Mesothelioma Bill [HL]
Lord Howarth of Newport Excerpts(11 years, 5 months ago)
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Lord Freud
My Lords, before there are any other contributions on this topic, it might save time if I respond rapidly to the last point mentioned by the noble Lord, around Amendments 1, 2, 4 and 5, about establishing the scheme on a statutory basis. Clearly that is the recommendation of the Delegated Powers and Regulatory Reform Committee. We acknowledge the concerns behind it. In the time between the recess and the Committee stage it has not been possible to do more than consider the proposed changes to the Bill. I am sure that noble Lords understand exactly what I am saying. I understand their concerns about the means by which the scheme is established and we are giving the matter due attention. I hope that those remarks might save a little time today.
Lord Howarth of Newport
My Lords, I hope the Committee will allow me to speak. I apologise for arriving late. My excuse is that the document issued by the government Whips’ Office informed us that business was to begin at 3.45. I am obviously lagging behind everyone else. I apologise particularly to the noble Lord, Lord Avebury, for missing the beginning of his remarks.
Obviously what the Minister has told us is strongly encouraging. It points us in the direction we all want to go—and certainly in the direction that the Delegated Powers and Regulatory Reform Committee wants the Government to go—and the noble Lord, Lord Avebury, was quite right to quote from that paragraph. As he says, it is very powerful on this point.
I am sure that Parliament will welcome it if the Government decide that this scheme is after all to be introduced under a statutory instrument. We received this morning the draft rules of the new scheme and while I congratulate the Minister on enabling us to have them, as he undertook to do, by the time we reached Committee, at the same time I grumble a little that we only had them during the course of this morning. We will want time to study them and no doubt revert to the issues contained within the draft proposals.
“( ) the person was self-employed at the time of exposure to asbestos,”
Lord Howarth of Newport
My Lords, the two amendments in this group, Amendments 7 and 8, would extend eligibility under the scheme to two classes of people who, as I understand it, are not eligible under the Bill as drafted and the scheme as proposed. The two classes of people are those who are self-employed and were exposed to asbestos and in the course of time contracted mesothelioma, and family members who have contracted this appalling and fatal disease as a result of doing the laundry of an employed person who came back home with asbestos fibres on his workwear. There will have been many people who were self-employed in the building trades and the construction industry over the years. I do not know whether the department has any information as to the numbers. It would be helpful to the Committee if the Minister were in due course able to give us an idea of the scale of this problem.
The Minister may take a severe view of the case of a self-employed person who did not insure. He may argue that it is unfair to insurers that they should pay a levy into a scheme to compensate someone who failed to insure when it was his own responsibility as a self-employed person to do so. To that, I would say that the whole Bill is based on rough justice; competent, respectable insurers are required to pay for the dereliction of their colleagues in the insurance industry who lost or even wilfully destroyed documents. There is also rough justice for the recipients, who are invited to be content with 70% of the amount that they might receive in an award from a court. On the other hand, the self-employed and their dependants suffer exactly the same as employed people and their dependants. There seems to me to be a strong moral case for treating them alike.
The Minister may pleasantly surprise me, but if he does take that severe view of the case of those who did not insure on their own behalf, what of self-employed people who died insured but whose documents have gone missing? The insurance company no longer has them and, although there is tentative evidence that a self-employed person was insured, it is not substantial and the case cannot be proved. Why should not a person in that predicament be covered by the scheme? They and their dependants are in exactly the same boat in terms of suffering and loss as employed people.
Let us also consider the predicament of wives, partners, daughters—family members, people in the same household—who contracted the disease because they were doing the washing. I am personally aware of the cases of three people where that has occurred. It is entirely possible that someone could catch mesothelioma through washing the workwear of their partner or parent where the employed person has not, although they may contract it later. The dependant, the family member, the person caught in that situation, is equally the victim of an employer’s neglect. It seems morally wrong not to include such people in the scheme on the technicality that the person who was the employee has himself not been diagnosed. Insurers ought to be willing to embrace those people within the scheme.
People in that predicament are eligible for compensation under the 2008 statutory scheme, I believe, but the difficulty is that payments under the scheme are very small by comparison with payments that would be made under the scheme that we are now considering. Again, it would be helpful if the Minister or his officials could give us any idea of the number of people in that second category to which Amendment 8 is addressed.
If the Minister says that the insurers should not be obliged to extend the scheme to support people in either of those groups, I should be grateful if he will tell us what the Government will do to create justice for them. I beg to move.
Lord James of Blackheath
My Lords, before I comment on what the noble Lord, Lord Howarth, said, I declare my interests. I was an elected member of the council of Lloyd’s throughout its entire rescue period; I was chairman of the audit committee of Lloyd’s of London; and I was chairman of the committee that created Equitas, which effectively brought about a solution. I am afraid that I have lived and slept with this thing for rather too long in my life.
The noble Lord, Lord Howarth, is quite correct, but he opens up a much bigger issue, which I do not think that he has spotted. That is that in the realm of self-employed people, the Navy did not necessarily re-equip its own boiler rooms on the three vessels which have had the biggest ever death rates: HMS “Britannia”, HMS “Albion” and HMS “Furious”. Therefore, all those people who were self-employed and contracted in would come entirely within the compass of the noble Lord’s concern, and I support that.
I pre-warned the Minister that I have now set the Admiralty on the issue of the effects of the Bill for it and its former members. The noble Lord, Lord West, who was here just now, asked me to pass on the message that he is going to be very upset if he is allowed to die without being given his handout. He was one of only two commanding officers ever to be given a permit to sit in the boiler room during a major reconstruction, so he is almost certainly at high risk. The other one, who was the commander of the “Britannia”, has already died.
There is a very serious concern here regarding the naval forces. As the Minister knows as a result of our meeting the other day, there was a discussion in the House on 24 November 2008 led by the noble Baroness, Lady Taylor of Bolton, on behalf of the armed services at that time. She responded to my concern about the repeal of Section 10 of the Crown Proceedings Act 1947 and its replacement by the Crown Proceedings (Armed Forces) Act 1987, which had the effect of precluding any claim for asbestosis against any single person of the Armed Forces from anyone who had failed to put in a claim for an identifiable disease at that time. There were only 10 years in which such a disease could be identified, but we are talking here of a 30-year incubation period. In the region of 200 members of the Armed Forces are currently still at huge risk—it is virtually an inevitability—of suffering from this terrible disease and absolutely nil provision or obligation rests on the armed services to look after them or their dependants. I think that somewhere down the line we need to alter this Bill to allow a once-and-for-all, final opportunity for justice on their behalf. I shall return with an amendment to this effect once I have had my discussions with the Admiralty, but for the moment I just want to put down a marker.
Lord Freud
I really will have to come back on that. It sounds to me like quite a complicated legal position. The whole point of this scheme is to try to drive through a very rapid response. In this case, of course, these things are known. There should not be a problem of not knowing who is liable for what. That is what the Bill is trying to do. I will try to get an answer to the noble Baroness’s question, but it is by way of academic interest rather than core to what we are trying to do here. I ask the noble Lord to withdraw the amendment
Lord Howarth of Newport
My Lords, I thank all noble Lords who have contributed to what we knew would be an important debate but has also turned out to be a very impressive one. The debate has revealed complexities as well as possibilities that I hope we can all reflect on and look for ways to explore constructively.
