsured and untraced drivers”.
It goes on to say:
“The ultimate cost falls to law abiding motorists via their insurance premiums”.
Inevitably, that will happen to this scheme. That is what the impact assessment says. I draw noble Lords’ attention to paragraph 97; effectively, the research shows that that is the industry’s intention, while the impact assessment stands itself on its head and concludes the opposite in the last part of the paragraph. I draw these two issues to the Minister’s attention. I hope that he will either address them now or at some stage in the debate.
Finally, I repeat the words of my noble friend Lord Jones, who said that no words are adequate to describe the nature of the suffering and the anguish that this awful disease has generated. Our obligation is to respond to those pleas of anguish. We have only words to do it, but surely we can translate those words into some form of fair legislation.
Lord Whitty
My Lords, like other noble Lords who have spoken, I welcome the Bill and will not seek to delay it. Having said that, the Bill is deficient. It needs to be strengthened, either in Committee in this House or through secondary legislation. I hope that that happens.
My basis for speaking is that I have been involved in this field for nearly 40 years. In the early 1970s, when I was a trade union health and safety officer, I sat on the first HSE drafting committee on the asbestos regulations. Of course, as the noble Lord, Lord Alton, has said, by that time the scientific knowledge was clear on blue asbestos and pretty clear on white and brown asbestos as well. However, it took a long time for the government machine to get in place. Of course, employers were still in denial. My union, the GMWU, had significant membership in Turner & Newall itself, and frankly some of them were in denial as much as the management. However, the reality was that they were dying.
We also had a group of workers who liked to call themselves thermal insulation engineers, or laggers, who stripped off asbestos from machinery in shipyards, steelworks and royal government dockyards. There were some fantastic leading figures among that group of workers, almost all of whom were dead in their 40s from asbestosis. Many of those who survived came to suffer from mesothelioma as well.
As my noble friend Lord Jones and others have said, this is an utterly horrendous disease. I am pleased that, belatedly—50 years on from the scientific knowledge being here—we are finally getting to grips with it. The previous Labour Government did a lot in relation to other asbestos-related diseases, and the noble Lord, Lord McKenzie, started the ball rolling on this one against considerable opposition from the insurance companies and, be it whispered, from the Treasury.
However, we still do not yet have a sufficiently effective Bill. Others have pointed to the deficiencies in relation to those it excludes because of the date. Frankly, many are excluded by that date, given the life-expectancy after diagnosis. Given the exclusion of other long-latency diseases and mesothelioma, which can generally be ascribed to asbestos, although the causal association may be slightly weaker, and to the whole structure of compensation, it is true that those who get through this system, or their dependents, will belatedly get a very significant sum. That is what, rightly, the civil courts have awarded in individual cases which have been through the court system. I find it pretty disgraceful that the average that comes out of that system will now be discounted by a whole 30%.
When one stands back it is not only that there are normally scanty records that employers have disappeared, and that individuals kept changing their employer in many of these sectors, but, as my noble friend Lord Browne of Ladyton just deftly hinted, there was some degree of destruction of records involved here as well. That is the responsibility of the insurance industry, and one they should face up to. His analogy with the motor insurance bureau is also apposite. After all, in the motor industry insurance is compulsory on motorists, as employer’s liability is compulsory on employers. Therefore, despite the greater difficulty of proof, the analogy holds. In that situation, rather than have a sifting body, possibly interpreted by a technical committee, and then the DWP looking at it, or whatever body the DWP eventually devolve this scheme to, effectively the insurance industry faces up to its responsibility and pays effectively the proven 100% of the claim. That is not a complete analogy, but compared with that 100%, a 70% figure seems very difficult to justify. There is a higher risk on the insurers and an increased administration cost on them. I think it was the noble Lord, Lord Avebury, who said that maybe 90% in other analogies is perhaps appropriate, but any person would regard 70% as excessive.
