Pensions Bill
Lord Browne of Ladyton Excerpts(10 years, 11 months ago)
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Lord Browne of Ladyton (Lab)
My Lords, I am delighted to follow my noble friend Lady Dean and I learnt a considerable amount from her contribution to this debate, some of which I shall draw on in my few remarks. I think most noble Lords will understand that I rise to the Dispatch Box with the words of my noble friend Lady Donaghy ringing in my ears, not just because she is sitting behind me but because she urged us in her opening remarks to approach this subject with a degree of humility. I do just that, as this is the first time in 16 years in one part of this building or another that I have had the lack of wisdom to debate pensions, and to do so from the Dispatch Box is a daunting prospect.
I open my remarks by thanking the Minister for his introduction. I thought that he laid out in a helpful way what this Bill seeks to achieve and I look forward to hearing him build on that in his response to the debate and throughout further consideration of the Bill. I have some experience of engaging with him in debate in your Lordships’ House and I know that he will do his best to assist the House to understand and, if necessary, improve this legislation. I thank him, too, for engaging with Members in all parts of this House in preparation for this debate and for his promise of further briefings. I join him in commending the noble Lord, Lord Turner, my noble friend Lady Drake and Sir John Hills for the work they have done; I add to that my thanks to my noble friend Lord Hutton and the noble Baroness, Lady Hollis of Heigham. I was privileged to work with her for a short time when I was the Minister for Employment in the Department for Work and Pensions.
If all those who deserve some recognition for their contributions to this debate will excuse me, while I hope to give them some recognition during these remarks I single out my noble friend Lady Drake. With an economy of words that was a model, she went through the Bill in a way that identified almost all the issues that many months of my trying to understand it had identified, if not understood, and some others that I had not even thought of. I can appreciate why she was on the commission led by the noble Lord, Lord Turner, and why she has had such a significant effect on the direction of travel. I also commend my noble friend Lady Sherlock, whom I am privileged to serve in this cobbled-together team for this purpose. She knows how much I admire her and I thought that she made a sparkling and excellent speech.
I congratulate the noble Lord, Lord Balfe, on an accomplished maiden speech. I have no doubt that the House will value greatly what appears to have been his long and varied journey since the age of 16. It took him all the way from 4 Millbank, which is just across the road, to your Lordships’ House. He referred to Millbank and the noble Viscount, Lord Eccles, referred to the Imperial Chemical Industries, or ICI, in his contribution. Since I am the survivor of a man who was an employee and then, for a short period, a pensioner of the ICI—my mother, who was widowed, was a pensioner of it for a significant period—I recognised the Millbank address as being very significant to the ICI. Those buildings are still there and at least the noble Lord, Lord Balfe, is still with us although the ICI is not. That just occurred to me as a relevant coincidence in the debate before your Lordships.
Turning to the issues raised in the debate, I start with my noble friend Lady Sherlock’s first question to the Minister, which challenged him to confirm the level at which the STP—the simple pension which we are all discussing—will be set. I do that because it seems to be the essence of our understanding of whether this significant reform of the pension system will meet the challenges that the Minister and others have set for it. There seems to be agreement that it needs to be high enough to provide an adequate platform for saving and to reduce means-testing. The problem is that, as we understand it, these reforms will reduce means-testing only if the flat rate pension is set above the pension credit level. Indeed, the Select Committee recommended that there should be some clear blue water between one and the other and argued further that that principle should be built into the Bill. None of us will be able to get a handle on whether this will, over time, consistently meet that condition unless we have some idea of the rate at which it is to be set.
Perhaps I may say in passing, and with all humility, to the noble Lord, Lord German, that this is assuredly not a citizen’s pension. A pension that requires 35 years of national insurance contributions cannot be described as a citizen’s pension.
Moving on, I am encouraged to draw the Minister’s attention to the questions asked by a number of noble Lords, including my noble friend Lord McKenzie, about the fact that all the documentation we have before us, set in the context of the impact assessment, assumes that the single-tier pension will be uprated by the triple lock. Of course, we know that the triple lock is in place only until the end of this Parliament and I am not suggesting that it is reasonable to expect the Government, or indeed any party aspiring to government, to promise the triple lock going forward. One does not know what financial circumstances or degree of growth there will be in the economy in those times. However, I would argue that if we are to understand fully the implications of this policy, and whether it meets the tests that we are all generating for it, we have to have some information against which we can compare the performance of this policy going forward. It would be much more helpful if the Minister could provide us with additional information, other than that which is in the impact assessment and has that assumption underpinning it. If there were alternative calculations provided to us that showed the other ways in which could it be uprated, or not uprated at all, that would give us some sense of whether this policy is dependent on the triple lock or whether, on its own terms, it can be sustainable into the future.
I turn to the question of the continued review of pensionable age, which was raised by my noble friends Lady Turner of Camden, Lady Hollis of Heigham, Lord Whitty and Lord Hutton of Furness. The noble Lord, Lord Balfe, also raised it in his maiden speech. I make it clear that we on these Benches recognise that, as life expectancy increases, it is reasonable to consider extending working lives. However, along with many other Members of your Lordships’ House, we believe that it is very important to consider a range of factors. One of those is that there are differences in healthy life expectancy between different groups and varying employment opportunities for continued working in later life. A number of noble Lords made reference to that.
It is our argument that the Bill needs to provide greater clarity about that process. It is also essential that people have sufficient notice of any changes in state pension age in order to make or revise their plans for retirement. To meet the first objective, we proposed consistently in the House of Commons an amendment that would have ensured that the panel set up to assess rises in longevity included representatives from opposition parties and trade unions. We also have concerns about the methods of periodic reviews.
On the second of these objectives, I point out to the Minister that only this month the Government themselves published a document entitled Reshaping Workplace Pensions for Future Generations, in which they conceded that:
“Our current thinking is that employers would not be able to adjust the”,
normal pension age,
“of anyone within 10 years of the existing NPA in the scheme”.
That concession—that advice—that they published in their own document brings into question a five-yearly review and the consequences of such a review. At this stage I am not seeking to argue beyond the amendment that we tabled in the Commons, and will probably repeat here in Committee and perhaps on Report, but it raises a question about the consistency of the Government’s thinking when that document, published just last month, can strongly make that point while the Government expect that the review of pensionable age will be every five years.
My noble friend Lady Hollis of Heigham made reference to part-time workers—I think she called them people in mini-jobs. As she identified, there is a group of people, mainly women, who have more than one part-time job but are below the national earnings limit in each job, so are not building up the rights to a future pension. In fact, as she pointed out, recent analysis found that in 2012-13 50,000 people—40,000 women and 10,000 men—had two jobs with a combined income above the lower earnings limit but were not accruing qualifying years towards their pensions. My noble friend argues, I think with some authority, that this is unfair and could prejudice hard working people who are doing everything possible to provide for themselves and their families at a time when full- time jobs are acknowledged to be in short supply. Characteristically, she has an innovative solution, which, as I understand it, is essentially that they be treated as self-employed. That would ensure that all those in work with total earnings above the lower earnings limit were building up rights to a state pension. I commend this approach to the Minister, and we will be interested, as I think other Members of the House will be, in the Government’s position regarding this. I suggest that the arguments that have been put forward thus far do not meet the challenge that my noble friend has set out.
My noble friend and others have concerns about the phasing out of the assessed income period. She makes the very good point that the phasing out of this period generates challenges relating to equity release to pay for care and its impact on pension credit when changes to capital are taken into account. While I am not arguing that the release of equity should be dependent on administrative easement that was meant for other purposes and may not be sustainable in the long term, we on the Front Bench do not disagree with the phased abolition of an assessed income period but we wish to use Committee to probe the evidence base for this change. We know that some elderly people struggle with correspondence, particularly official communications, and we wish to be assured that there is support in place for those who need it, with the additional burden that these provisions impose.
A number of noble Lords raised issues reflecting the dysfunctionality of the private pensions market. It is at the heart of this reform that, from a base of a single-tier pension, people are encouraged to save. As my honourable friend Greg McClymont has made perfectly clear, this will work only if they are saving into pension funds in which people have trust and confidence. At the Bill’s Second Reading in June, Greg made clear that our focus on the Bill would be on the half of the Bill that was missing—essentially, the part that would make private pensions value for money for the saver. The Pensions Minister responded throughout the deliberations on the Bill in the Commons in a relatively dismissive way to these suggestions—the Minister smiles; I think that he recognises some of the phraseology that was used—and resisted all our amendments throughout Committee, despite the fact that he recognised consistently that they were relevant to existing serious problems. Throughout that time, he was able to take advantage of the alibi that the OFT report had not been concluded. However, as many noble Lords have said, the OFT reported in a devastating fashion, confirming all our criticisms of the dysfunctional pensions market and raising the sword of a market investigation reference, which is still hanging over the pensions market pending Parliament’s completion of the Bill.
In response to that and the fact that the report expressly, or by implication, supported every one of our amendments, the Government performed a U-turn, but only in response to a part of the problem with charges. The Government have listened to the OFT report on charges and have done a U-turn, and that is welcome, but perhaps now they should listen to the other OFT recommendations, which include the areas that we have tabled amendments on. Indeed, the OFT has gone further than we did to make our pensions industry value for money for savers. We encourage the Minister to consider some of these issues in relation to transparency and governance of the pensions industry, which we will continue to urge.
