Earl of Erroll
Main Page: Earl of Erroll (Crossbench - Excepted Hereditary)Enterprise and Regulatory Reform Bill
Earl of Erroll Excerpts
Lord Browne of Ladyton
My Lords, it is a privilege and a pleasure to follow the contribution of the noble and learned Lord, Lord Hardie, to your Lordships’ debate on these provisions this afternoon. He has done a great service to your Lordships’ House by his considered and detailed contribution. Watching the body language of Members of your Lordships’ House, I have the impression that he has alerted many noble Lords to consequences of this provision of which they were unaware, and that he has, perhaps, concentrated minds in a way that may be helpful both to noble Lords in their consideration and to the Government in determining the correct course of action.
I agree with all the arguments in favour of this group of amendments, and I wish to be associated with them all, but I will make a few additional points to reinforce some points that have already been made. As my noble friend Lord McKenzie of Luton said, the justification for Clause 62 is that there is a perception among some employers that a compensation culture exposes them to a risk of unjustified damages claims by employees, and—this is where the briefing that the noble and learned Lord referred to comes in—that this perception prevents employers from taking on new workers and is a barrier to growth. However, no such compensation culture exists. The Government’s own statistical evidence shows that claims arising from workplace accidents are going down. The Health and Safety Executive’s impact assessment of these provisions suggests that this is the case, too, as do the figures published by the Government’s Compensation Recovery Unit.
In Grand Committee, I asked the Minister to point me to the evidence that existed—even the evidence of a perception—and argued at the same time that legislating in response to a perception, which was in fact a misperception, was a poor basis for making law. The Minister was gracious enough at our meeting to confess that, try as they might, neither he nor his officials could find evidence even of the perception—although, to be fair to the Minister, he said in effect, “We know it is there but we cannot find it”.
This is supposed to be a deregulatory measure. Therefore, the test of whether it is a proper policy is whether it will result in any deregulation. Frankly, the evidence in relation to that suggests otherwise, too. It will not remove the complexity of the challenges faced by employers, particularly if they are concerned about possible civil claims by employees. Indeed, it will add to that uncertainty by making the law less clear than it is presently. In particular, the issue of whether these reforms will leave the law incompatible with the European body of law that it has to be compatible with, will inevitably lead to complicated legal argument. I can hear the smacking of lawyers’ lips in anticipation of the cases that will come from this provision if it is enacted in its present form.
We on these Benches provided the Government with a detailed senior counsel’s opinion which set out just how complex the arguments will be. With respect to the noble Viscount, his reply to our correspondence, which was a short paragraph, suggested that his officials had not thought about the consequences that the senior counsel argued were inevitable. Perhaps they have now had the opportunity to do so and, in summing up this short debate, the noble Viscount will be able to give us a better and more considered answer than the one with which his officials provided him in response to the detailed arguments set out in the senior counsel’s opinion.
The Government’s plan is to require all those who wish to claim in the civil courts for compensation arising from workplace accidents to claim by way of a common-law negligence case. I am grateful to the noble and learned Lord, Lord Hardie, for setting out at least some of the potential complexity of such a claim. The component elements of a common-law negligence case will inevitably mean that cases will be prolonged. The health and safety regulations that the Government seek to skirt around will not become irrelevant to such claims, as the Government intend. They will add to their complexity because persons claiming will rely on them to show what a careful employer would have done—what was reasonable and feasible. So we have added an unnecessary layer of complexity to a set of claims that now proceed by way of reference only to the statutory regulations.
Neither will this reduce insurance premiums for employers. It will shift burdens but it will not reduce insurance premiums. Presently, the employers’ liability compulsory insurance regime is well settled and it works. It was in spasm in about 2004, but it has settled down again and it works. The law compels all employers to have insurance. Employers pool the risk of being employers through the employers’ liability compulsory insurance process. Everyone has to have insurance by law and the premiums are shared fairly and in a proportionate fashion across all employers.
Employers’ liability compulsory insurance represents a small percentage of the overall general insurance market and traditionally it is a loss leader for the industry, which does not make any money out of it. In fact, there is a suggestion that claims outstrip premiums. But that has been the case for a long time, and it has been absorbed into the general insurance market. If anyone believes that the consequence of a change in the law—even if it does shift the burden from the insurance market to the public sector—will result in reduced premiums, frankly, they are living in cloud-cuckoo-land. The premiums do not cover the payments.
Finally, the justification has been put forward that it will reduce necessary record keeping and paperwork. The noble Viscount defeated that argument himself in Grand Committee. In summing up the debate on this issue he reassured my noble friend Lord McKenzie of Luton that employers would still have to keep the same records because the requirement of record keeping was related to obligations that are enforced by criminal law and nothing at all to do with civil liability. So record keeping will not go down.