No fewer than 11 noble Lords apart from the Minister contributed, and they came from all around the United Kingdom. My noble friends Lord Wills and Lady Golding gave us case studies from their own constituency experience that were significant and revealing. The noble Lord, Lord Martin of Springburn, told us about his own industrial experience, which was illuminating; the case of the mum who did the washing was particularly poignant. My noble friend Lord Wigley from Wales and the noble Lord, Lord Empey—whom I shall also call my noble friend, if I may—from Northern Ireland illustrated the range of this issue, as of course did my noble friends Lord Moonie and Lord Browne of Ladyton. The debate benefited very much from the medical experience and expertise of the noble Lord, Lord Walton of Detchant, and my noble friend Lord Moonie.
We have had a very valuable debate, with many issues raised. My noble friend Lord Browne of Ladyton probed most determinedly and effectively as to who exactly is covered. It may be that the Minister is fortified with legal advice that enables him to declare confidently, definitively and with the utmost clarity who is covered and who is not, but we suggest that there is more to look at here, particularly in the case of family members. It seems to contravene common sense to suppose that there is no liability where someone contracts the disease as a direct consequence of the predicament of the person who was employed and was, or should have been, covered by employer’s liability insurance. It is hard to believe that such people are not covered.
My noble friend Lord McKenzie raised a question that has become increasingly pertinent over the decades in which this whole problem has been gestating: the shifting nature of self-employment. With the increase not only in contracting-out by public departments but in subcontracting by major firms, and with the rise of such practices as zero-hours employment, it becomes very difficult to say with confidence who is employed and who is not, although no doubt there is case law on this. I hope that the Minister will want to satisfy himself that the definition of self-employment sufficiently overlaps with the definition of employment in a great range of relevant situations, such that we can appropriately bring self-employed people within the compass of this scheme. I think that it is worth investigating further.
Issues arose as to public liability. My noble friend Lady Golding’s case study raised it, and the noble Lord, Lord James, talked about what the responsibility of the Lords of the Admiralty may be. I was encouraged to a degree that the Minister seemed to be saying to us that the question of the liability of the Crown and of public departments does warrant further investigation. It may be that, in the interests of getting this scheme up and running as quickly as possible—which we all want—it may not be appropriate to try to redefine the scope of the scheme or the compass of this particular Bill to take account of everyone who was in a situation of being employed by the Crown or by some other public agency when they were exposed to asbestos negligently. However, if a parallel scheme can be created, I think that that would only be right and proper.
While I would never suggest that the Minister is meagre or defensive and I completely respect and applaud his motivation in bringing this Bill before us, I hope that he will not stand pat on the deal that he has negotiated. However, we can come back to that. It seems to me that, as legislators, it is our responsibility to take a view as to what the public interest is and to amend the scheme that he is proposing to us, which he has negotiated with the industry, so that it better satisfies justice and the requirements of the public interest. In the mean time, I beg leave to withdraw the amendment.
Lord Howarth of Newport
My Lords, we need alternates. I am looking forward to an imminent group where I shall have nothing to say. I am sure that the Committee is looking forward to it even more.
This is one amendment in a group that deals with the start date or, as it might also be described, the cut-off date. Amendment 9 is the most radical amendment in the group. It would simply abolish the start date of 25 July 2012, which is written into the Bill, so that the scheme would then encompass anyone who is still alive and contracts mesothelioma in consequence of employer’s negligence, and their dependants, as well as the dependants of people who have already died.
The noble Lord, Lord Freud, explained to us at Second Reading that the case for disqualifying anybody who was diagnosed with the disease before 25 July 2012 was that it was only at that moment, when he made a Statement to Parliament in which he declared the Government’s intention to introduce this scheme, that the insurers could start to reserve to meet the costs of the scheme. I would certainly take the view that at the very least, we should go back to the date at which my noble friend Lord McKenzie of Luton, the Minister’s predecessor, announced his consultation with a view to introducing the scheme on 10 February 2010. From that moment onwards, the contingency was clearly foreseeable by the employer’s liability insurers. I would go further even than my noble friend Lord McKenzie goes in his amendment. I would simply say that the insurers should always have reserved. That is what insurance is about.
Lord James of Blackheath
Perhaps the Minister will allow me to make one last entry into this debate. I believe that I can answer part of the question asked by the noble Baroness, Lady Sherlock. I am probably the only person in this Room who has ever made a financial provision for asbestosis. I did so on the last day of December in 1998 when I signed off the creation of Equitas; £12.8 billion of assets were locked in an investment fund put together by Warburg’s, with the countersignature of the Bank of England on it, so it was pretty good. The £12.8 billion has been sitting there and can be used only for each category of settlement of claim. One category is labelled asbestosis. I left £6 billion in there, but it is £6 billion with an annual growth rate of 6%.
When Equitas was sold for a knock-down price to Warren Buffett’s Berkshire Hathaway in 2009—I hasten to add, not with my approval—he took over all the asset reserves that were left. So even after Equitas had traded for 13 years, he got a residual balance of £8 billion of my original £12.8 billion—still growing at 6% per annum. My calculation at that time was that he was left with £5 billion for asbestosis. But the £5 billion effectively included a great deal of unidentified claims, because it was largely rolling up the reinsurance claims around the world. It is very incestuous, this claiming business: everybody insures each other and they come up with these collective figures.
At the moment, my estimate is that the global reserves for asbestosis of all the insurance companies in the world are £65 billion, including all the reinsurance markets around the world as well. But they do not expect that that £65 billion will be paid out. Let us suppose that you settled Turner & Newall for £1 billion—you will not, but let us suppose you did. You would take £1 billion out of the Lloyd’s of London reserve of £5 billion and you would have £4 billion left. But immediately you would have wiped out the consequential reinsurance demands down the chain, so the whole industry would write back as profit something in the region of £15 billion to £20 billion of released reserves.
We have a huge potential gift to the insurance industry here and we must not give it away too cheaply. We can screw this insurance industry into paying what it long since has deserved to pay. Why has it not settled so far? Right through the six years of the collapse and rescue of Lloyd’s of London, the great myth was that there was a massive amount of claims arising in the USA that we had insured and that those claims were largely spurious because they had used television advertising to get people to join up. You did not have to have any illness or even to have been in an asbestos building; you were just told, “Sign up, join in, it is a free lottery ticket”—that was the advertising in America.
We were expecting, having worked at government level and failed, to get the American President to impose strict standards on the American industry to force it to have only legitimate claims. If that had happened, we would have taken billions out of our liability and saved Lloyd’s of London without the need of Equitas. It never happened, but then up comes Warren Buffett and buys it for a knockdown couple of billion. I would put a very substantial sum of money on him having a letter in his back pocket from the President, agreeing to write off those claims or to curtail them. He is going to rip out the whole of that profit. We should not sell cheap on this; there is a huge amount out there, which we can get, and we need very much to play hardball.