In anticipation of this debate, I wrote myself a set of notes that said, “No one supports the Government’s line on pot follows member except possibly the ABI”. That was before I heard the speech from the noble Lord, Lord Paddick. I think that he was the lone voice in this debate supporting pot follows member. I say to him, again with some humility, that the Australian example that he encouraged us to follow comes from an entirely different environment. In Australia, as I understand it, there are several hundred pension schemes, whereas there are over 200,000 pension schemes in this country. This is an entirely different environment and the Australian analogy does not quite work.
I am conscious of my time and I shall endeavour not to go through all this now, saving some of these arguments for Committee. However, I am sure that the Minister knows the arguments that have been put forward by many, including the Centre for Policy Studies, as my noble friend Lord Hutton identified. Reading carefully the briefing we all received from the ABI, I am not entirely sure that it is still as supportive of pot follows member as it was at the outset of the debates on this issue.
I commend the right reverend Prelate the Bishop of Derby for a measured and informed speech in relation to bereavement benefits. He made a very powerful argument for consideration of the effect that bereavement can have on children and the importance of the support of parents. I do not intend to go into any more detail on this other than to commend to the Minister the questions that were asked by noble Lords who also made this point. It is an issue that we will to return to in Committee and later during the passage of the Bill.
There are issues about the consequences of the phasing out of contracting out. There are significant potential impacts on public sector and local government pension schemes. There is a related but not directly analogous issue in relation to protected pensions. I also commend to the Minister the observation made by my noble friend on this Front Bench and by the noble Viscount, Lord Eccles, that this is a framework Bill and encourage him to give us some indication about when we will see some of the regulations that inform the Bill.
Unusually, I want to refer to an issue that was not raised, but I promised my noble friend Lord Dubs, who is well respected in this House, that I would indicate to the Minister that my noble friend will raise in Committee the issue of Jarvis and the small number of employees who have lost out very badly in its pensions.
My noble friend set three tests in her opening speech. However, there is a series of other tests that the Government have set that we will measure this Bill and these reforms against, because the Government claim substantial consistent consequences for them. I think the Minister has comprehensive notice of them, particularly from the informed contributions by my honourable friend Greg McClymont, who went over the detail of this with some care. I think he can expect interesting and engaged debates in Committee and on Report. I was very struck by the number of times the Minister used the phrase “very complicated” or “very complex” when I was speaking to him earlier and he and his officials were giving me an explanation of what we can expect in the Bill. He is right about that. I stand before your Lordships’ House confident that behind me I have a significant number of Members who are comfortable with that complexity. One or two of them will be talking to me quite a lot before the later stages of the passage of the Bill. This is a reform that we broadly support, but we will challenge it every step of the way.
Millennium Development Goals
Lord Browne of Ladyton Excerpts(11 years ago)
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Lord Browne of Ladyton (Lab)
My Lords, I, too, wish to congratulate the noble Lord, Lord Loomba, on securing this important debate and creating an opportunity for this issue to be brought to the attention of your Lordships’ House and to engage with the Government on it. It is an enormous privilege to follow the noble Baroness, Lady Chalker, and I commend the previous speeches for setting out the issues which need to be addressed. In the short time I have I intend to address just one discrete point.
Women and girls are marginalised enough but when multiple inequalities intersect, they are marginalised even more. More than one-third of the 57 million children who are not in school have a disability. There are very limited data on disability and they need to address this lacuna and make it one of the key messages of the global disability movement for the post-2015 framework to address. However, if there were statistics they would almost certainly show that girls are unequally represented among the children with disabilities who are out of school. There are a number of reasons for this and the noble Lord, Lord Loomba, enumerated some of them. They include broader gender inequality and entrenched cultural attitudes towards girls and women. Often girls and women in households are responsible for caring, cooking and cleaning or just working to support the family. There are often early and forced marriages of girls and a lack of female teachers or school managers or other female role models to encourage girls to participate. Unfortunately, gender-based violence and harassment, particularly on long journeys to school, make girls feel very unsafe. Among other things, poverty causes families to make choices about which children they should send to school and they often favour sending boys.
The MDGs 2 and 3 on universal primary education of girls have made considerable progress but, as the MDGs make no mention of disability, the harsh fact is that this progress has not reached girls with disabilities. The high-level panel’s shift on “leave no one behind” is to be welcomed. The UK Government have a special responsibility to ensure that this emphasis is not lost, as the discussions continue at UN level.
I am aware that girls’ education is a major priority for the Department for International Development. One of the headline goals is keeping girls, particularly the most marginalised, in school. A target for 2011-12 to 2014-15 to support 11 million girls and boys in school is a significant challenge and the sub-target of 1 million of the most marginalised girls is even more challenging. I welcome this focus and DfID’s flagship Girls’ Education Challenge, which is intended to deliver a step change in ensuring that the barriers that prevent girls from benefiting from education are removed.
I end with one simple but important question to the noble Lord, Lord Bates: how is DfID’s Girls’ Education Challenge fund reaching girls with disabilities?
Mesothelioma Bill [HL]
Lord Browne of Ladyton Excerpts(11 years, 4 months ago)
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The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, in speaking to these amendments I hope noble Lords will not mind if I open with a few thanks. First, I thank noble Lords for their consistent and invaluable dedication to this important Bill. The Bill looks quite different now to how it did at Second Reading and it is certainly in better shape for its passage through this House. I never cease to be amazed by the attention to detail and rigour that noble Lords apply when examining a Bill and I admit that I have ruthlessly stolen as many noble Lords’ ideas as I could over the past few weeks.
The Bill as it stands is a collaborative piece. I have listened with great interest to the concerns of noble Lords and responded to the pressure points. Since the Bill was introduced we have been able to renegotiate the rate of payment to 75%, which is in no small part thanks to the pressure exerted by this House. We have pledged to explore the creation of an oversight committee to ensure that the scheme may operate in the most efficient and just way, an idea that I cannot claim credit for. For that, and indeed much more, I must thank the noble Lord, Lord McKenzie, and the noble Baroness, Lady Sherlock. The noble Lord and the noble Baroness have been kind enough to give their time frequently and I am grateful for their supportive approach and their expertise.
Returning to the issue of scheme management, we have announced that the scheme administrator is to be selected through an open-tender route. I am confident that the scheme that will be set up as a result of this Bill will be the best it can be and will offer financial support to those who, through no fault of their own, have contracted this terrible disease yet cannot sue for damages. This represents a substantial achievement and, once again, one for which I cannot claim all the credit; so I thank noble Lords. My particular thanks go to those who have given so much of their time to contribute to the comprehensive debates we have had. The continued support and attention of the noble Lords, Lord Howarth, Lord Wigley and Lord Avebury, have been key.
One issue that we have discussed at length, and I know that many noble Lords feel strongly about it, was research into mesothelioma. As noble Lords will remember, I mentioned that when negotiating the terms of this Bill, I really hit a brick wall at every turn regarding research. A great debt of thanks must therefore go to the noble Lord, Lord Alton, for raising the awareness of the lack of research in this area and, although we disagreed on the mechanism, the pressure of his amendment has helped me, jointly with my noble friend Lord Howe, to form a strategy for how we might encourage proposals for high-quality research into mesothelioma. On Report last week, my noble friend Lord Howe outlined this strategy, and I thank the noble Earl once again for his support and collaboration on that point. The momentum in this area created by his efforts and the efforts of this House should not be underestimated.
I have tabled one amendment for today and I apologise to the House for its tardiness. The amendment is minor and technical in nature and we will come to it in a moment, but I will quickly say that further thanks are due, this time to the noble Lord, Lord Browne. The purpose of the amendment is simply to add further clarification to Clause 2. It was the noble Lord’s careful scrutiny of that clause that alerted us to a possible source of confusion. The amendment was deemed necessary in cases where an individual had tried but failed to bring a claim against a relevant employer but, where any other relevant employer existed, the individual must attempt to bring a claim against that employer also before being able to come to the scheme. It has always been the policy intention that this scheme must be one of last resort and that all other avenues should be exhausted first. The object of the amendment is only to avoid any misinterpretation of Clause 2.
Before I conclude, I will briefly mention the sterling work of the team behind the scenes. There have been many working in DWP, MoJ, the Department of Health and parliamentary counsel to whom I extend my thanks, including, in the Box, Rose Willis and Fiona Walshe of the Bill team. I pay especial thanks to the tireless work of our redoubtable Bill manager, Lee Eplett, with whom I know many noble Lords have worked during the passage of this Bill.
I know that noble Lords have wished for the Bill to go even further than it does but I hope that they can agree with me that it is a major step forward. The issue of poor record-keeping in the industry has for far too long prevented mesothelioma sufferers from receiving the compensatory payments due to them. The Bill represents substantial progress in rectifying this injustice, and I once again thank noble Lords for their role in this achievement. I beg to move.
Lord Browne of Ladyton
My Lords, I speak in support of these amendments to the extent that they improve the Bill. I am pleased to have been of some assistance to the noble Lord, Lord Freud, in improving the Bill. I venture to suggest that at one stage he thought that I was perhaps more of an irritation than an assistance on Clause 2. However, important issues still need to be addressed and, if your Lordships’ House will bear with me for a couple of minutes, I shall explain.