I commend the Minister on getting this Bill to this stage, and no doubt having the equivalent arguments with the Treasury to get it to this stage. However, on the negotiations, I dealt with the insurance industry on flood defence and with some of the Minister’s colleagues in Defra who are in the current Government. The insurance companies are tough negotiators. They live for negotiation, even more than trade unionists do, and at times are rather more successful than the trade unionists. We could afford to be a bit tougher in this respect, in particular in relation to the discount. We have a significant exclusion on the basis of the date, another on the basis of the non-mesothelioma diseases, and on top of that the insurance industry has somehow come out with a 30% discount. I suspect that they went home and thought that was a result. The Government could get a better result. I am not sure whether we will manage to get a better result in the course of this Bill. I hope that some of those anomalies can be addressed; for example, the Minister ought to be prepared to accept an amendment that allowed him or a future Secretary of State to add the other diseases to the Bill. I would have thought that that ought not to be a great difficulty for the Government. I hope that when we debate the regulations that might stipulate the 70% or something like it, a little bit of give in an upward direction would be forthcoming from the Government.
Having said all of that, I welcome the Bill. We need to make sure that, for the reasons the Minister spelt out at the beginning, it gets a speedy result within this House and gets on to the statute book. At the end of the day, the people we are helping have gone through horrendous difficulties, and their nearest and dearest have watched them do that. We have a responsibility to ensure that at least the majority of those people get adequate compensation as rapidly as possible.
Baroness Sherlock
My Lords, this has been a very rich debate, suffused with not only the expertise but the passion and compassion for which the House is widely celebrated. It has been a privilege to hear personal stories about people who have been affected by mesothelioma: to hear of lives cut short and ending avoidably in terrible suffering. I am grateful to all noble Lords who were willing to share those experiences, as well as for the knowledge that they brought.
I acknowledge once again what an extraordinary range of people we have in this House. I pay tribute to all those who in many different ways have been part of bringing the story to this stage of its development: to those who campaigned in Parliament, such as the noble Lord, Lord Alton, who has done so much to raise the issue, and the noble Lord, Lord Avebury; and to those who have been Ministers, such as my noble friend Lord McKenzie in recent times and, in times gone by, my noble friend Lord Jones, whom I thank for such a passionate speech and for bringing us back to the point of remembering what this means for those who are going through such pain and suffering at the moment.
I pay tribute also to my noble friend Lady Donaghy and other trade unionists for reminding us of everything the trade unions have done, and to my noble friends Lord Whitty, Lord Monks and others who have been part of the story of trade unions getting behind efforts to try to change this country’s attitude that nothing could be done and prove that perhaps it could. I pay tribute also to the Minister for his personal commitment and—I suspect that my noble friend Lord Whitty was right about this—for conducting some pretty tough negotiations. We hope to give power to his elbow so that he can go back and make them more successful still.
There has been an extraordinary unanimity round the Chamber on almost every Bench on what the top issues will be on which the Minister will have to convince us as the Bill goes through its remaining stages. In true Eurovision style, the top three are already predictable. The first is the scope of the Bill. I understand the pressures that may have led the Government to settle where they have landed. The Minister argued that the Bill’s focus on mesothelioma was based on the fact that it is a terrible disease that is almost always fatal, and that is exclusively caused by exposure to asbestos. That much is uncontested. However, the fact that mesothelioma sufferers will have a case for compensation does not mean that others do not also have such a case, and does not take away from the fact that there are still too many victims of other long-latency asbestos-related conditions who should be entitled to compensation but cannot find either an employer or an insurer to pursue. Of course, their claims would need to be tested, but I see that the Government are not minded to go down that road.
I understand the attractions of clarity and moving forward with the support of stakeholders, but I hope that the Minister has heard the breadth and strength of feeling from all around the House that the Bill needs not only to address this pressing problem but, as my noble friend Lord Browne put it, needs to be fair. It will not be perceived to be fair if it cannot at least set out the way in which the Government will move forward. If the Minister feels that the Bill is not the route forward for that, I hope that he will be able to tell us what the way forward will be, so that by the time we conclude these proceedings we will be able to give some comfort to those who may otherwise feel that they have been unfairly ignored in the process.