Lord Howarth of Newport
Given the noble Lord’s deep knowledge of this, since Equitas was set up to rescue Lloyd’s from the chaos caused by its exposure to asbestosis claims, Equitas must presumably have a great deal of documentation in its files. The missing documents that would enable claimants to validate their claims before the courts might conceivably, in some cases, be within those files. Are they now in the custody of the “Sage of Omaha”?
Lord James of Blackheath
In the main, they are in the custody of what was the Department of Trade and Industry, because it oversaw and supervised this. It should be the port of first call for that.
Your Lordships must understand that, on Lloyd’s of London and its reserves, it still has not closed the file on the “Titanic” because it was not the “Titanic” that sank. Perhaps you know that story. It was the “Olympic”, which was substituted at the last minute because it was not finished and ready to sail. On those grounds alone, Lloyd’s of London has refused to settle most of the claims on the “Titanic” ever since, because the claims were all on the wrong ship.
Lord Howarth of Newport
My Lords, this has been a valuable opportunity for us to begin to explore one of the most important issues arising from the Bill, as well as one of the most technically complex. The noble Lord, Lord Alton, made the important point, in addition to the observations that I had made, that for many years insurers pocketed the state payments of lump-sum compensation. Again, that needs to be taken into account in evaluating where justice lies.
I am particularly grateful to my noble friend Lord Wills for supporting my amendment, but the majority of noble Lords who have participated in the debate have preferred to focus on whether the start date for the scheme should be February 2010. I do not doubt that that is where the focus will remain when we revert to this matter.
My noble friend Lady Sherlock asked the most beautifully expressed and forensic questions, about which she was too modest, but there is no question but that the interventions of the noble Lord, Lord James of Blackheath, were like flashes of sheet lightning across the proceedings of the Committee. He gave us some remarkable figures about the sheer scale of mismanagement, before he came to the rescue through Equitas, but also the sheer scale of loss, I fear, to the interests of this country in many important respects, because of the sale of the assets of Equitas at a huge discount to Berkshire Hathaway.
I was, however, particularly struck by what the noble Lord had to say about the documentation. If the DTI has somewhere in its vaults great crates of documentation dating back decades concerning employers’ liability insurance, the Minister may well have to go back to the drawing board to start again. We do not want him to do that, because we want the scheme, in a significantly improved version, to hasten to the statute book.
Lord Freud
I remind the noble Lord that Equitas and Lloyd’s were dealing with reinsurance, not primary insurance. There may be some information there, and it may be of great interest to the insurance industry—I am sure that it is looking at that—but, regrettably, I can assure him that there is no reason to pause the Bill because of that information.
Lord Howarth of Newport
I certainly accept that point, but I also noted what the noble Lord, Lord James of Blackheath, said about the incestuous character of the industry, how involuted it is and how they all insure and reinsure with each other. If we are to unravel what has happened—a later amendment to the Bill points us towards a further effort to unravel the past, the most deeply regrettable and scandalous past—in this area, the DTI archives may be an early port of call. I hope that the noble Lord, Lord Freud, will not dismiss the possibility that the documentation associated with Equitas which reposes in the DTI archives may enable more people to be able to make a claim for employer’s liability if they have access to those files.
The Minister told us that he fought to get his Statement out by 25 July 2012, and I can well believe that. We praise him and thank him for getting it out even at the last moment before Parliament rose for the Summer Recess.
On the question of reserving, I venture the observation that, whatever the rules and regulations may be, they do not prevent insurers from reserving prudently against liabilities that they can reasonably foresee. I am not impressed by the Minister’s argument that the scheme’s eligibility should run only for people diagnosed after the date on which he made the formal announcement that the Government would bring in a scheme, and that it is only from then that insurers could begin to reserve against that liability. I just do not accept that. We will need to think much more carefully about the obligations on reserving, but there was never anything to prevent insurers from reserving against something which they could and should have foreseen, not just from February 2010 but from the very first date at which they began to provide employer’s liability insurance.
As for the noble Lord’s fears that if the levy were increased to pay for a more expensive scheme, the insurers would simply pass on the extra costs to employers—well, they will pass on whatever they can to employers just as soon as they can. As I understand it, that is how insurers operate. They pitch their premiums at a level that they believe the market can afford. There is some downward pressure because of their need to compete with fellow insurers but collectively they will all rejoice in market conditions that make it possible to raise their premiums. Of course, they will use any excuse they can to raise their premiums because they want to maximise their profits. I do not see that holding down the levy is going to stop employer’s liability insurers raising their premiums just as soon as they can. Any additional costs from extending eligibility for this scheme to different categories of people or people who were diagnosed at an earlier date are not likely to make a material difference to the premiums that are sought in the market because there is a host of factors in the market that shape the level of premiums that insurers seek to be able to sell. This is only one and far from the most substantial among them.
We will return to these issues. In the mean time, I withdraw the amendment.
Lord Pannick
The noble Lord is right. As I mentioned, there are other examples. Parliament imposes levies when it thinks it is appropriate to do so in order to promote a valuable public purpose. There are many examples. I am grateful to the noble Lord.
Lord Howarth of Newport
My Lords, I add my thanks and congratulations to the noble Lord, Lord Alton of Liverpool, on tabling this amendment. He has been a consistent, determined, passionate and highly effective advocate for sufferers of mesothelioma and this is one more instance of his very good work. I was happy to sign the letter that he initiated to the Times but there was no room left for me to add my name to the amendment.
It is profoundly desirable that more funds should be invested in research in this field. It is good that the industry, spurred by the British Lung Foundation, has already contributed £3 million and even better that it has stated its willingness to contribute more, provided that the state provides what the industry would regard as an acceptable contribution, which I guess means more than match funding.
I would be grateful if the Minister or the noble Lord, Lord Alton, could cast some light on why we have not yet seen a greater volume of state-funded research in this field. The Department of Health and the NHS have very large budgets for research; the business department has a substantial budget enabling it to fund the Medical Research Council; and there is no lack of public funding available to be applied in this area.
The normal principle is that those to whom decisions on the use of state-provided funds for research are entrusted look to receive high quality research applications. Surely such high quality research applications must have been forthcoming. The noble Lord, Lord Kakkar, spoke, in some sense, on behalf of University College London, where there is an important programme of research in the field of cancer. He also alluded to the Sanger Institute at Cambridge. If we are talking about academic institutions of the highest quality willing to commit themselves to work in this field, it is a puzzle to me why they have not been able to obtain more of the funds that the state provides for research. It may be that not enough appropriate proposals for research have yet been formulated, but I am puzzled about that and I would be grateful if the Minister would cast some light on it.
Perhaps he is going to say that the DWP, which itself has a substantial research budget, will be willing to find additional money to earmark in this direction. However, even the DWP probably insists on quite high quality in its research, so the same constraints might apply. However, those constraints should not be meaningful in this area. We are talking about a subset of the broad field of cancer research. There is an abundant willingness to fund it. I really want to know why it has not happened. Of course, I hope that it will and I hope that this amendment, whether or not it is modified as the Bill proceeds, will be the means to opening up a greater flow of funding towards mesothelioma from the state as well as the industry and perhaps also the charitable sector.