My noble friend Lord McKenzie of Luton first raised concerns about Clause 2 when he moved Amendment 12 in Committee on 5 June. My noble friend’s contribution spurred my interest, and I recollect making some points of observation in debate. In his response the noble Lord, Lord Freud, initially dismissed these points, but as the debate became more engaged he promised to write. That was because he found himself—I think I quote him properly—“in deep legal territory”, or he was concerned that he might find himself in deep legal territory. He promised to write, and on 7 June he did so. He dismissed my concerns again, but I persisted. Thanks to the engagement of the Bill team, in particular the Bill manager, I was able to find a route of communication with parliamentary counsel about my concerns in relation to Clause 2.
I will not take up the House’s time by going into these in detail, but I remain unconvinced that even an amended paragraph (c) of Clause 2(1) is necessary, except in the most remote, hypothetical circumstances. I commend the ingenuity of those supporting the Minister in trying to find sets of circumstances which justify the words in the first draft of the Bill. In my view, the justifications which I was given were either wrong or showed a repeated misunderstanding of the interaction of other parts of Clause 2 with that very paragraph or, as we got deeper into the weeds in this, a misunderstanding of the relationship between Clause 10 and Clause 2, and then a misunderstanding of the relationship between Clause 2 and its provisions, and the draft set of rules which we were then given. I presume they will now form the template for the regulations which will set out the scheme.
At every point at which a justification was made for the wording there was an inconsistency, which I pointed out. However, having said that, the clarification which the Minister gave in his letter of 7 June that the phrase “the relevant employer” in Clause 2(1)(c) was a reference to the same “a relevant employer” in paragraph (a) of the same subsection, perhaps deals with the issue, at least to some extent. If the Minister finds some way of putting that explanation on the record, it may be sufficient to see off my concerns in the short term. In any event, at this stage I do not intend to persist, now that the paragraph has been divided and recast.
Amendment 1, which would put new paragraph (ca) in Clause 2(1), and Amendment 3, which would put new paragraph (ba) in Clause 3(1), are improvements. I support them without any qualification because they deal directly with my concerns about cases where an employee had multiple employers. It is a simple necessity that at the time of application the employee-applicant, or an eligible dependant, must be unable to bring an action against any of the employers or relevant insurers.
I move now to the consequences of Amendment 5. Amendment 5 is extremely interesting. It would amend Clause 18(3) so that it reads as follows:
“The scheme may specify circumstances in which a person is, or is not, to be treated as able to bring an action for the purposes of section 2(1)(ca) or 3(1)(ba)”.
This is potentially a very significant provision. Remarkably, despite all of the scrutiny it has remained totally unscrutinised. It has now been brought to my attention because of this amendment. I presume that these circumstances will now require to be set out in the regulations which will apply to the scheme—in other words, what were the draft rules that we were given copies of. I went through the draft rules in detail after I received this amendment and could find no references at all to any such circumstances. It seems therefore that a very important part of the structure of this scheme has not been subject to any form of parliamentary scrutiny. I hope that this will be corrected when the Bill goes to the other place. If this provision is necessary, the circumstances that are to be in the scheme ought to be shown to Parliament before parliamentary scrutiny of the Bill is concluded, which it has not been.
Finally, the most important point that has arisen from my engagement beyond Parliament with the Bill team is that during my conversations and in correspondence with those advising the Minister it was explained to me that it was the Government’s intention that, when a person was diagnosed with diffuse mesothelioma on or after 25 July 2012 but before the Bill comes into force as an Act, application to the scheme would have to be made and received by the scheme administrator not later than three years after the date on which it comes into force, not three years from 25 July 2012. That would be a very welcome relaxation of the limitation rules, given the nature of this dreadful disease and how quickly it can become fatal.
Unfortunately, the draft rules make no mention of that relaxation and there is no such relaxation anywhere in the Bill. However, there is a very specific relaxation in draft rule 7, where a person has died on or after 25 July 2012 and the claim is made by an eligible dependant. That very significant concession is known to me and is now known to all Members of your Lordships’ House. It requires some parliamentary acknowledgement or commitment, at the very least. More than that, it requires some commitment that the regulations will deal with this in an explicit way.
Mesothelioma Bill [HL]
Lord Browne of Ladyton Excerpts(11 years, 4 months ago)
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Lord Browne of Ladyton
If your Lordships’ House will permit me to intervene, I do not intend to engage in debate with the Minister at this stage on any aspects of his commendable “pre-statement”, for which I thank him. It is consistent with the attitude that he has shown to this legislation and his handling of it in the course of our consideration. However, there is another matter which, as he knows, I have been discussing with the Bill team, which is not reflected in the proposed amendments on Report and which, therefore, will not be directly raised.
My concern is about the clarity of the drafting of Clause 2 and the interaction of parts of it. Without going into the detail of that, I have been in discussion and correspondence with the Bill team, and I am grateful to the Minister for allowing that to happen. We did not bottom-out our discussions about the fundamental issue but we revealed a number of things about the interaction between the draft rules and Clause 2. Before I came into the Chamber this afternoon, I got an e-mail saying that there was a recognised tension in relation to the issue of limitation between the draft rules and the current drafting of Clause 2. If the Minister is not in a position to say anything about this now, perhaps he will make time to say something on Report so that it will be on the record and will go to the other place to be considered.
Lord Freud
My Lords, I know that the noble Lord does not want me to go into detail, but I can commit to going on working with him on this issue, which is very technical. If we work out that something needs to be adjusted, we will have time to do it in the other place.
Lord Browne of Ladyton
My Lords, I support this group of amendments. In the interest of the efficient use of our time I shall do so principally by adopting the arguments that have already been advanced by my noble friends in support of them, and will seek only to reinforce one point and augment another in relation to Amendments 5 and 6.
The quotations which my noble friend Lord Howarth deployed from the ABI’s brief come from the brief that the ABI provided to some of us—in a discriminating fashion, I recollect—in anticipation of the Committee stage on 5 June. On that occasion I deployed these very same quotations; I do not think that the noble Lord, Lord Howarth, had them at that stage. I made this point then, and I wish to repeat it: the ABI’s argument in relation to self-employed people seems to be, “This was a very small number of people”. I felt that that argument read that since we were leaving behind only a small number of people, we could be justified in doing so. I deployed the argument that that increased the injustice substantially and that extending the scheme to this very small number of people would have a very limited effect on the total cost of the scheme and on its administration. I also argued that it would be a deep and disproportionate injustice to leave those people behind because they were probably victims of the same negligence; they probably picked up the fibres that caused this dreadful disease in exactly the same workplaces as employed people did, but just happened to be working in them at the time. I repeat that point as there is some significant merit in it.
In relation to the group of people who are referred to in the Minister’s letter of 4 July as those who are infected by environmental or secondary exposure, there is a more compelling argument as to why these persons should be included in this scheme. It relates to the way in which public liability insurance and compulsory employers’ liability insurance—or employers’ liability compulsory insurance, which I think is its proper title—was sold historically. It may still be sold this way, but I know that it was sold in this fashion. I explored this argument in Committee—I am grateful to the Minister, who, in his characteristic fashion, addressed comprehensively in his letter those issues that he did not have a briefing to address in Committee—and I have now had it confirmed, from the information in the Minister’s letter, that it is right.
Almost invariably, employers’ liability compulsory insurance was sold in a package, with, among other things, public liability insurance. Consequently, it is invariably the case that the insurers, who carry the employers’ liability risk, also carry the public liability risk. It is the behaviour of exactly the same insurers, in either destroying their records or failing to be available to those who identified them as the insurers who carried these risks, that has caused this deep failure in the insurance market. Therefore, there is no difference in relation to the mechanism of insurance and its failure to provide compensation for people who have been exposed to environmental or secondary exposure, compared with those who were employed in the first instance.
It is almost incontrovertibly the case that were an employer to have been sued by the person who was exposed at the secondary level, that person would have been able to establish that they were owed a duty of care and that there was a direct causal connection between the exposure of their relative or loved one and their contracting the disease. Had they had somebody to sue, they would have been able to get compensation. If the employer does not exist and the insurer cannot now be found, they are in exactly the same position as the relative who was exposed to the fibres and carried them home. I made that argument, and from the way I read the very carefully worded letter from the Minister, that appears to be what his researchers have revealed: that this group of people would have been covered by public liability insurance and that almost invariably the same insurers would have carried that risk.
There is no argument, therefore, that has any merit, that those people who were in the category of secondary exposure should be excluded from this scheme. The opposite is the case. Given that exactly the same players would have been involved in the processes that caused their contracting this disease and dying from it, we should honour the experience they have had by including them in the scheme.
Lord Stoneham of Droxford
My Lords, I will comment on a number of issues to which these amendments give rise—and they are very sensitive issues. Any start date is arbitrary, and there will always be people who are caught by a start date, so whether it is 2010 or 2012, there will inevitably be feelings of unfairness. However, the earlier the start date, whatever the cost—perhaps the Minister will clarify the cost, but we were told it was £119 million, and if it is 70% of that it will come to £80 million—agreeing to that concession would cause a 25% increase in the cost of this scheme. Where is the money going to come from? Will it come from a new negotiation, or from reduced benefits and compensation for those who will receive money from the scheme? That question has to be answered by the movers of the amendment.