I also hope that in Committee we will have a chance to discuss what can be done to try to make the process of moving on in other areas more systematic. I was very struck by the point made by my noble friend Lady Taylor about the piecemeal way in which steps were taken in the past. It would be very helpful if we could set out a way forward that did not involve constantly being dragged step by step into solving problems that will one day have to be solved anyway. Perhaps this time we could be the House that breaks through that way of doing things and tries to find a more systematic way of planning for the future.
The second question on which there is almost total unanimity is why the cut-off point is fixed at 25 July 2012. This point was raised by many noble Lords. Suggestions were made that it could be set at February 2010, when the consultation opened, or May 2010 when it closed. The Asbestos Victims Support Groups Forum suggested that a three-year rule in law should be applied. Whatever the Minister comes forward with, it would be helpful if he would take the House carefully through his reasoning for July 2012, and against having an earlier commencement date. From the reaction of noble Lords around the House, it would seem that simply feeling that one could not leave it open-ended was not enough of an answer to the question: why this, why now and why only then?
The third big question is the crucial question of the proposed nature and level of compensation. My noble friend Lord Browne of Ladyton raised some important questions about the way in which damages are constructed. I hope the Minister can set out some more information for us on the record about that, about how he came to this space—in particular, the question of why compensation is likely to end up being set at 70% of the average damages being awarded by the civil courts. I confess I have not yet heard a persuasive argument for that. I understand that the Minister seemed to be saying—and it is certainly what the briefing said—that the rationale is that an incentive of some sort is needed to ensure that this is genuinely a scheme of last resort. However, my noble friend Lord McKenzie raised the telling question: since claimants can by definition access the scheme only if their former employer’s insurers cannot be traced, and since the body will actually have an obligation to help people trace an employer, why is any incentive needed? The door is only open to people who meet this condition, so they surely do not need to be bribed to step through it as well—or in this case, rather than being bribed, they are facing a hefty financial penalty if they are unable to identify a provider of employers’ liability insurance through no fault of their own, a point made very tellingly by many noble Lords.
There is then the question of who runs the scheme. A number of noble Lords have made the point that concerns are being heard abroad that it might be the insurance industry itself that will run the scheme. The Bill, of course, carefully sets out two options: one of having the scheme run in-house, the other run externally by a scheme operator. However, it is clear in the briefing that the plan is that the insurance industry should run it. It is, we are told, already in the process of setting up a scheme in anticipation of the Bill becoming law, which could then be up and running right away on day one, on the assumption that the scheme meets the criteria set out by DWP. However, as my noble friends Lord McKenzie and Lady Donaghy and others have pointed out, there is a potential conflict of interest here if the same industry that has to fund successful claims not merely underwrites but administers the compensation scheme. Aside from the actual conflict, is the Minister not concerned that the perception of a conflict may be a cause of concern to victims and their families? Have the Government done any research to find out how claimants would view such a provision, having the scheme run by the very industry with which they have to join battle?
In particular, could the Minister tell the House whether he considered any alternatives? Would it not have been better, perhaps, to have had an arrangement like that for the FiSMA bodies, such as the Financial Ombudsman Service—and I declare my interest as a non-executive director of that body—or the Financial Services Compensation Scheme, mentioned by the noble Lord, Lord Avebury? Both of those bodies are set up in statute and funded by levies on the financial services industry, but they are administered by independent scheme operators overseen by boards. The job of the board is to guarantee the independence of the scheme, both from consumers and from the firms that underwrite the scheme. Therefore, I would be grateful if the Minister could tell me whether he looked at that as an alternative, and, if so, why he rejected it.