Lord Freud
To be honest, I do not think that we have looked at that as an option. I will have another look around the wheel to see what there is, but where I have come out is that we need a mainstream effort with the people who are interested in this matter to push it up the agenda of the country. We need to say, “This needs research and it will take a decent share of the budget that is available for cancers in this country”.
Lord Howarth of Newport
When the Minister goes round the wheel again and has conversations with the Minister in the Cabinet Office responsible for the Office for Strategic Coordination of Health Research, and when he meets Professor Dame Sally Davies again, will he try to find out why the money has not been forthcoming so far? Is it political, because the view is taken that there are not terribly many sufferers from mesothelioma as a proportion of the population as a whole and therefore they are not a priority, or is it because this field is unfashionable among academics? We need an explanation because it is very puzzling. Given the existing structures, conventions and procedures, I cannot see any reason why the money should not already have been made available.
Lord Freud
I have actually got round to asking that question already, so I can answer it now. The reason is that it is an unfashionable area because it was believed that there was no hope. We caught it late, it was happening over a very short period and it was fatal. It was an unfashionable area to go into and therefore the people who wanted to make their careers in research turned to other cancers. As a result, good-quality research proposals were not coming in and therefore the research council did not feel that it could supply funds. That is the reason and it has been the reason for decades. With regard to breaking that cycle, the insurance industry and the voluntary groups working with the BLF have started rolling the stone down the hill, and I think that we are now in a position to get something moving. However, it is a bigger issue than just getting a little bit of money through this device.
Lord McKenzie of Luton
My Lords, as the Minister will be aware, while I am supportive of the scheme that he brings forward, there is a need for key improvements. Foremost among these is the proposed level of scheme payments. We have seen nothing definitive, but the impact assessment suggests that it could be pitched at 70% of the tariff. The tariff will be set in age bands of one year and it is understood that it will be based on average compensation awards of claimants and dependants, in respect of those diagnosed with diffuse mesothelioma. The impact assessment also states that by linking payments to age, the overall cost of the scheme will be reduced because of the rise in age of those diagnosed.
The suggested likely level of payout of 70% is the component of the scheme which most noble Lords at Second Reading considered unacceptable. An increase in this level of payment is the most important change we can make to the Bill. It is difficult to pin this down in the primary legislation but we need to have something clear in the Bill. What levels of payment are actually made depends upon the computation of average compensation claims as well as the percentage award.
As to average compensation claims, we need to be assured that this is a fair basis for constructing the tariff and that it does not unfairly depress the amount of compensation claims which would have been payable to scheme beneficiaries had they been able to access compensation on an individual basis. There is no inherent reason why the cohort of scheme claimants should not reflect the average of those accessing compensation in the usual way.
We have seen the national institute’s statistical note, which merits more detailed scrutiny. However, we have not seen that translated into a tariff schedule which supports the impact assessment levy calculations. When might this be available? The national institute note sets out various measures of average compensation, including the arithmetic mean, the median and a variety of trimmed means. Which average is to be used?
Table 3.4 of the paper sets down some average compensation tabulations but it is unclear whether either of model 2 or model 4 will be adopted. Further, it would appear that in Scotland, for example, actual awards are on average some £60,000 higher than in the rest of the UK. Is this right and are there any other large regional disparities of which we should be aware?
At Second Reading the Minister referred to setting payment figures at 70% as a “real juggling act”. The argument runs that if the levy is small, in a reasonably competitive market providers will absorb it and not seek to pass the cost on to British industry. The impact assessment points to research both ways on this matter, although it also suggests that it is worth noting that even if insurers did pass the costs on to employers the impact on employer customers is likely to be relatively low.
The argument being used to significantly depress payments to sufferers of mesothelioma is thin to say the least. Where is the evidence that at a 3% level they will absorb the costs but above that they will not? Is it not the case that there is a variety of issues and costs which will feature in employer’s liability insurance pricing and that these policies might anyway be bundled with other insurance products? Even taking the Government’s argument at face value, their position cannot be justified.
Taking into account the government contribution in year one, the levy on insurers is, on average, estimated to be 2.24% of a 70% level of payment. This would imply an average level of some 3.2% if the payment were set at a 100% level, an extra 1% of gross written premiums, or £15 million per year over the 10-year period. From the point of view of the insurance industry, this would not appear to be an unmanageable additional amount.
It should be borne in mind that the industry is still not bearing the costs of other asbestos-related and long-term diseases where employer’s liability policies cannot be traced. The Minister has suggested that the diffuse mesothelioma scheme covers 70% of the payment amount that would fall due if there were full coverage, so there is benefit still accruing to the sector just because old policies have been lost or destroyed.
However, this aside, we should not be looking at this only from the point of view of the insurance sector. We need to give full consideration to those affected by this terrible disease. If their condition is a result of negligent workplace practices, why should support for them be discounted by 30%? Indeed, on a matter that we have to pursue in the future, we remain to be convinced that the scheme payment could not be subject to greater benefit recovery than a composite level of compensation payment. However, we will return to that issue.
If it is right—and it is—that payments should be made, they should be the full compensation equivalent. It has taken a long time for a scheme to be developed and we continue to pay tribute to the Minister for advancing this, but there is no excuse for now short-changing those who, we all agree, should get justice. I beg to move.
Lord Howarth of Newport
My Lords, my Amendment 18 is grouped with Amendment 15, just moved by my noble friend Lord McKenzie, and it drives at very much the same purpose. Both of us seek to ensure that the scheme payments will match the average of court awards for people in comparable circumstances, thereby lifting the figure from 70% of the tariff to 100%.
I have not been able to discern any principled basis for this figure of 70%. I think that it was the best deal that the Minister could secure. I do not underestimate his achievement in securing that deal against an insurance industry that for decades fought a rearguard action to try to escape from its proper liabilities. At Second Reading, the Minister told the House of the press investigations into the mesothelioma scandal in its various dimensions from 1965 onwards. As time went by, we understand that policies went missing wholesale. As the Minister also told us at Second Reading, it was not until 1999 that the industry created a code of practice for the better tracing of employer’s liability policies.
As I said in an earlier debate, I do not think that Parliament needs to feel that it is bound by the deal that the Minister has secured with the industry. We respect the Minister’s efforts in securing that deal but it is our duty to take a view on where the public interest lies, and I do not believe that it lies in palpable injustice or in the convenience of the insurance industry at the expense of mesothelioma victims. It is surely unacceptable that mesothelioma victims should be penalised because, through no fault of theirs, documents have gone missing, and it is unacceptable that the insurers, whose duty it was to keep proper files, should benefit to the tune of 30% in precisely those cases where they failed in their responsibilities.