On the issue of coverage, there are obviously concerns about the self-employed and people from the same household, but are we saying that we are going to complicate this legislation and hold it up while we have an argument about public liability insurance versus employee insurance? That would be a recipe for severe delay. The great advantage of this legislation is that we have kept it simple and we have an agreement. It is a balancing act to get to that agreement and to get the legislation through so that it benefits the people who were in employment. Once this settles down, we could consider coming back to this—I hope the Minister will do so at some stage—and look again at how we might cover the self-employed and people from the same household, but if we start that discussion now we will be here until 2015 or 2016 before we have legislation to benefit the families for whom it is intended.
Lord Browne of Ladyton
My more fundamental point is that the insurers that sold employer’s liability compulsory insurance were the same insurers that sold public liability insurance to individual employers, because they were sold in a package. That was my experience when I was the Minister for employment between 2003 and 2004 when, the noble Lord will remember, there was a significant failure of the employer’s liability compulsory insurance market that had to be resolved. His letter of 5 July to me and others confirms that that is still the case, according to his research. These insurers are not separate insurers, they are the same insurers, and I suggest that the requirement to carry cover in relation to the specific risk of asbestos would have been irrelevant to public liability.
Lord Freud
I have just made the point that the public liability may have been bundled up with employee liability but it did not necessarily cover asbestos risk. That is the issue. If we start going into this, we are just blasting open and widening the position in a way that is very complicated and difficult to deal with under the timelines we are dealing with.
Moving to the second group about the self-employed, here the matter is not so clear-cut. Some people may appear to have been self-employed but if they are able to demonstrate when making their application that in fact they were employees, they may be eligible for a payment under the scheme. There is considerable case law amassed on this and we will ensure—I can commit to the noble Lord, Lord Howarth—that the scheme will reflect this when assessing applications.
I know it is not fashionable but I should point out that there is a technical problem with the amendment, which is cumulative, but I will not go through it. As drafted, this amendment does not work because you have to be an employee and self-employed. In our spirit of co-operation, if we wanted to take it we would adjust it, but there are good reasons in both cases why we do not want to.
Lord Browne of Ladyton
My Lords, I have added my name to the amendment in the name of my noble friend Lord Wigley. When he and I put our names to the amendment, we were unaware of what the Minister would be able to achieve without the benefit that our amendment being carried by your Lordships’ House might give in strengthening his negotiating hand. I have immense respect for my noble friend and his decision not to press his amendment and I will not seek to do otherwise. However, I want to add to what has already been said in relation to this group of amendments and the principle of justice.
In one of the early sentences of his introductory speech at Second Reading, the Minister enunciated a principle that, if a person is damaged by the negligent actions of another, that person should be entitled to compensation and, therefore, justice. I paraphrase him and I am sure that I do not do justice to the eloquence of his words at the time, but I remember pointing out that there was an inconsistency between that and other recent actions of his Government in relation to health and safety law.
We all agree with that principle and, with all due respect to the arguments that can be made, I suspect that the Minister does not equate the payments from the scheme with justice. He will be comfortable at the Dispatch Box and probably will, in his characteristic style, say that he is not presenting this as justice. Justice for these people would be for an employer who is insured to sue, and 100% compensation. So we are not going to do justice. I regret that we are not going to do justice to the victims of this dreadful behaviour and of the dreadful history that followed it, not necessarily on the part of employers—which went out of business for lots of reasons—but certainly on the part of the insurance industry.
However, we have a duty to strive for justice. The Minister eloquently expressed, as he has done on a number of occasions, that this is basically a negotiation. He has negotiated on behalf of the victims in a situation where hitherto they had only statutory schemes to look to, and he is to be congratulated on his achievement. I have experience of the responsibilities he holds and know just how difficult the job is. I have congratulated him on it in the past and he gets a significant amount of deserved credit in this House for what he has achieved.
He says that his ability to improve the scheme is a function of a number of practical and realistic things: what is negotiable in the circumstances of what the market will bear; and the point at which he judges, and the insurance industry tells him, that it will be compelled to transfer the marginal cost of the scheme to British industry and thus affect competitiveness. It is also a function of the fact that he is operating in a situation where he is seeking to have the scheme funded by what he calls active insurers, which are not necessarily the insurers that historically wrote the policies that carried the risk in the first place.
I accept all that. In the debate on the previous group of amendments, my noble friend Lord McKenzie made a point that prompts my own, which is different from any that have been made in the debate. We do not doubt the Minister’s bona fides, but whether we are at the limit of his negotiating ability, or whether we can help him go a bit further towards the sort of figure that is more like justice, it would be helpful if we knew how many of the insurers with which he is negotiating are those that carried this risk in the first place and behaved in the way they did.
Until now, the Minister has deployed very adroitly the point about active insurers as opposed to those who carried the risk. However, he has done it in a very generalised way. I was not moved to interrogate him in detail until he explained, probably for the second time —I did not pay enough attention the first time—to my noble friend Lord McKenzie that when he first approached the issue, his desire was to place the burden on those insurers that underwrote the policies and risk in the first place. That implies that he must have thought that there were enough of them to carry the burden. Therefore, this cannot be an insignificant number of insurers. The inference I drew from the argument that he put forward in his contribution—which he may now regret—was that a disproportionate burden was being placed on people who were not about when the problem was being created. However, my knowledge of the Minister and of his abilities, which is growing, suggests that the opposite is the case, and that more of these insurers than we think will have to pay up.
If I had thought about this before, I might have argued for a differential levy in order to get a significantly increased amount of money, so that we could all do what we wanted to do, which was get much beyond 70%. Is the Minister in a position to help us? It may not be of any great assistance to us, although there is still Third Reading, but at some stage—I am not asking him to name and shame, although I would quite like him to—it would be interesting to know the number of insurers involved. Perhaps we could go a bit further. Could he describe the scale of this market in monetary terms, and the proportion of the market that is controlled by those companies that let this insurance market fail? We would then all have a better sense of justice and of where we should apply the burden.
I will say two more things. Unfortunately I had to leave the Grand Committee before we came to debate this issue. When I read the Official Report, I was extremely impressed by the amendment of my noble friend Lady Donaghy, which proposed adopting the idea of the incentive that the ABI deployed—which my noble friend Lord Howarth demolished and which the Minister has now abandoned—and reversing it to fix the compensation at 130% of the average, in order to incentivise the insurance companies to get their colleagues to find the policies, and to get the people who wrote them to carry the risk and burden. That is where the incentive should be in this situation.
I see that the noble Lord, Lord Stoneham, is in his place. I am glad that, thus far in the debate, he has not deployed the argument of delay in relation to this legislation. I do not resent—but I do not like—the idea that those of us who have been trying to improve the legislation somehow have to step back because we may delay the point at which very deserving people can get some form of payment. I do not like it for a simple reason. The Bill was introduced in your Lordships’ House and went into Grand Committee. We are now on Report and this is the first and earliest point at which we can vote on anything in it. If the argument of delay in these circumstances is to have any merit, it means that we have to accept whatever is presented to us by the Government if it is broadly in a good area of public policy. If in future we ever have to face an argument for reform of the House of Lords, we had better not do that.
Mesothelioma Bill [HL]
Lord Browne of Ladyton Excerpts(11 years, 5 months ago)
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Lord Freud
I am not sure whether they are claims or successful claims. My understanding is that there have been no cases where there has been compensation. My interest today is obviously not to re-run the debate that we have already had. We will have another chance to do this. I just wanted to get this on the record for the convenience of Members of the Committee at subsequent stages.
Lord Browne of Ladyton
The noble Lord is generous with his time. I listened carefully to his words. If they were a direct quotation from what the Association of British Insurers told his officials, and therefore him, it said that it had no record of any claim of that secondary nature having been settled through the employer’s liability insurance, not no record of any claim having been settled. I ask the Minister to go back to the question: since the association clearly has comprehensive data, has it any record of claims having been settled? If so, through what form of insurance were they settled and—this is the important question—were the insurers and those who carried the risk the same companies that carried the risk for compulsory employer’s liability insurance in respect of the circumstances of the cases?
Lord McKenzie of Luton
My Lords, I should explain that this amendment was tabled before we had a chance to peruse a draft of the scheme rules, but there are some issues still worth pursuing. It is a probing amendment and is, I hope, precisely focused for the benefit of my noble friend. Clause 4(3)(a) states that the scheme may make payments “subject to conditions”, and paragraph (b) gives,
“the scheme administrator power to decide when to impose conditions or what conditions to impose”.
To the extent that these conditions are to be covered in the scheme rules and that those scheme rules are to be subject to some parliamentary process, we are perhaps more relaxed about the position. However, paragraph (b) appears to give a wide discretion to the administrator, which is likely to be an arm of the insurance industry. The draft scheme rules throw some light on this by identifying that the conditions that might be imposed include requiring that a trust be established and that a deputy or guardian be appointed. The draft rules also authorise the meeting of costs to this end by the administrator. The thrust of this seems to be a concern in situations relating to the capacity or legal competency of the claimant or a dependant. However, there is nothing that requires the imposition of conditions to be for the benefit of the applicant or dependants rather than that of the levy payers.