Moreover, I would be very interested to hear the Minister’s response to the matters raised by my noble friends Lord Howarth of Newport and Lord Browne about the question of benefits. Why do the Government see this position as analogous to that of a compensation payment, an interesting point made by my noble friend Lord Browne, who did indeed manage to introduce additional material very late in the day? Also, my noble friend Lord Howarth asked whether there would be any caps on the amount that can be clawed back, what particular benefits are in that situation—will it be all benefits, including carers’ benefits?—and what happens to the way in which the money is treated? Finally, there was the very important question of research, raised by the noble Lords, Lord Alton and Lord Monks, the noble Baroness, Lady Masham, my noble friend Lord McKenzie and others. I very much hope that we can return to that in some detail in Committee.
I do not want to detain the House any further at this time. This is a Bill whose purpose we support fully, as one would expect, since the previous Labour Government in the person of my noble friend Lord McKenzie started the consultation process which brought us at last to this point. Action has long been demanded by victims, their families and the organisations that have supported them over many years. We owe it to them to act swiftly, but we also owe it to them to get it right. We owe it to the people who depend upon this fund to scrutinise this legislation as well as we can to ensure that it is robust and that the redress it provides will meet the needs placed upon it. Furthermore, I think we should take a moment to reflect on the terrible consequences of a failure to take seriously the health and safety of workers and, indeed, citizens, a point made by my noble friend Lord Giddens, to whom thanks are due for a very interesting exposition of how we came to this point. I was very taken by his suggestion about the idea of a pro-active scanning forward. I would be interested to hear the Minister’s response to that. How do we learn not just from what has happened but learn lessons for the future?
There is a great temptation in modern life to complain about health and safety as though somehow it is there solely as a means for bureaucrats to stop any of us having any fun. The next time any of us is tempted to complain about there being too much health and safety, we might remember the legacy of the days when there was precious little of either health or safety in too many workplaces.
Lord Freud
My Lords, I have been in this House long enough to have an expectation that this would be a high-quality debate. I can confirm that my expectations have been exceeded. This was a very good debate which showed that noble Lords have focused on the issues and is the precursor to a valuable process being undertaken as we go through Committee and subsequent stages of the Bill.
Clearly, the Bill deals with what I called a very damaging historic market failure. Various noble Lords, such as the noble Lords, Lord Avebury, Lord Alton and Lord Browne, implied that it might have been rather more than that. Indeed, it was implied that there might have been reckless behaviour. Observations have also been made about the way in which the paperwork was dealt with. To be blunt, many people in the insurance industry would admit that that was the case.
This is not the Bill I wanted to bring to the House. I will explain why that is the case because it is very important that noble Lords should understand that. I wanted to find a way of allocating responsibility to the companies that had engaged in the relevant business in the year in question so that we could levy a specific charge on those companies for the business for which they were responsible over the relevant period. We would thus have allocated the responsibility where it should lie. I spent a lot of time and, indeed, some of the DWP’s money, researching that proposition. However, I came to the conclusion that such a course of action was legally too risky in a most litigious environment. Therefore, we have moved to a second-best position, the implications of which are driving many of the shortfalls that noble Lords have pointed out vigorously tonight, because it is one thing to say that there is a moral imperative to look after the individuals suffering from this terrible disease and their dependants but it is another to pin the responsibility on companies which, frankly, had nothing to do with it. We are looking to insurers in the employers’ liability market to fund this provision through the levy and we are looking at the appropriate level of levy in that marketplace when direct blame cannot necessarily be attributed. That is why the scheme is designed in the way that it is and why various constraints are in place.
I think that I heard support for the principles of the scheme. We can get money to the sufferers regardless of whether the insurance records have been lost. In general terms it is right that we look to the insurance industry to provide this support, not least because this situation is a horrific blemish on its reputation which it will, and does, want to correct and mitigate.
We need to help the insurance industry to impose this levy. It cannot do it on a voluntary basis, which would have been the ideal position and the one which I would have preferred. It needs the legislative support because it is a disparate industry with very many different players in it.