The Government's measures go beyond what Professor Löfstedt recommended, and he has said so. They set the clock back 150 years in terms of health and safety, which is an area of public policy of which we in the United Kingdom are rightly proud. They have the flimsiest of justifications and even then the Government themselves cannot find any evidence even of the perception —perhaps because the perceived facts do not exist. Apart from all that, they do not even meet the Government’s own limited objective of being deregulatory. The Government should take them away and think again.
The Earl of Erroll
My Lords, I rise to put the opposite opinion. I live in the world of small and medium-sized businesses. The SMEs and the micros employ half the workforce out there. As one of them, I feel it is totally unfair that, even if you took all the precautions you could, if something happened that you could not foresee and could not know about, you are held to be guilty. This is wrong in natural justice. The fact is that you can then be put out of business. I hate to disagree with the noble Lord, Lord McKenzie, and the noble Baroness, Lady Turner, but they are not all well funded.
We talk about big businesses, big organisations and corporations, government, and things like that. They may be well funded, but a lot of small businesses out there are struggling and on a knife-edge. It only takes one of those things with the Health and Safety Executive cracking down and you have had it. I invite noble Lords to look at some of the cases—I will send you pointers to the websites that will detail them—where the Health and Safety Executive, for instance, gloats over how much it has managed to get out of someone at a tribunal. I know that is not the exact case here, but the perception is out there, I am afraid, and it does restrict people. My wife, who is a small employer, is very careful about taking on extra people because of these sorts of regulations.
Regulations also start to conflict because of their complexity. You may well find that you cannot comply with them all. If you are then held to be in breach of one of them, which you did not and could not know about because you could not know that the employer was breaching it without your knowledge and against your instructions, you are still going to be held liable, because it is an absolute offence. I think that is wrong. We should remember that it is not just big businesses out there. We will be bankrupting some small businesses and putting other people out of work—and when we put them out of work, there will be other unintended consequences and damage to other families.
Lord Pannick
My Lords, I added my name to Amendment 81 in the name of the noble Baroness, Lady Turner, which would leave out Clause 62. I did so because liability under Section 47 of the Health and Safety at Work Act operates fairly, effectively and efficiently and its amendment will cause substantial practical problems.
Your Lordships have heard comprehensive arguments on these subjects, so I will be brief. Section 47 works well because the claimant needs to prove a breach of health and safety legislation. The claimant needs to prove causation—that there has been a breach which has caused serious injury or death. In those circumstances, the law has long recognised, without controversy, that the victim should be compensated without also needing to prove facts and matters relevant to negligence, which are the responsibility of the employer. That is the answer to the noble Earl, Lord Erroll; the matters are within the knowledge of the employer. They are rarely matters within the knowledge of the employee.
To require employees to prove negligence—that is, a failure by the employer to take reasonable care—will inevitably result in very substantial delay in obtaining compensation for those who have been injured or killed by reason of the employer’s failure to comply with health and safety regulations. It will require the considerable expense and uncertainty of litigation for both employer and employee—these are expensive matters for both of them—at a time when legal aid is being reduced.
Clause 62 is unnecessary, unfair and—judging by the deafening silence from the Government Benches this afternoon—unsupported by any marked enthusiasm whatever. I hope your Lordships will support its removal.
Lord Brown of Eaton-under-Heywood
My Lords, I, too, support these amendments. For a number of years before the passing of the 1974 Act, I enjoyed a reasonably successful practice at the Bar, often instructed on behalf of employers’ insurers defending negligence claims by injured workmen. Mostly these claims were settled, quite often for substantially less than their true value, because of course the insurers, for whom I acted, were altogether better able than the claimants were to risk losing them. A number of these claims were lost —I defeated them—because the claimants were not quite able to assemble all the evidence necessary to prove actual negligence.
The 1974 legislation, which Clause 62 is designed to overturn, introduced a sea change in the approach to damages claims for workplace injuries. No longer was it necessary to prove that the employers knew, or should reasonably have recognised, that their machinery, equipment, systems of work or workplaces were actually dangerous, it was sufficient to show that regulations designed to secure the workforce’s safety had been breached and that, in consequence, the employee had suffered often appalling injury. Thereafter most claims were settled early, at their true value and with very little in the way of litigation costs. Of course, we at the Bar suffered for this change, because our personal injury practices were greatly damaged, but almost everybody else benefited. Injured workmen obviously did but so too did the Exchequer, because benefits for their injuries thereafter were paid by the insurers out of the premium moneys they had received instead of the cost being put on the state. Safety conditions in the workplace were hugely improved. There is nothing like strict liability, or its civil equivalent, to induce employers to take proactive steps to ensure that the risks and dangers are reduced to a minimum. Employers’ insurers therefore, since 1974, have had altogether fewer claims to meet and have certainly incurred far fewer legal costs in meeting them.