A key point in the draft rules is that conditions can be imposed to ensure that that payment is used for the benefit of the applicant. That requirement does not appear in primary legislation. There would be merit in it doing so to tie down this potentially wide discretion. I await the Minister’s response on that. We might return to this quite narrow point on Report to embed the concept that is in the draft rules, which we have now seen, into primary legislation. I beg to move.
Lord Browne of Ladyton
My Lords, I rise to reinforce the points made by my noble friend Lord McKenzie. It is easier to understand what lies behind Clause 4(3) now that we have the draft scheme rules. To understand the Government’s thinking one has to read that subsection along with Rules 15 and 16(3)(e)—I think—and presumably also the review provisions and the appeal provisions that will apply all the way back to any conditions that may be imposed, set out in Rule 19 and those following it. It is by no stretch of the imagination straightforward to determine what exactly the combination of this provision and the rules will mean in practice. I have just a couple of specific questions, which I hope are relatively simple.
The primary legislation, if enacted, will allow conditions to be imposed on any payment. There appears to be no limit to the conditions that can be imposed. The rules, to some degree, limit them. Rule 15, in particular, says that this rule—that is, the decision to impose conditions on making a payment—applies when the scheme administrator first decides to make a payment under the scheme but considers that there is good reason to impose one or more conditions in making a payment in order to ensure that the payment is used for the benefit of the applicant.
The next paragraph, paragraph 2, says that the scheme administrator may impose such conditions as it considers appropriate. We appear to go back into a very broad power immediately after a limiting power. It is not clear to me that the limitation in the first part of that rule applies to the second part of that rule. If it is intended to do so, clarification from the Minister might be of some assistance.
I reinforce the point made by my noble friend Lord McKenzie that if that restriction on making conditions is to apply to all conditions, it would be better for that restriction to be reflected in the primary legislation rather than in the rules. There is at least one possible interpretation of this at the moment—I have not had time to work out all the possible interpretations—that is, that the power to make the rules requires the scheme administrator to come to the view that rules are necessary to ensure that the payment is used for the benefit of the applicant. Once they pass that hurdle, the administrator can make any rule that it considers appropriate. It is not clear that all rules have to pass the test of being rules made to ensure that the payment is used for the benefit of the applicant. That is intended, but it would be helpful if that was clear.
Lord Freud
I take on board my noble friend’s point. As I said, I shall look at this and the other points made by this Committee. The rules are only in draft form, and we may look at them to lock that down.
Lord Browne of Ladyton
I am sure that the Minister will do this, but perhaps I may check that he will consider whether it would be better to reflect that restriction in primary legislation rather than allowing it to appear for the first time in the rules.
Lord Freud
I will look at that, but I remind noble Lords that primary legislation sets a framework, and what matters here is how the rules work. In this case, the rules that we have agreed will go before Parliament in the form of regulations, so there will be a chance for oversight of that issue. Therefore, it does not matter too much where we make sure that the matter is under control.
Lord Browne of Ladyton
My Lords, I am strongly in favour of the principle that informs the amendments in this group, which has been set out in such detail by my noble friend Lord Howarth of Newport. At Second Reading, the Minister in explaining—and, I dare say, in justifying—the part of the Bill that allows for the recovery of benefits, relied on the principle, with which we all agree, that nobody should be compensated twice. However, until then he had explained in some detail, in order to explain the 70% of average as a payment to mesothelioma sufferers and to defend it against the argument that it was insufficient, that we were dealing not with a compensation scheme at all but with a payments scheme. As I pointed out strongly in my contribution at Second Reading, it is inconsistent to have the same two arguments in relation to the same legislation. Either this is a compensation scheme or it is a payment scheme.
My noble friend Lord Howarth of Newport, in trying to devise a justification or a reason for this, was being generous to the Government. He has observed from a sedentary position that he did not mean to be; I know that, but he was. This is a payment scheme until we come to compensation recovery, because if it were a compensation scheme, all the justifications for averaging and for taking percentages of averages would fall away. They would be intellectually incapable of being defended. However, one comes to the point at which it is clear that the Treasury wants to try to recover some of this money as if it was compensation, so it has to become compensation or quasi-compensation to justify that. One can then deploy the high-minded principle that no one should be compensated twice for the same loss. I have some sympathy for the Minister in having to ride these two horses, and I hope that he is not torn apart by them. However, as I said at Second Reading and as someone once said to me when I was a Minister, if you cannot ride two horses at once, you should not be in the circus.
The truth is that that is what lies at the heart of this issue. The justification for recovering benefits paid to people through the compensation recovery process is not because people cannot be compensated twice, it is just because the money is there and it can be recovered. It is because it can be done. To some degree, given that the Treasury has inadvertently been subsidising the insurance industry through a genuine compensation scheme in the past, perhaps there is some justification for trying to get some of the money back, and of course we are living in difficult financial times. I understand that, but I would like the Minister to explain in simple terms why this is being done rather than by seeking some justification in the principle that informs compensation recovery.
The compensation recovery system is set out in quite complicated law called the Social Security (Recovery of Benefits) Act 1997, as now amended, and in a variety of subsequent Acts of Parliament. It applies throughout the United Kingdom. I was not present for the earlier debate about the calculation of the average that would inform the payment, but there are substantial differences between awards for mesothelioma in Scotland as opposed to the rest of the United Kingdom. The Scottish courts are much more generous to mesothelioma sufferers than are the English courts and award substantially more in damages. However, compensation recovery law is consistent throughout the United Kingdom.
If Amendments 20 and 21 were to be accepted, my noble friend Lord Howarth would have created a device to defeat the Government’s ability to recover compensation at all by designating all payments as being for pain and suffering, and through the second of the two amendments would discount all payments for pain and suffering from recovery. He is wise to do this because that is the way the Act operates at the moment. However, thanks to some of my colleagues in the legal profession in Scotland, I have a pretty exhaustive list of all the heads of damages litigation that are not offsetable in relation to benefits. The list is the best part of half a page long. I will spare noble Lords the whole list, but it moves from pain and suffering to loss of future earnings, and it goes into some detail. All of them are component elements that one would look at if one were calculating the level of compensation payment due to a mesothelioma sufferer as a possible head of damages.
The thing about this list is that it lies behind all the settlements that form the history of the settlements that in turn have informed the average, from which the Government will take the 70%. They are not irrelevant to the calculation of the payment that will be made; they are at the heart of it. If the payments were made through a court process of compensation, a very small number would allow for benefit recovery: substantially, they would not allow it. There is a lot to be said for treating these payments, which are informed in that way, in the same way as one would treat compensation. Not the least that can be said in favour of that proposition is the fact that the Government cannot justify recovering any benefits unless they can use the word “compensation” against the payments.
I will make a final point to the Minister that is not reflected in an amendment. I would like to know his justification for this situation. If, having gone through a process of looking at historical settlements and averaging them one is then justified in making a payment that is 70% of that average, why is one justified in taking 100% of the benefits of that 70% settlement? Why do we not at least restrict the recovery of the benefits to the same percentage that we apply to the calculation of the payment?
Mesothelioma Bill [HL]
Lord Browne of Ladyton Excerpts(11 years, 5 months ago)
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Lord Wigley
My Lords, I rise to speak very briefly in support of the amendments put forward by the noble Lord, Lord Howarth of Newport, and particularly to address the question of the self-employed which is covered by Amendment 7.
Many people working as jobbers in industries who may undertake patching work in schools or in other buildings where asbestos was involved—perhaps electricians who need to drill into the walls—will have had this exposure. As a consequence, many of them will have suffered, and many will have died. Their need for recognition and for help by way of compensation is as great as that of those who are not self-employed. I understand from where the Government have come on this—this is an agreement with the insurance industry, of course—but that in no way lessens the need and the suffering of those who are self-employed, who might not be the people who the insurance industry would choose to recompense in this way. If that is the case, does it not behove the Government to step in to fill the breach for those who cannot be covered by such a scheme? I simply ask the Government and the Minister to think about that between now and Report.
Lord Browne of Ladyton
My Lords, I rise briefly to support both of my noble friend Lord Howarth’s amendments, and I do so—relatively unusually, I think—by referring the Minister to the briefing from the Association of British Insurers which I received about one of my noble friend’s amendments, but not about the other. It is the omission of the other amendment that interests me. However, let me deal with the first one first.
The briefing contains an argument against Amendment 7 which is summarised essentially in one sentence of this short briefing:
“As employers’ liability insurers will be funding the untraced scheme, payments from the scheme will only be made to those who would have been covered by employers’ liability insurance”.
That is the argument that the insurers make and I understand why they make it. The association then goes on to imagine that most people who worked in this industry may have been employed at one time and self-employed at others, and that is probably right—there will have been people who were exposed to these fibres both in an employed and in a self-employed capacity. Because of the way in which these cases are dealt with in the courts, that will not disqualify these people from being included in the payment scheme. However, the association goes on to make a point which I think it believes is crucial to its argument but which actually grossly undermines it. In the last sentence it says:
“There will only be a very small category of people who have been solely self-employed and therefore not eligible for a payment from the untraced scheme”.
Let us assume that the phrase “very small category” is the equivalent of “a very small number”. I am not quite sure why the association used the word category; I think that it means a very small number of people. If indeed that is right, and if indeed we are doing an injustice by excluding a very small number of people from this scheme, that is an argument for extending the scheme to that very small number of people, because it would be grossly—disproportionately—unfair to exclude them.