We are clearly going to spend a lot of time going through the detailed questions raised. As I will be going through them in Committee, I do not intend to spend a lot of time going through everything now, but I will try to pick up the main themes. I need to add something that I omitted to do earlier, my thanks—which several Lords have mentioned—to the victims’ groups and the trade unions for all the work they have done and for which I am personally most grateful.
Before I get into the drier stuff of this, I must add that many noble Lords talked about the human stories. Nearly all of us will know someone who has gone through this, and there is an awareness here that in many ways this is one of the worst diseases to get. I acknowledge that. The noble Lords, Lord Giddens and Lord Monks, and many other noble Lords made that point and told us some stories to remind us.
One of the key issues raised by virtually all noble Lords—too many to mention individually—was about setting the figure at 70%. There was a real juggling act about what the right level of levy is, and that is something we can spend more time in Committee debating. If we set the levy too high, in practice what will happen is that it will just raise the amount to be paid and the insurers will pass on virtually all of it to British industry, which is something I was very keen not to see. There is a lot of economics around this, but if you set a small level in a reasonably competitive market, most of it will probably be absorbed by the insurance industry, which should do so, rather than by British industry, which should not be required to absorb it. There is a real balancing act in the amount of money that it is sensible to raise this way to get to the victims, and that is the main driver here. It is not, I want to emphasise, the behavioural incentives that have been floating around. That is not what we are doing here. We are trying to get a balance of funding.
The second issue is, because we went early—theoretically one can start doing a levy like this only at the time at which it becomes law—we have gone from the date of the formal announcement, from which point the insurance industry can start to reserve. However, one of the issues coming from that is that in the first year, we effectively have to make over three years’-worth of payments, and noble Lords will see the problem instantly. There is suddenly a very large levy in one year of the kind that is very difficult to absorb. That is the reason that we have worked to smooth that first year over four years, so that we do not get these sudden large amounts, but it is a constraint. I shall not go into the detail tonight of how difficult all this is to do, although perhaps in Committee I could be persuaded to open my heart a little about particular Treasury rules, levies that are treated like taxes and why the Treasury, which collects taxes, should give the DWP any money to make payments.
Lord Howarth of Newport
Even before the noble Lord opens his heart to us in Committee, will he look again at the question of the start date in the light of the figures we have been given? We have been told that the life expectancy of a mesothelioma sufferer following diagnosis is perhaps two years. We are told that around 2,400 people die each year, and that the insurance history can be traced in more than 50% of cases, which means that more than half are able to pursue their case against the insurer. That leaves around only 1,200 people who would benefit if the noble Lord were simply to remove the start date. I would have thought that that ought to be affordable and that the insurance industry ought to accept that quite limited extension of its responsibility. I hope that the noble Lord will think about that and perhaps even amend Clause 2 himself and not just leave it to us.
Lord Freud
Virtually all noble Lords mentioned the start date. The trouble is that, in principle, this is a sheep and goats situation. Any date, wherever it is set, as the noble Lord, Lord Monks, mentioned, is always arbitrary at one level. To pick up on the point made by the noble Lord, Lord Howarth, this concerns dependants as well, so if there was no start date and the date went back indefinitely, we really would be talking about a huge amount of money. We will spend a lot of time talking about this, but let us flesh out the areas of discussion.
I think that we might look in Committee at the point made by my noble friend Lord German and reinforced by the noble Baroness, Lady Taylor, about a cap or a different structure. Noble Lords can see my constraints, but we can look at shaping the structure in different ways. The noble Baroness, Lady Donaghy, asked when we would have the report on payments. It will be ready in the summer. In response to my noble friend Lord Courtown, I will say that we will have the scheme rules ready to be looked at by the time we reach Committee.