The Minister will argue to us again, I think, that there needs to be a discount in order to incentivise claimants to go to the courts first. However, I am not persuaded by that argument because it seems to me that the procedures of the scheme—the portal and the remit of the technical committee—will all ensure that they do go to the courts first if they can and that they pursue that avenue until they find that they cannot proceed satisfactorily or successfully along it. Be that as it may, in any case a 30% discount is simply too large. The Financial Services Compensation Scheme provides cover for 90% of the liabilities of insolvent insurers where insurance is compulsory. That 90% should be the very minimum and 100% would be right.
Lord Avebury
My Lords, I certainly agree with the noble Lord, Lord Howarth, about the incentive argument. I thought that that was comprehensively demolished at Second Reading and I hope that we are not going to hear it again from the Minister this afternoon.
I also think that my noble friend should pay attention to the fact that this was one of the subjects on which all the speakers at Second Reading were unanimous in saying that 70% was simply unacceptable. Whether it should be 100%, 90% or some other figure much higher than 70% could be a matter of argument between us. However, there are certainly very strong reasons for saying that the 30% deduction is totally unfair and unacceptable to the majority of your Lordships.
My noble friend said at Second Reading that he was keen to avoid the insurers passing all, or virtually all, of the levy on to existing insurers. As the noble Lord, Lord McKenzie, said, this would not require a very large increase in the premiums to be imposed. It is logical to assume that insurers would also be constrained by the effects of competition. Some might be inclined to pass the whole burden on to other insurers, but would be constrained from doing so by the thought that if others did not then they would obtain all the business. The threat of the insurers passing on the burden is a very slight one.
If there were an increase from 70% to some higher figure, that would not happen suddenly. Presumably, a proportion of the insurers might pass on some of the burden as we approach 100%. I do not think that the Minister has any objective evidence to show to what extent this would happen. I would be very glad to hear from him if he thinks that there is evidence of something that must be hypothetical and cannot intrinsically be tested without actually trying it.
Lord Freud
My Lords, the amendment seeks to set the rate of payment at 100% of the average civil award amounts. Many noble Lords expressed opinions about this at Second Reading as well as today. I know that I have the support of all present today in wanting to guarantee the maximum payment possible for those people who, through no fault of their own, cannot bring a case against a specific employer or that employer’s insurer.
To tidy up some of the questions asked by the noble Lord, Lord McKenzie, on the tariff tables, I think he caught that they were published in an ad hoc statistical report only today. I apologise that it is so late; we will circulate all of that to Peers tomorrow. It is based on a survey of civil compensation undertaken between 2007 and 2012 registered with the Compensation Recovery Unit, so it is a broad mix of cases. That is what the figures are based on.
To make a point that is really at the heart of this, and as many noble Lords have pointed out, if we were going after the people who should pay the money, it would be a very different proposition in terms of justice as opposed to our asking for money from a group of insurers that may or may not have been doing this business during the time. We are actually asking a group of active insurers to carry a particular burden when we know that of the industry as a whole, 40% are in run-off, including many of the biggest ones involved in mesothelomia. If one looks at insurance as one industry, all in one category, that is one way of thinking; if one starts to individualise what different insurers are doing, it becomes a different debate.
Lord Howarth of Newport
I understand that argument, but can I put two other considerations to the noble Lord? When the Lloyd’s insurance market ran into very severe difficulty on account of asbestosis claims—I forget when that was—it had to act collectively to rescue the reputation of the London insurance market. I think we are in a similar situation here. I also put it to the Minister that the active insurers are advantaged by the fact that other run-off insurers have either failed or given up the business. They are the insurers who are now in the market and dominate it. Considering that they benefit from the absence of those erstwhile competitors, they are in a perfectly strong position to shoulder the moral and indeed the practical responsibilities left behind by those who have abandoned the field.
Lord Freud
It is always a dangerous thing to base it on a moral argument, particularly in this area. It is a differentiated industry. There is a group which we are now looking at to shoulder this. There was an enormous amount of negotiation in getting to this level of levy. That then feeds into the amount that we can pay eligible people. You could have an infinite amount of levy but if we went too high, the risk would be very clear. The genuine danger is that it would just go straight to British industry. Many of the insurers who will be paying it were not in business at the time or may have kept good records, so there is a differentiation within the industry.
If we could pay people more, of course we would. This is a balancing act and 70% is the compromise that we have arrived at after long negotiations. I hope that noble Lords can appreciate that there is a real achievement here in getting very substantial payments to people who are eligible, if they are afflicted by this terrible disease. I urge the noble Lord to withdraw the amendment.
Mesothelioma Bill [HL]
Lord Howarth of Newport Excerpts(11 years, 6 months ago)
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Lord Howarth of Newport
My Lords, I, too, thank and congratulate the Minister on bringing the Bill to the House. He is a good man who has fallen into bad company. He has had to present a number of pretty miserable policies to the House. However, we should recognise that he has worked long and hard to develop this scheme and today he brings us, by his standards, very good news indeed. We should also express measured appreciation of the insurance industry and the ABI. Goodness knows, the industry has been grudging and obstructive in the past, but it has established the Employers’ Liability Tracing Office and is willing to go along with this scheme. It is, however, a scheme that needs improvement.
Credit should certainly be given to the previous Government for the preliminary work that they did. The Minister was rightly generous to my noble friend Lord McKenzie, who published the consultation document in February 2010 on accessing compensation. Credit should also go to this Government for pursuing the process, and I think that means that credit should go to the permanent Civil Service. Credit should, of course, also go to the campaigners. It is right that we should do all we reasonably can to support those who are victims of the horrors of diffuse mesothelioma because of their employers’ negligence. This long-latency illness incubates for perhaps three to four decades but at the end inexorably causes great suffering and death. It is right that we should do what we can to support the dependants of people who contract the disease. It must be grim for all of them in the circumstances that follow diagnosis to struggle to achieve compensation. I am not convinced that that process will be much eased given that the new scheme is a scheme of last resort, but at least it will yield better financial outcomes for more people.
I also ask why the scheme is to be limited to mesothelioma alone. Other asbestos-related diseases of the lung and the pleura caused by the inhalation of asbestos fibres ought surely to receive equal consideration such as asbestosis, diffuse pleural thickening, pleural plaques, pleural effusion, rounded atelectasis and asbestos-related lung cancer. With all these illnesses, employers’ liability is equally disputed and equally hard to trace. Natural justice tells us that people who suffer from this range of asbestos-related illnesses should be treated alike. They all have in common that they suffer from their employers’ negligence in relation to asbestos. The Minister said in his opening speech that these problems also need to be addressed but he thought that if they were addressed straight away too many cases would spoil the scheme.
I echo the question asked by the noble Lord, Lord German, because I am not clear whether the Long Title allows the flexibility to introduce under this legislation further schemes to support people suffering from other asbestos-related diseases. If it does—I understand why the Minister is unable to proceed with introducing schemes in relation to other diseases now—will he indicate when he expects to do so? If the legislation does not permit it, and is not susceptible to amendment to enable it to do so, will he pursue his mission and introduce further legislation? As my noble friend Lady Taylor said, we need a comprehensive approach. In the mean time, we must address the project that the Minister has placed before us.