The second point relates to Amendment 8, which essentially proposes extending the scheme to those who have been exposed in a secondary way to asbestos but through exactly the same route as those who are employed and covered by compulsory employer’s liability insurance, or who would have been covered had it been in existence prior to 1972. That is the way in which the payment scheme is constructed. It strikes me as very odd that the Association of British Insurers does not deal with this issue at all in the brief. As I have listened to the debate unfold in the Grand Committee this afternoon, I have wondered why that was the case. I can certainly figure a set of circumstances where there is a traceable employer and where there is a secondary infection. If a man comes home from the shipyard with fibres on his clothes it does not matter whether they are washed—if the fibres get into the air of the environment in which his children or other relatives live and they breathe them in, they are at risk of developing mesothelioma eventually if these fibres are trapped in the fibres of their lungs.
There must be cases where that negligent act has caused secondary infection and mesothelioma and there has been a successful litigation against the employer of the person who carried the fibres. So there is a chain—a direct link—and the person who would be sued would be the employer.
I do not know the answer to this, because I do not know the details of the employer’s liability compulsory insurance scheme well enough. However, I ask the Minister, if he can tell us at some stage during the course of our deliberations, whether the insurers pick up the payment for the successful litigation because they were the insurers in the employer’s liability policy, or because of public liability insurance, which is a separate and different but compulsory insurance for people who are in workplaces. Either way, this is likely to be the same group of insurers. I suspect that it may be through the route of the employer’s liability compulsory insurance, and if that is correct, may it be the case that this payment scheme already applies to their efforts? I am not sure whether it does or not, but if it definitely does not, it definitely ought to. Since these general insurers, who carried or presently carry the risk of employer’s liability compulsory insurance, are likely to be the same people who are carrying the risk of public liability insurance, I am sure that the Minister can persuade them that it should.
Lord McKenzie of Luton
My Lords, this is, I hope, a brief and probing amendment. To be eligible for a payment under the scheme, Clause 2(1)(c) requires that a person has not brought an action against an employer or insurer and is unable to do so. The amendment requires that action to be successful. The implication is that an unsuccessful action would not preclude access to the payment scheme.
I have had some contact with the Bill team on this, and I think that the government response will be that if an action cannot be successful, it would necessarily preclude access to the payment scheme, because the conditions could not be met. I wonder whether that is necessarily so. What if an action were against an employer found not to be the right one but when the right one had gone out of business and the insurer could not be identified? Similarly, if an insurer were pursued by an action but proved to be the wrong one, why should that then preclude access to the scheme? I beg to move.
Lord Browne of Ladyton
My Lords, I support my noble friend’s amendment, although I think that there is a more elegant way of dealing with the issue. Frankly, and I hope that the Committee—particularly the Minister—will agree, I do not understand why Clause 2(1)(c) is there at all. It does not seem to make any sense.
The clause has two parts to it. The second part is that the person who is diagnosed with diffuse mesothelioma will be eligible for the payment only if he or she is unable to bring an action against an employer or insurer because the relevant employer or insurer cannot be found or no longer exists. I cannot envisage any circumstances in which anyone could have brought an action against some person who cannot be found or did not exist. I do not understand why that conditionality is there at all. I can envisage the sort of circumstances that my noble friend suggests, which are that an action was brought wrongfully against the wrong employer or the wrong insurer, but why should that disqualify someone from making a claim and receiving a payment from the scheme because they made a mistake in the past and thought that they had the right employer or insurer?
I urge the Minister to take that away and perhaps rephrase the clause to provide that a person who has been unable to bring an action against the relevant employer or any relevant insurer for damages in respect of the disease because the employer and insurer cannot be found or no longer exist, or for any other reason. That seems to be the answer. I do not understand why that part of the clause is there at all.
Lord Freud
My Lords, as I understand it, the purpose of the amendment is that a person may be eligible for a payment from the scheme if they have not brought a successful action against their relevant employer or insurer for damages. However, there is another condition attached: they must also not be able to bring an action for some reason, perhaps because the employer or insurer cannot be found or no longer exists.
A person should be eligible for a payment from the scheme if they have not brought an action against a relevant employer or insurer through the courts and there are very good reasons why they are unable to do so. It is a scheme of last resort. If a person can bring proceedings, they should do so. But a person should not be eligible for a payment from the scheme if they have brought an action against a relevant employer or insurer through the courts and they have not been successful in that action because they have not been awarded civil damages. This may happen for a number of reasons. For example, the courts may consider that the employer did not expose the person to asbestos as a result of negligence or breach of statutory duty, or that the person was not an employee. It is not right in these circumstances that the person should be able to make an application to the scheme. It is a scheme of last resort, not a no-fault scheme. The scheme is correcting a market failure where employer’s liability insurers failed to keep thorough records; it is not replacing the civil system.
Lord Browne of Ladyton
My Lords, I am reluctant to intervene on the Minister when he is reading a very carefully constructed argument but, with all due respect, what he has just read defies logic. Bearing in mind that the person must have been diagnosed with mesothelioma after July 2012 and, if the draft rules become the rules of the scheme, must have brought any claim within three years of that diagnosis. It is envisaged that in that period the person would have sued somebody despite the fact that they were unable to find the relevant employer or the relevant insurer. It cannot possibly have been the relevant employer or the relevant insurer that they sued so the determination of the case is an irrelevance. I do not understand how people can sue somebody they cannot find.
I am not sure that I understand the concern. This may be because of the way in which one reads the legal language. I think the best thing I can do is write a letter spelling out exactly how the language works.
Lord Browne of Ladyton
The reason we are able to deal with these cases in this way is because of the history of the way in which mesothelioma litigation has developed. In mesothelioma cases, one can sue any employer. So if one finds a relevant employer or insurer, one can sue that person—I think that is agreed. That is part of the reason why this group of people are able to have access to this payment scheme whereas people suffering from other asbestos-related diseases cannot so easily do so. We agree on that.
Any person who has found a relevant employer or insurer to sue is disqualified from the payment scheme—full stop. It is not a question of finding one and then saying, “I cannot find the other, therefore I want to claim through the scheme”, anybody who finds one and has somebody to sue is disqualified by the second half of the clause. The first half of the clause is unnecessary.
Lord Freud
As I said, let me write to noble Lords about the necessity or otherwise of the first half of the clause, because I suspect that we are in deep legal territory.
Mesothelioma Bill [HL]
Lord Browne of Ladyton Excerpts(11 years, 6 months ago)
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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.
Enterprise and Regulatory Reform Bill
Lord Browne of Ladyton Excerpts(11 years, 10 months ago)
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Lord Browne of Ladyton
My Lords, I draw the Committee’s attention to my entry in the Register of Members’ Interests. I am a non-practising member of the Faculty of Advocates of Scotland. I have not practised for in excess of 15 years and I have no pecuniary interest in this piece of legislation. However, I have some knowledge of the application of the duties imposed by the Health and Safety at Work etc. Act 1974 and regulations made thereunder. I support the question in the name of my noble friend Lady Turner for many reasons, most of which have already been articulated.
My noble friends have produced valid arguments about the effect of the Government’s proposed change to the Health at Safety at Work etc. Act. It will shift the burden of proof in a significant number of cases following almost a century of struggle to establish a fair division of the burden under the law. As we have heard, it will—I may come back to this in a moment and pose some specific questions to the Minister—in future shift the burden of supporting many people who are injured in accidents at work from the private insurance industry and compulsory employer’s liability insurance on to the state. That seems to me significantly at odds with the Government’s overall ambition in relation to where the burden of costs should lie in the long term in relation to the public and private sectors.
Given my own practice and the information that many of us have obtained from those who still practise in this area, I believe that the measure will have a significant effect on the complexity that faces anybody who is injured in many accidents at work in the future. I think that the actual numbers are in dispute, but I will come back to the specific figures that have instructed this change. I understand from the Government that the relevant figure is 20,000 cases but I have no idea where that figure came from. As the Minister will realise in a moment when I draw his attention to some of his own publications, the Health and Safety Executive also has no idea how many cases this measure will affect but it will certainly shift a burden of complexity on to people. It will result in much more complex cases coming before the courts.
The information we have been given from the Association of Personal Injury Lawyers indicates that the measure will affect many thousands of cases, which will put a significant burden on the courts. We are already aware of the challenges faced by the courts in delivering public services and the delays that are being incurred. As I say, all the arguments that have been made are valid and I do not intend to repeat them. I certainly do not intend to repeat the argument made so effectively by my noble friend Lady Donaghy who mentioned the terrible circumstances in which people may be left, with no opportunity for redress in terms of placing the responsibility for compensation where it ought to lie following the sort of accidents that routinely happen in our workplaces.
The noble Baroness, Lady Brinton, is absolutely right: there needs to be a balance. However, with respect to her, I am not sure that the case that she brought to our attention had anything to do with the Health and Safety at Work etc. Act 1974. I am not sure that the individual case was exactly relevant, but that was not the point that she was making; her point was that there needs to be a balance. I agree with her, and would argue that, broadly, the balance is struck in the right place in relation to health and safety at work legislation between those duties that lie on employers for which the principle of reasonable practicability applies and those duties where there is strict liability.