Nothing I have yet read from earlier debates, or heard, has suggested to me that any clear advantage is to be gained by this proposed change in the law. Which precisely, one asks, are the supposed undeserving claims that in future it is intended shall fail when presently they succeed? I confess I did not find the answer to that in the speech of the noble Earl, Lord Erroll, the substance of which seemed to be directed rather to unfair dismissal claims than to claims for injured workmen, essentially against insurers, in respect of whom employers are bound to take action.
The Earl of Erroll
As a quick correction, it was nothing to do with unfair dismissal, it was about the health and safety issues which come up the whole time in certain industries, particularly agriculture and things like that. That is what I was thinking about mostly.
Lord Razzall
My Lords, if there is one lesson that your Lordships and the Government might draw from this debate, it is that it is a mistake to introduce a major change in the law so late in the process of a Bill going through the House of Commons. The noble Viscount’s department had a very good record of not changing the law without extensive consultation. It is quite clear from the debate today that even one or two noble and learned Lords did not quite understand what it is being proposed in the way that I understand it. That all would come out if there was appropriate consultation on the clause.
The Government’s intention is to try to find a balance between what the noble Earl said about protecting employers from unfair strict liability claims and protecting the rights of the sort of claimants that the noble Lord, Lord Pannick, is referring to. The Löfstedt report made various recommendations and, had we had proper consultation, that would have come out. The Government say that they are implementing what Löfstedt recommended but some would say “Up to a point, Lord Copper”. He did of course say that the strict liability issue needed to be looked at, but with a lot of reservations as well as to how strict liability could be amended. That would have come out in proper consultation. However, we are where we are. As I understand it, the Government wish to remove strict liability to protect the sort of company referred to by the noble Earl. They say that the complainant or the injured workman can rely on the law of negligence to protect them. There is of course criminal liability, and in extreme cases somebody’s offending will be prosecuted, but they are relying on the law of negligence.
I ask noble Lords to imagine the sort of scenario where these two principles would come up each against other. There could be a contractor who has employed a subcontractor to put up scaffolding and the subcontractor does so in a rather dodgy way. Somebody falls off the scaffolding and is seriously injured. Under the current law, the contractor will probably be strictly liable for that accident. The subcontractor, who is a man of straw, has disappeared, and therefore if the contractor is not liable then who is liable, and what compensation is there for the individual? That seems to me in essence to sum up the dilemma produced by this clause.
I do not think that our job here on these Benches—certainly not when we are in coalition—is to defeat the Government; it is to win the argument. I hope that when the noble Viscount sums up he will try to find a way to meet what I think are genuine concerns from all sides of the House about whether this provision can be modified to deal with the problem I have referred to.
Lord McKenzie of Luton
My Lords, I am bound to say that I found the Minister’s response profoundly disappointing. It was his noble friend Lord Razzall who said that it was a mistake to introduce laws without extensive consultation and who urged the Minister to find a balance. Indeed, the same point was made by the noble Lord, Lord Phillips. Yet I do not see any balance in the Minister’s response.
With this power to make exceptions, the Minister is asking us to do the job of the Government. Frankly, that is not the way round that it should be. The Minister always goes back to focusing on strict liability and extrapolates what is perceived to be the issue around that to all other circumstances where people might be injured at work, then causes there to be a restriction on their ability to get justice.
There seems to be an incredible disconnect between an analysis of the health and safety system and the extent to which there is overcompliance with it, with the solution being to restrict the right of people to claim justice when they are injured at work. For a long time there has been a problem of overcompliance, and now there is undercompliance with the health and safety system as well. That is why, as I know, the HSE is engaged in improving guidance, not helped by the Government having restricted proactive inspections so that inspectors can no longer go out and visit as many premises as they did in the past. There is a huge disconnect there, which does not seem to have any justification.
We have had a very impressive array of contributions to this debate today, from very experienced legal minds, all of whom, with the exception of the noble Earl, Lord Erroll, argued in one direction. I would say to the noble Earl, who mentioned agriculture, that this industry is proportionately the most dangerous in the country. There are more fatalities in agriculture than in any other industry. It is absolutely right that there should be a concentration of health and safety regulations in those circumstances.
The Earl of Erroll
I am not arguing that one should not have health and safety regulations and that one should not do one’s best. However, it is just wrong when someone has done everything they can but something is done behind their back that they have no knowledge of or power over and they are made liable and possibly locked up. I object to the strict liability part.