Extending this to other asbestos-related diseases was the other big issue of concern to virtually all noble Lords. The point about mesothelioma is that if you have it, you will essentially have contracted it doing a job in which there was negligence, and that it is fatal. You can fix a figure with a tariff level and you can go very fast. The objective is to reach a point within five months as compared with a typical period now of two years. Noble Lords will be conscious of the meaning behind those periods, given the prognosis of survival for up to 15 months. Getting something this quickly is really important. There may be schemes for other types of asbestos-related illness, but they could not be set up within this structure. We would have to look at something else; it could not be a simple extension.
My noble friend Lord Avebury and the noble Lord, Lord Alton, asked how many meetings have been held. Out of amusement, I counted them. There were 15 meetings with representatives of the insurance industry, of which seven were held in quite a tight period. You can imagine that they were being held during a time of heated negotiation. A total of 11 meetings were held with representatives of victims’ groups, lawyers and members of the all-party parliamentary group. It is not a complete balance but I took on board as much as I could as we built this.
I will not spend a lot of time tonight on the MoJ process. We will have time to do a bit more. The fundamental point is that the MoJ will launch a consultation shortly. It will go through all these issues and then come up with a scheme on the balance, taking on board all the responses. This is a major process and we will just wait for it to happen.
The noble Baroness, Lady Donaghy, raised the question of the scheme administrator. We are in control of this scheme and the DWP will drive the scheme rules. The scheme administrator will therefore be answerable to the Secretary of State, who will monitor whether it is doing the job that needs to be done. It is not a done deal with the ABI at this stage, though it is setting up a shadow company. If it does this successfully and if it is the administrator, it means that we can go very fast, but it is open at this stage.
My noble friend Lord German raised a key point about the assumption of negligence. What distinguishes mesothelioma from some of the other diseases is that there is no reason for it other than being exposed to asbestos in employment. There has been a general acceptance that if you were exposed to asbestos in the workplace it would be through negligence. The decision has typically been made on a balance of probabilities. We will spend more time in Committee on the important legal context of why one can do such a straightforward and rapid scheme.
I have had good warning from the noble Lord, Lord Alton, that I will get an amendment proposing that some of this levy should effectively go into research. I cannot tell the noble Lord how hard I have tried to produce that result for him. I have failed to do it and we will spend time on this in Committee. There are some really complicated technical reasons why that cannot happen, mainly because, formally, a levy is a tax and it cannot go to anyone but the victims. I have tried every single route round this. If noble Lords are cleverer than me and can work their way through it differently, I will be delighted.
Lord Alton of Liverpool
I am grateful to the Minister, who is obviously coming to a conclusion, for giving us a lot of his time in replying. Has he noticed that the British Lung Foundation proposal is not asking for money from the levy? It is suggesting a membership scheme for every insurance company, who would then contribute £10,000 as part of that scheme. This would raise £1.5 million each year. He will also recall that I made a point about the amount of money coming into the Treasury as a consequence of the proposals before your Lordships tonight.
Lord Freud
My Lords, if it was done on a voluntary basis by the insurance industry itself, that would be one thing. If it is done through legislation that is another thing and that is the problem, but I have not given up on research. There are quite a lot of issues here. The Government do not spend a lot of money in this area and there is a kind of chicken and egg situation because we commission research only if it is of high quality, yet if there is nothing to encourage it you do not get the bids. There is lots more and I am working with my noble friend Lord Howe on trying to get more there. The noble Lord is pushing on an open door, which I am afraid someone else has slammed in all our faces.
I will close by saying that the Bill is a really positive opportunity. It means that we can provide financial support to the sufferers who cannot bring a claim for civil damages. We can do it quickly, with the creation of an industry-supported payment scheme. I am grateful to hear that noble Lords may try to amplify the Bill in different ways but that the determination of the House is to not see a delay. If we achieve that collectively, and pass the Bill in 2013, we can set up the scheme in April next year and get the first payments to people in July, with 300 people receiving, each year, an average of about £100,000. It is an important and essential piece of legislation and I commend the Bill to the House. I again thank everyone who has contributed, in the very high-quality way that noble Lords have, to this debate and ask the House to give the Bill a Second Reading.