The reason why it lies broadly in the right place is that this area of law has developed over a century. The HSE and all those who have worked in this area over that century have a real sense of where that balance should lie, broadly. It is not that difficult to explain why it is necessary. As my noble friend Lady Donaghy made clear, the relationship between employers and employees is not one of parity. There are very few workplaces where employees can say, “I’m worried about that machine and I’m not going to use it”, or alternatively, “I’m not going to use this piece of equipment you’ve given me, or these materials”. That is not how workplaces work; they work, normally, on the basis that people have an assurance that their employers will comply with the law and, if they are asking them to do inherently dangerous things, there will be a strict liability on them and the employer will carry the can if it goes wrong—maybe criminally, but certainly in terms of civil liability. Because that may be an unfair burden on an individual employer, we pool the responsibility. All employers accept all these responsibilities, and we have a principle called employers’ liability compulsory insurance. It is compulsory; you have to insure yourself for millions of pounds in possible liability to your employee. So we share the burden across society by that process.
Interestingly, over the years of employers’ liability compulsory insurance, the information that the HSE has published indicates that in 2010 it cost in total about £800 million, out of about £30 billion of general insurance in this country. So it is a comparatively small amount of money and the insurance industry has never made any money out of it. In fact, when I was Minister for Employment in 2004, it was in crisis, because the industry sought to do something with it that it had not done for some time and disaggregate it from the package of insurance that it was selling employers. The industry discovered that it was not making any money and that it was a loss leader. But it made a lot of money off the rest of the insurance, so they sell employers’ packages.
There is no reason to believe that from the point of view of any one individual employer the shifting of this burden from strict liability to reasonable practicability will make a jot of difference to any individual employer in terms of the regulatory burden of having to pay his insurance premium. It will not go down, because he is already getting it for less than it costs the industry. So we will not reduce regulation in any way by shifting this burden. All that we will do is shift the cost of the consequences of these accidents from that part of the market on to the public purse, which will have another consequence for the Government. I am sure that they have thought about it and that the Minister will be able to tell us his assessment of it.
At the moment, we have a set of laws in this country that mean that if you have an accident and you become a burden on the public purse for a period and then settle the claim, you have to pay back the benefits. So we have a Compensation Recovery Unit. In the last year for which there are statistics, 2011-12, the unit recovered £75,245,271.28 from accidents involving employer-employee relationships. In total, it recovered about £138 million, and some of those may also have been health and safety at work claims. But somewhere between £75 million and £138 million is being recovered by the Government from compensation that is paid because of health and safety at work claims. How much of this will now not be recovered because the claim cannot be made? Apart from the possible burden on the National Health Service and on local authorities in caring long-term for people who are injured, how much will that cost? How much of the Compensation Recovery Unit’s £75 million to £130 million a year will not be recovered by the Government because of this change. What estimate did they make of that?
Another point is: why are the Government doing this? We are given different arguments. One of them is that there is a compensation culture. I have made some references already to what the Health and Safety Executive has said about these changes but I draw your Lordships’ attention to the document I have in my hand, which is an impact assessment, Strict Liability in Health and Safety at Work Legislation. It is by the Health and Safety Executive itself. I assume that this document, which I got from the net, was presented to Ministers in the process of their assessment as to whether they should proceed with this change. It is not clear whether it was, because it is not signed or dated by the responsible Minister where it should be, but at the top it is dated 11 June 2012. It is a very instructive document because it goes through and assesses, in some detail, not only all the arguments for this possible change but all its potential consequences and tries to estimate them. It fails in every single regard.
I will read just one paragraph for the erudition of the Committee to make my point. It is paragraph 34, which is very germane. The Health and Safety Executive said:
“We assume in the absence of robust evidence that the existence of strict liability duties may contribute towards any over-compliance that exists as a result of the general perception of a ‘compensation culture’. We are however also aware that the network of influences on attitudes and behaviour towards risk is complex”.
In that one sentence, it shoots the feet from the only argument that the Government have to date put into the public domain as to why this is necessary. It is not that there is a compensation culture, because the Health and Safety Executive says in the introductory paragraphs of this report to the Government—and it is the Government’s agency—that it is not clear whether this actual culture exists. Paragraph 2 says:
“The ‘compensation culture’ (or the perception of it) in the UK has been the subject of several reviews over the last few years, but no clear evidence has been presented for its existence”,
so it kicks into touch the idea of a compensation culture and then says that it is a perception of that culture that is the argument.
As I understand it, the argument from Professor Löfstedt, which the Government have adopted, is, first, that even if there is not a compensation culture there is a perception among some employers out there that there is. They are overcomplying in relation to health and safety legislation, where there is strict liability, because they are concerned about the possibility of a compensation culture that they think exists. We are starting off on the basis that there is no proper evidence for the fundamental underpinning of this argument in the first place—at least, there is none that the Health and Safety Executive can find in the almost 40 pages of its impact assessment report to Ministers.
Secondly, if the problem is that some employers, particularly those whom Professor Löfstedt spoke to, have a perception that there is such a culture and that that is affecting the way they behave, the answer is to educate them. Of course, that is part of what Professor Löfstedt recommended. What is conspicuous by its absence in response to Professor Löfstedt’s report is a serious programme of educating employers not to be afraid of a compensation culture, which apparently does not exist, but to apply the law in the way in which they ought to.
What is the consequence of this? It is that Professor Löfstedt says, “There is a perception of a problem here”, and that if the problem is right we need—
Lord Browne of Ladyton
My Lords, I was at the point in my argument where I was making the case for the basis for this change in the law being a perception of a set of circumstances which the Health and Safety Executive argues does not exist, or at least, if it does, there is no evidence that it exists. In order to reinforce this point, I refer the Minister to the Compensation Recovery Unit statistics, which he will find in the performance statistics on the DWP’s website. They show that, in relation to health and safety law, there is no compensation culture in the sense of an acceleration of claims by employees against employers. There has been an increase in claims for which benefits have been recovered, but they appear more to be motor accident claims, and there has been an increase in clinical negligence claims but claims under the employer category have gone down. Settlements recorded by the Compensation Recovery Unit have gone down from 215,000 in 2006-07 to 89,000 in 2012-12. So there are fewer than half of the claims that there were only five or six years ago. The number of cases registered by the Compensation Recovery Unit have gone from about 198,000 to 87,000 in the same period. If anything the trend is significantly down—not marginally—in relation to claims of this nature. There is no statistical evidence or other evidence that there is such a thing as a compensation culture out there in relation to health and safety at work.
Indeed, the contrary is the case, as my noble friend Lady Donaghy has made clear and as was alluded to by my noble friends. In fact, the civil process polices the health and safety at work regime because, for the very small number of cases that are prosecuted in the criminal courts as regards those accidents that happen in the workplace, the regime is policed and enforced by the ability of individuals to be able to claim against their employers. That is another shift that I suggest will happen. If this strict liability is removed, there will be significantly greater pressure on the Health and Safety Executive to prosecute cases in the criminal courts because people will demand some answer to what happened to their relatives who were either killed or injured at work. We see that in almost every other area of public life: a demand for an investigation, a trial or some form of proof. That will increase if we lose the ability for the civil courts to be able to police the health and safety legislative structure.
When Professor Löfstedt looked at this, he drew our attention to something that is very important: that we may not have precisely got the balance between reasonable foreseeability and strict liability absolutely right. Under the 1974 Act, we now have a regime in which, when regulations are made, they are strict liability regulations, unless the contrary is stated. I accept that maybe that has allowed some regulations to slip under the wire and we may have failed the test of the noble Baroness, Lady Brinton, to get the balance at precisely the right place. This is why the good professor made his recommendation that we review those regulations of strict liability. They are either in the tens, or at the very most 200; the Health and Safety Executive’s impact assessment which I referred to earlier suggests that there about 200 of them. If it is as many as 200, is that really too much of a burden for accepting the implication of the first part of his recommendation? That is, that between publication of the professor’s report and June 2013, the Government look at each regulation and see whether it was appropriate for a duty to carry the burden of strict liability, or whether we could appropriately apply reasonable forseeability to it, and therefore provide a form of defence for an employer.
The Government decided without any review, further discussion or consultation, that faced with the two options —one being to look at each of these either 20 or 200 regulations, depending on who you believe, and to decide how many of them needed still to be strict liability—they would take strict liability away from them all. They did this because it was perceived to be easier, but also because this process was all in the health and safety challenge, aptly named staff chamber process. This is apparently a process for deregulation set up by the Government in order to minimise the level of consultation on deregulation and to accelerate beyond the point of the early review to the point of decision and change. That is the answer to the questions of my noble friend Lord McKenzie of Luton about why the Government did not, after apparently accepting the professor’s recommendation, implement it. They were fixed on this staff chamber process.
I would like to be able to share with members of this Committee what really happened, but I cannot find out. Despite the fact that one can go on to the Cabinet Office’s website and click on “Health and Safety Challenge Starts Here”, “The Process, and “How it Works”, when one later clicks on something that says “Health and Safety”, it says that this consultation is now over and Professor Löfstedt has reported. It goes on to cover some other stuff that is ongoing, none of which is of any relevance to any of this. It does not say, in these circumstances of open government, what the Government actually did during the period between apparently accepting Professor Löfstedt’s review recommendation and deciding that they were not going to have what anybody else would call a review, but were just going to jump on to one of two possible alternative solutions to this problem that he suggested existed. That solution was the draconian measure of in the future taking away from a significant number of people the right to any compensation when injured at work through absolutely no fault of their own, and probably because they had been asked to do something inherently dangerous by an employer who is already insured for it and is already paying the insurance.