The Government have said that their overarching aim is to ensure that employees who are injured or made ill in consequence of their employment should not be denied fair compensation. The scheme, in providing compensation where the employer or the insurer cannot be identified or traced, goes a long way to achieving that objective but does not go far enough.
I would like to probe the Minister on a number of points. I would be grateful if he would clarify the position on legal costs which I do not understand very clearly. The Government’s aim in the Legal Aid, Sentencing and Punishment of Offenders Act 2012—the LASPO Act—was to remove personal injury from the scope of legal aid. On that basis, legal aid would generally not be available to a person diagnosed with mesothelioma who seeks advice from a solicitor, as he or she is bound to do.
Part 2 of the LASPO Act implements the Jackson reforms to no-win no-fee arrangements. However, the Government have deferred implementation of the measure in relation to mesothelioma claims pending the findings of a report which they have commissioned. When will we have the findings of that report? If Sections 44 and 46 of LASPO are applied in mesothelioma cases, as I understand it, lawyers acting under conditional fee agreements will be able to charge a success fee payable from the damages. Does the Minister think it is appropriate that that should be so in mesothelioma cases?
How does the new scheme that this legislation enacts take account of the new position on conditional fee agreements? The 2013 impact assessment assumes that a scheme payment would include an amount to cover legal costs in making an application. The 2012 impact assessment estimated that would be £7,000 for a successful case and £9,000 for an unsuccessful case. The overall legal costs for the scheme are put at £24 million to £27 million. As with civil actions, will they be paid out of the scheme award, which is already reduced to 70% of the level of civil damages, or will they be paid by the scheme over and above that 70% award? Will the payment take account of a personal injury solicitor’s fees incurred for work prior to the application being made to the scheme? Who decides these matters? As far as I can see from Clause 1, the Secretary of State does. There will be no legal aid for appeals to the First-tier Tribunal following the review scheme decision, unless they are exceptionally to secure the claimant’s rights under the ECHR or under European Union law. Are the Government content with that situation? Are the Government going to control the fees that the lawyers charge? The statement by the Minister for Employment, Mr Mark Hoban, on 13 May indicated that the Ministry of Justice is going to consult about a fixed-cost regime for mesothelioma claims. It would be helpful if we could be told what he has in mind. It would also be helpful if the Minister could give us, either today or in Committee, a clear statement in relation to what, if any, legal costs incurred under the new arrangements by claimants, either pursuing their own case against an employer or an insurer or claiming from the scheme, will be met under the arrangements that he has designed.
The interaction of the scheme with the benefits regime will warrant careful consideration. The Bill would permit the Secretary of State to recover benefits and other sums from scheme payments. The impact assessment tells us that the Government expect to recoup a net £69 million after the first year. However, in their briefing to us the ABI has stated:
“We have suggested that mesothelioma sufferers should be able to access financial support in addition to the benefits they are entitled to.”
What benefits will continue in payment after an award has been made? If an award under the scheme is to average £87,000, as we are advised it will, what benefits will be left for the claimant? Will income support and housing benefit be swept away? What will happen to industrial injuries disablement benefit, which is a major benefit, and very important in the budgets of such families? Is it correct that the payment of benefits would not be affected during the first year after an award? That is the case, I understand, where civil compensation is concerned. Would it still be the case with this scheme? Is pension credit to be ignored indefinitely? What will be the developing position under universal credit?
It would also be helpful if we could be told whether lump sums, payable for example under the Pneumoconiosis etc. (Workers’ Compensation) Act 1979, or the diffuse mesothelioma scheme under the Child Maintenance and Other Payments Act 2008, will be recovered where payments have already been made. Or will it only be the case that someone who receives an award under the scheme will no longer be eligible in the future for such payments?
Schedule 1 contemplates the recovery of benefits on a scale such that the whole award could be negated. However the schedule amends the recovery of payments legislation to permit, but not to require, the Secretary of State to claw back payments. What does the Minister intend? What scope is there for discretion? For example, will the DWP refrain from clawing back any payments that have been made in relation to pain and suffering? Is he able, and will he be prepared, to limit to a certain percentage the amount of benefits to be denied or recovered? Will he take a lenient view of the treatment of carers under the benefits regime in these circumstances? Past practice has been to an extent discretionary and compassionate. I am quite sure that the noble Lord will want to be as compassionate as he can in the appalling circumstances that these families face. I hope he will err on the side of generosity in relation to both benefits and legal aid.
I had hoped to have time—but I have gone on too long on these subjects—to say that I, too, can see no justification for the limit of 70%. I will just briefly say that it cannot be right to discriminate against claimants where employers and insurers have lost or destroyed the documentation. It is no fault of the claimant that the employers and insurers are in that difficulty. If all claimants are to go through a single portal to be followed by a rigorous search to trace the documentation, then surely all claimants ought to be treated equally. There will be a temptation for the industry not to trace the documentation if failure to do so means they will only have to pay 70% rather than the full amount of compensation they anticipate the court will award, so there is a real risk of the industry being conflicted here. Certainly employers’ liability insurers are not in a position to plead poverty. They did very well for decades. Up until 2008 they even kept the lump sums that were awarded by the tax payer, aggregating to over £20 million a year to offset the cost to them of compensation. We can be sure, notwithstanding what the Minister has said, as sure as eggs is eggs, just as soon as market conditions permit, the insurance industry will pass on the additional cost to them of this scheme by way of increased employers’ liability premiums.
So, pragmatism and practicality, as he said, are very important, but I am not convinced that the Minister has struck the best bargain that he could in the interests of mesothelioma sufferers and their dependants in agreeing to limit payments under the scheme to 70%.
Lord Freud
My Lords, I have been in this House long enough to have an expectation that this would be a high-quality debate. I can confirm that my expectations have been exceeded. This was a very good debate which showed that noble Lords have focused on the issues and is the precursor to a valuable process being undertaken as we go through Committee and subsequent stages of the Bill.
Clearly, the Bill deals with what I called a very damaging historic market failure. Various noble Lords, such as the noble Lords, Lord Avebury, Lord Alton and Lord Browne, implied that it might have been rather more than that. Indeed, it was implied that there might have been reckless behaviour. Observations have also been made about the way in which the paperwork was dealt with. To be blunt, many people in the insurance industry would admit that that was the case.
This is not the Bill I wanted to bring to the House. I will explain why that is the case because it is very important that noble Lords should understand that. I wanted to find a way of allocating responsibility to the companies that had engaged in the relevant business in the year in question so that we could levy a specific charge on those companies for the business for which they were responsible over the relevant period. We would thus have allocated the responsibility where it should lie. I spent a lot of time and, indeed, some of the DWP’s money, researching that proposition. However, I came to the conclusion that such a course of action was legally too risky in a most litigious environment. Therefore, we have moved to a second-best position, the implications of which are driving many of the shortfalls that noble Lords have pointed out vigorously tonight, because it is one thing to say that there is a moral imperative to look after the individuals suffering from this terrible disease and their dependants but it is another to pin the responsibility on companies which, frankly, had nothing to do with it. We are looking to insurers in the employers’ liability market to fund this provision through the levy and we are looking at the appropriate level of levy in that marketplace when direct blame cannot necessarily be attributed. That is why the scheme is designed in the way that it is and why various constraints are in place.