Candidly, I do not understand why after 100 years of progress, we are now in this situation following months of no proper discussion or consultation. I suggest that apart from a very small number, most people in this country have no idea of the significant effects that this change could have on their working circumstances. It may be inappropriate to do this, but I asked somebody from the House of Lords Library to research this for me. He immediately said that this will have an effect on our working circumstances, and that he had been unaware of this. He is absolutely right. Almost everybody who is in a working environment could be affected by this. If this law goes through and you are asked to work a dangerous and complicated piece of machinery, which probably your employer does not understand properly, and it goes wrong because of some latent defect that nobody could reasonably have foreseen, you will have been put in an inherently dangerous position and, if you are left with a life-changing disability, you could be in the position of not being able to get any compensation. I do not want to be responsible for that sort of change in the law and I venture to suggest that not one Member of the House wants to be responsible for that sort of change in the law, so why is this being pushed through in this way?
If there is a legitimate issue—a question of restriking the balance—why do we not work together in an open and transparent fashion to move the balance to the appropriate point, releasing employers from any quantifiable burden so that they can get to this great new world in which they will create lots more jobs because they do not have strict liability in relation to some of their employees? Why do we not work together to achieve that, because we all agree with those objectives?
I could make many other arguments, but I am conscious that I have spoken for too long. This Health and Safety Executive impact assessment is a veritable mine of arguments against this legislation. I recommend it to the Minister. I am certain that we will return to this issue on Report and I suggest to him that there is a way forward.
I have a series of questions, some of which may already have been asked, but the Minister needs to be able to answer them. One of them is: what is the evidence base for this change? It is not apparent in the impact assessment, so what is the actual evidence base? The question is not what the perception is; it is what the evidence is. What assessment have the Government made about the number of claims that will be affected? Is it a comparatively small number or is it a substantial number, as we are told by the Association of Personal Injury Lawyers? Are the Government in exactly the same position as the Health and Safety Executive in saying, “We haven’t a clue and we do not know; in preparing the impact assessment, unless we put a disproportionate amount of work into it, we have no way of working out how many claims are affected by this change in the law”?
What is the Government’s assessment of the cost of shifting the burden to the NHS and local authorities, as well as the loss of money for cover by the Compensation Recovery Unit? What is the Government’s assessment of the effect that this will have on employers’ liability compulsory insurance, if any at all? My view is that it will have none, so to that extent it will not reduce the burden or the regulation on employers. If the Government believe that it will reduce premiums that are already not covering the claims, what is the argument for that? Are there employers out there who believe that their insurance premiums will go down if they live in this brave new world? If they do, they are kidding themselves.
All these questions need to be answered but, much more important, the Government need to go back to Professor Löfstedt’s report and say, “There are two alternatives here. We could take a scalpel to this and we could identify and change the regulations that are inappropriate for strict liability, thereby creating the assurance and certainty that employers need to be able to move into this world of deregulation that apparently they told Professor Löfstedt they wanted. Alternatively, we could just take it away from everybody”. What is the argument for taking it away from everybody when it means taking it away from sets of circumstances in which that is an entirely inappropriate thing to do and where it will create massive injustice, as my noble friends have made clear? What is the argument for that? I say with respect to the noble Lord, who I know will try to answer these questions, that if he cannot answer them he is not entitled to change the law in this way.
Viscount Younger of Leckie
I would need to refer back to the report to give the noble Baroness a full answer. Indeed I shall do so.
The effectiveness of the health and safety regulatory framework has also been highlighted by Professor Löfstedt, as has been mentioned today by several noble Lords, in his independent review, Reclaiming Health and Safety for All. Both my noble friend Lord Young of Graffham, whose report received much support across the House when it was debated, and Professor Löfstedt found that there is no case for fundamental change of the health and safety framework itself and that the existing regulatory requirements are broadly right. In fact, the biggest problem today is the way in which the regulatory requirements are interpreted and applied.
No one can be complacent. If we are to build on the steady progress made, we need to take action to tackle the current myths about health and safety, myths which the Health and Safety Executive see as such a problem that it has set up the Myth Busters Challenge Panel to provide a mechanism so that anyone who receives advice in the name of health and safety which they believe is disproportionate or inaccurate can challenge that advice.
Businesses consistently report that these myths lead to confusion about what the law actually requires and a fear of being sued, which, in turn, drives employers to overimplement the law in an effort to protect themselves and indeed discourages them from expanding their business. This in turn reinforces the perception that the application of health and safety law is unduly burdensome. I shall have more to add to that later.
This situation results in responsible employers taking an overly cautious approach, which has a detrimental effect on their approach to controlling risks properly in the workplace. For example, spending considerable resources on disproportionate paperwork and record-keeping, far in excess of what is necessary to comply with the law, diverts employers from taking a sensible approach to identifying the risks that actually affect their business and their employees, and taking sensible day-to-day precautions to protect their employees from those risks.
In the interests of both employers and employees, the aim is to improve understanding of what the law actually requires and to allay fears about possible litigation to help build employers’ confidence to take on new activities and further develop their businesses and to include recruiting new employees, which is so vital today.
To address these issues, the Government are implementing a package of measures, based on the recommendations of my noble friend Lord Young of Graffham and Professor Löfstedt, to reform both the civil litigation system and to restore a common sense approach to health and safety. This measure forms part of this package and I would reassure noble Lords that its introduction into the Bill at a later stage is purely due to the timing of the publication of Professor Löfstedt’s report and the Government’s desire to address the concerns he raised at the earliest opportunity.
We have already put in place a programme of work to improve understanding by simplifying the supporting guidance that explains what the law requires and to consolidate and clarify the body of health and safety regulation in a number of key industrial sectors. This programme builds on the work carried out as part of the better regulation initiative led by the previous Administration.
The clause does not change the duties placed on employers, but amends Section 47 of the Health and Safety at Work etc. Act so that in future, unless the legislation provides for an exception, it will be possible to bring a claim for compensation in respect of a breach of health and safety legislation only where it can be proved that the employer has been negligent.
Claims for breaches of the general duties of the Health and Safety at Work etc. Act can already be brought only for negligence. The change in this Bill simply extends this position to regulations made under the Act to create a consistent approach to civil litigation for all health and safety legislation. This means that if an employer fails in their duty of care towards their employee they can of course be successfully sued. However, where an accident has taken place and the employer could not have reasonably done anything about it, they should not be liable.
In the knowledge that they will not be liable if an accident happens which is totally outside their control, this change will support responsible employers, who take care to protect their employees, by encouraging them to take sensible steps to manage workplace risks. I am grateful for the speech made by my noble friend Lady Brinton and the example that she gave to support the helplessness that some businesses can experience where there is no defence for them. This will not assist irresponsible employers who fail to comply with the law as they will have no defence to an accusation that they did not take all reasonable steps to protect their employees.
This amendment to the Health and Safety at Work etc. Act has been adopted in preference to amending each strict liability duty, as Professor Löfstedt suggested, because an approach targeting each strict duty would be much more complex, and therefore complicated for businesses and their employees to understand.
The noble Baroness, Lady Turner of Camden, brought up the concern that the law would go backwards, which I think was her expression, and the employer would hold all the cards. I would like to assure her and all noble Lords that the provision will affect only a small number of duties that are unqualified. In any claim for negligence, the existing regulatory requirements on employers will remain relevant, as the courts will look to the statutory duties, approved codes of practice and established guidance to inform them about what risks a reasonable employer should be aware of and the steps they would be expected to take to manage those risks. I stress again that this change will only assist responsible employers who have done what is required of them and can demonstrate this.
This amendment reflects an adjustment to help rebalance the civil litigation system and, as part of the wider reforms of the system, is a proportionate response to the impact that strict duties currently have in the civil litigation system identified by Professor Löfstedt. It also has the benefit of creating a consistent approach to civil litigation for all health and safety legislation.
Currently, most claims are brought for both breach of statutory duty and negligence and, in practice, it is anticipated that the vast majority of claims will still be capable of being brought for negligence. For the small number of cases where this is not possible, as now, individuals will be able to claim for financial and other support through the state benefit system.
This measure is not about reducing the number of claims. It is about establishing the principle that an employer who has done nothing wrong should have the opportunity to defend themselves on the basis of having taken all reasonable precautions. Providing employers with this important reassurance will help them to manage health and safety risks in a sensible and proportionate way.
Lord Browne of Ladyton
At the heart of the noble Viscount’s argument there are general arguments about numbers. The Health and Safety Executive’s impact assessment says that this change will affect 200 sets of health and safety regulations. When it seeks to answer its own question about the number of cases that this will effect, it says that it has not a clue. In the light of that information, which I have here in this assessment before me, could the Minister please tell the Committee on what basis he estimates that this will impact on a small number of regulations and cases? If that is wrong, we are legislating here on a false basis. The HSE has no idea what the statistical base of this is.