I think that I heard support for the principles of the scheme. We can get money to the sufferers regardless of whether the insurance records have been lost. In general terms it is right that we look to the insurance industry to provide this support, not least because this situation is a horrific blemish on its reputation which it will, and does, want to correct and mitigate.
We need to help the insurance industry to impose this levy. It cannot do it on a voluntary basis, which would have been the ideal position and the one which I would have preferred. It needs the legislative support because it is a disparate industry with very many different players in it.
We are clearly going to spend a lot of time going through the detailed questions raised. As I will be going through them in Committee, I do not intend to spend a lot of time going through everything now, but I will try to pick up the main themes. I need to add something that I omitted to do earlier, my thanks—which several Lords have mentioned—to the victims’ groups and the trade unions for all the work they have done and for which I am personally most grateful.
Before I get into the drier stuff of this, I must add that many noble Lords talked about the human stories. Nearly all of us will know someone who has gone through this, and there is an awareness here that in many ways this is one of the worst diseases to get. I acknowledge that. The noble Lords, Lord Giddens and Lord Monks, and many other noble Lords made that point and told us some stories to remind us.
One of the key issues raised by virtually all noble Lords—too many to mention individually—was about setting the figure at 70%. There was a real juggling act about what the right level of levy is, and that is something we can spend more time in Committee debating. If we set the levy too high, in practice what will happen is that it will just raise the amount to be paid and the insurers will pass on virtually all of it to British industry, which is something I was very keen not to see. There is a lot of economics around this, but if you set a small level in a reasonably competitive market, most of it will probably be absorbed by the insurance industry, which should do so, rather than by British industry, which should not be required to absorb it. There is a real balancing act in the amount of money that it is sensible to raise this way to get to the victims, and that is the main driver here. It is not, I want to emphasise, the behavioural incentives that have been floating around. That is not what we are doing here. We are trying to get a balance of funding.
The second issue is, because we went early—theoretically one can start doing a levy like this only at the time at which it becomes law—we have gone from the date of the formal announcement, from which point the insurance industry can start to reserve. However, one of the issues coming from that is that in the first year, we effectively have to make over three years’-worth of payments, and noble Lords will see the problem instantly. There is suddenly a very large levy in one year of the kind that is very difficult to absorb. That is the reason that we have worked to smooth that first year over four years, so that we do not get these sudden large amounts, but it is a constraint. I shall not go into the detail tonight of how difficult all this is to do, although perhaps in Committee I could be persuaded to open my heart a little about particular Treasury rules, levies that are treated like taxes and why the Treasury, which collects taxes, should give the DWP any money to make payments.
Lord Howarth of Newport
Even before the noble Lord opens his heart to us in Committee, will he look again at the question of the start date in the light of the figures we have been given? We have been told that the life expectancy of a mesothelioma sufferer following diagnosis is perhaps two years. We are told that around 2,400 people die each year, and that the insurance history can be traced in more than 50% of cases, which means that more than half are able to pursue their case against the insurer. That leaves around only 1,200 people who would benefit if the noble Lord were simply to remove the start date. I would have thought that that ought to be affordable and that the insurance industry ought to accept that quite limited extension of its responsibility. I hope that the noble Lord will think about that and perhaps even amend Clause 2 himself and not just leave it to us.
Lord Freud
Virtually all noble Lords mentioned the start date. The trouble is that, in principle, this is a sheep and goats situation. Any date, wherever it is set, as the noble Lord, Lord Monks, mentioned, is always arbitrary at one level. To pick up on the point made by the noble Lord, Lord Howarth, this concerns dependants as well, so if there was no start date and the date went back indefinitely, we really would be talking about a huge amount of money. We will spend a lot of time talking about this, but let us flesh out the areas of discussion.
I think that we might look in Committee at the point made by my noble friend Lord German and reinforced by the noble Baroness, Lady Taylor, about a cap or a different structure. Noble Lords can see my constraints, but we can look at shaping the structure in different ways. The noble Baroness, Lady Donaghy, asked when we would have the report on payments. It will be ready in the summer. In response to my noble friend Lord Courtown, I will say that we will have the scheme rules ready to be looked at by the time we reach Committee.
Extending this to other asbestos-related diseases was the other big issue of concern to virtually all noble Lords. The point about mesothelioma is that if you have it, you will essentially have contracted it doing a job in which there was negligence, and that it is fatal. You can fix a figure with a tariff level and you can go very fast. The objective is to reach a point within five months as compared with a typical period now of two years. Noble Lords will be conscious of the meaning behind those periods, given the prognosis of survival for up to 15 months. Getting something this quickly is really important. There may be schemes for other types of asbestos-related illness, but they could not be set up within this structure. We would have to look at something else; it could not be a simple extension.
My noble friend Lord Avebury and the noble Lord, Lord Alton, asked how many meetings have been held. Out of amusement, I counted them. There were 15 meetings with representatives of the insurance industry, of which seven were held in quite a tight period. You can imagine that they were being held during a time of heated negotiation. A total of 11 meetings were held with representatives of victims’ groups, lawyers and members of the all-party parliamentary group. It is not a complete balance but I took on board as much as I could as we built this.
I will not spend a lot of time tonight on the MoJ process. We will have time to do a bit more. The fundamental point is that the MoJ will launch a consultation shortly. It will go through all these issues and then come up with a scheme on the balance, taking on board all the responses. This is a major process and we will just wait for it to happen.
The noble Baroness, Lady Donaghy, raised the question of the scheme administrator. We are in control of this scheme and the DWP will drive the scheme rules. The scheme administrator will therefore be answerable to the Secretary of State, who will monitor whether it is doing the job that needs to be done. It is not a done deal with the ABI at this stage, though it is setting up a shadow company. If it does this successfully and if it is the administrator, it means that we can go very fast, but it is open at this stage.
My noble friend Lord German raised a key point about the assumption of negligence. What distinguishes mesothelioma from some of the other diseases is that there is no reason for it other than being exposed to asbestos in employment. There has been a general acceptance that if you were exposed to asbestos in the workplace it would be through negligence. The decision has typically been made on a balance of probabilities. We will spend more time in Committee on the important legal context of why one can do such a straightforward and rapid scheme.
I have had good warning from the noble Lord, Lord Alton, that I will get an amendment proposing that some of this levy should effectively go into research. I cannot tell the noble Lord how hard I have tried to produce that result for him. I have failed to do it and we will spend time on this in Committee. There are some really complicated technical reasons why that cannot happen, mainly because, formally, a levy is a tax and it cannot go to anyone but the victims. I have tried every single route round this. If noble Lords are cleverer than me and can work their way through it differently, I will be delighted.
Jobseekers (Back to Work Schemes) Bill
Lord Howarth of Newport Excerpts(11 years, 8 months ago)
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Lord Howarth of Newport
I wonder whether the Minister would reconsider the language habitually used by DWP. When he talks of a stockpile he is referring to human beings in very anxious circumstances who are waiting for their cases to be considered. Does not this language rather dehumanise them?
Lord Freud
The noble Lord makes the same point as JRR Tolkien, who did not think that “growth” was the right way to refer to hobbits at Bilbo Baggins’s birthday party. If the noble Lord can think of a better word than stockpile, I will happily use it. I cannot think of one off the top of my head. If the noble Lord finds that offensive—
Baroness Hollis of Heigham
I support the amendment of my noble friend. I have to declare a sort of interest as a former Minister responsible in the DWP for the tribunal services before Leggatt centralised them. As a result, I would visit tribunals and, five minutes into the hearing, I could tell whether the claimant had or had not received legal advice and support or welfare advice and support before entering the appeal. Those who had presented a coherent account with the appropriate accompanying papers and evidence, were prepared for the questions asked of them. It kept the process simple and straightforward, and the cases that I saw took on average about 40 minutes to complete. In each case, the decision, usually up to half the time in favour of the claimant, was the right one.
Then there was the other sort of case that came to tribunal, people who came with their sheaf of papers in a carrier bag, which they shuffled through without any advice, unaware of what it was that the tribunal needed to know and what would count as relevant evidence. I recall one man, Indian or Pakistani, who was there with his wife; his eyes never left the floor, and he sat hunched over as he tried to explain in poor English and a low, faltering voice, why he was appealing against a refusal of DLA—and he could not. The superb chair, who we now call a judge, spent nearly two hours trying compassionately to coax his story and evidence out of him in some sort of order. It took more than twice as long as the previous case, and his appeal was upheld.
What lessons may we draw from the situation in which there is no prior legal help or support for advice? Social security decision-makers, as we argued on the previous amendment, frequently fail to review decisions properly. Unless the claimant is savvy enough to put his case in ways that fit guidance on reconsideration, we end up with an unnecessary tribunal case, and the tribunals handling such cases clear, as a result, two or three cases a day instead of five or six. I plead with the Minister to learn from this. I do not know whether he has sat in on any social security tribunals, but he would quickly see which claimants had had prior advice and which had not. Remove the advice and the need does not go away; it is merely displaced to the very much more expensive and time-consuming stage of the tribunal itself. Instead of advice being given in advance, the whole untangling of that mess has to be done by the tribunal judge in person. That seems to me key. The need does not go away; all you are doing is transferring it to the most expensive and laborious way of addressing it.
Legal advice, which we are told we cannot afford, is not a luxury; in my view, it is essential because social security is complex and most claimants, by definition, are probably poorly educated, not especially articulate, confused about what they are due and need help at the early stages. They are aggrieved. However, as my noble friend Lord Bach said, early advice may discourage people from pursuing unfunded and unfounded cases. Legal advice also helps ensure greater consistency and a common approach across regions. We are getting a lot of research evidence suggesting the unevenness of responses from decision-makers and tribunals trying their best to produce the consistency that local offices are not.
The Minister knows that we are seriously worried about what will happen when existing claimants are brought on to UC, which I very much want to work. I fear that the tribunal system will be completely overwhelmed unless there is legal aid and welfare advice available at the preliminary stage to screen out weak cases and to put into good order appropriate cases for the tribunal; otherwise, I believe that the system will buckle.
We are therefore deeply worried about the situation of claimants under the Bill who will not know what their rights are and whether the proposed sanction is valid. In some cases, they may have been stalled for many months. They do not have fresh evidence to bring to bear and can no longer rely on their memory to give a coherent account of what happened when. Did they have good cause? At the preliminary stage, legal or welfare rights advisers can perhaps help them find out, track hospital or school records, organise paperwork and explain to the claimant what will happen, why he has lost his benefit and whether the case against him is soundly based. If that welfare rights officer or the legal advice is not there to do that, the tribunal judge will have to, as I have seen with my own eyes. Can that individual stop the sanction? Is it possible for him to comply? Jobcentre staff cannot or will not now give that advice, especially given the evidence about targets. Claimants need the supportive, friendly, neutral, professional, cheap advice from outside the system. However, of course all this hinges on whether the department wants people to get the right benefits and the right outcome. Does it?
Lord Howarth of Newport
My Lords, is it not the case that every Government of the United Kingdom since 1948 have been committed to the principles and values articulated in the Universal Declaration of Human Rights? Is it not also the case that Article 7 declares that all are equal before the law and are entitled without any discrimination to equal protection of the law? If the Government deny legal aid in these cases, will they not repudiate that historic and fundamental commitment?
Baroness Sherlock
My Lords, in responding to this amendment, I should like to pay tribute to my noble friend Lord Bach, who has fought tirelessly on this subject for many months.
As we have heard, it is currently possible for a claimant who meets the eligibility criteria to get free legal advice and assistance to cover preparatory work for a hearing. Legal aid may also be available for higher tribunals and courts appeals on a point of law. However, from 1 April, all welfare benefits will be out of scope for legal aid. The context for this Bill makes this all the more complicated because, as we heard from the Minister, the law on sanctions has changed, so claimants may struggle to work out what applies to their case. Further, since there may often be significant delays between alleged breach and appeal, claimants may also struggle to work out what good cause or recompliance mean so long after the event, subjects to which we will return on a later amendment. This brings me to my questions for the Minister. First, will he clarify the position? If a claimant would have been entitled to legal aid to help prepare his case had he appealed within a month of a decision to sanction him, will he still be entitled to legal aid on the same basis should he appeal after 1 April? If the answer is yes, how will this happen? Who will provide the advice and who will pay for it? If the answer is no, given that the Courts and Tribunal Service is likely to be inundated with cases once the deferred decisions pile is unleashed, what assessment have the Government done of the likely delays and the consequent additional cost to the Courts and Tribunal Service of having so many unadvised appellants arriving at once?
If the Government are unable to give satisfactory answers to all these questions, I suggest that the Minister should accept this very mild amendment. If he does not, and my noble friend Lord Bach chooses to press it to a vote, we on these Benches will give him full support. The very least that the Government should do is provide a considered view—impossible beforehand, given the timetable—of the effect on access to legal advice and support of a group which Parliament never intended to be affected by the provisions of the Legal Aid, Sentencing and Punishment of Offenders Act. We are pleased to support this amendment.
Unemployment: Young People
Lord Howarth of Newport Excerpts(13 years ago)
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Lord Freud
Yes, my Lords. It is very easy to get tied up with the tyranny of round numbers. The reality is that we have a genuine structural problem that has grown over the last decade and needs handling in a comprehensive way.
Lord Howarth of Newport
Is it not the case, particularly in old industrial areas, which have found it very hard to attract new private sector investment, that by withdrawing public sector expenditure too fast and abandoning regional development strategies, the Government are condemning young people to continuing unemployment?
Lord Freud
My Lords, of course we are not withdrawing regional support. We have put in a £1.4 billion growth fund and have a series of programmes designed to help young people. We have help in terms of work experience, the sector-based work academies and the work programme, which will together provide support for 350,000 youngsters over the next two years.