Mesothelioma Bill [HL]

Lord James of Blackheath Excerpts

Monday 10th June 2013 Grand Committee

[Lord Freud]

I apologise to the noble Lord for cutting him off in full flow. I understand that the level of independence of the scheme administrator is of some concern and clearly it is one of the things that have prompted the amendment. I can reassure the noble Lord that whoever the Secretary of State makes arrangements with to administer the scheme will be bound by agreements to comply with the scheme rules and departmental standards of implementation and administration. However, I am attracted to the idea of having some oversight of the scheme set out more formally. We could, for example, put something about reviewing and monitoring the scheme in the scheme rules and set this out in more detail in the arrangements for the scheme administration. I am minded to do more work on this to consider further whether we should bring forward an amendment on oversight of the scheme. I am not able to agree to the amendment today because I need to do the work first, but I would be grateful if I could consult the noble Lord, Lord McKenzie, and get his wisdom on this. I shall then come back to noble Lords at a later stage. On that basis, I urge him to withdraw the amendment.

[Lord James of Blackheath]

I will make one small comment about subsection (2) of the new clause proposed by Amendment 32: there are no longer any active insurers for asbestosis. You are really talking about the reinsurers. They are the people you should seek to have represented.

[Lord Freud]

I am most grateful for that point. We shall bear it in mind.

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[Lord Howarth of Newport]

My Lords, Amendments 40 and 45 in this group relate to the possibility of additional schemes being established. They would introduce that possibility into the Bill; perhaps I should say that they would clarify what has already been hinted at and may already be in the Bill. Amendment 40 would empower the Secretary of State to levy employers’ liability insurers in order to fund additional schemes comparable to the diffuse mesothelioma payment scheme. Amendment 45 would empower the Secretary of State to establish by regulation other schemes in relation to long-latency, asbestos-related diseases.

The difficulties of establishing entitlement to insurance payments after many years, when the employer has gone and the documentation is missing, are not confined to the circumstances of mesothelioma. If sufferers from asbestos-related cancer or asbestosis face the same barriers to securing compensation, if we call it that—perhaps we had better say “financial relief”—is it not right that they should be supported by analogous schemes?

I spoke at Second Reading about those two particular diseases as well as diffuse pleural thickening, pleural plaques, pleural effusion and rounded atelectasis. All of these are diseases of the lung and the pleura caused by inhalation of asbestos fibres. The Minister spoke encouragingly in that debate, saying:

“The issue of individuals who have developed other asbestos-related diseases through negligence or breach of statutory duty and are unable to bring a civil claim for damages of course needs to be addressed”.—[Official Report, 20/5/13; col. 690.]

Indeed, justice requires that where people have contracted one or another of these terrible diseases as a result of the negligence of their employer causing them to be exposed to asbestos fibres, surely they ought to be supported on a comparable basis.

Interestingly, the department has just produced a document entitled, Estimates of the Impact of Extending the Scope of the Payment Scheme in the Mesothelioma Bill to Include Other Asbestos-Related Diseases and Other Non-Asbestos Work Related Diseases. It expects that there will be some 2,000 asbestos-related lung cancer deaths yearly, 725 newly assessed cases of asbestosis and 821 cases of non-malignant pleural disease—around 3,500 cases a year of one sort or another. The department acknowledges that it may be more difficult to establish a causal occupational link where these other diseases are concerned and estimates that the levy on insurers to fund a scheme for asbestos-related diseases other than mesothelioma, if the new scheme were to be constituted on the same principle as the DMPS, would amount to £478 million compared with the £322 million cost of the levy for the mesothelioma scheme. That is a significantly larger cost than that of the mesothelioma scheme, but I think it is not impossible to contemplate at some point in the future. I certainly do not think that new schemes should be funded via the DMPS itself, nor do I think that anybody is in a position to create a new scheme immediately. However, it should be done in the fullness of time—indeed, as soon as possible. Therefore, while we are legislating to provide the basis for the diffuse mesothelioma payment scheme, it seems sensible that we should also be clear that we are legislating to make provision for further analogous schemes to be established on future occasions. I beg to move.

[Lord James of Blackheath]

My Lords, the problems of the Navy in this regard persist for that service. An MoD meeting has been called for 10 o’clock tomorrow morning. Will the Minister be present at that meeting? It would be helpful to know that.

[Lord Freud]

I regret that I am not invited.

[Lord James of Blackheath]

I think it will be harder to make progress without the Minister. It seems to me that three very significant problems are emerging in any dialogue with the MoD at present, and they will not go away very easily. Each of them has been shadowed in the discussions this afternoon. For a start, of course, this is a compensation payment for a dying sailor. There is no argument about it. There is no way you can call it anything else. We are here talking of it not being a compensation payment and this gives rise to a total misunderstanding in the minds of the MoD people to whom I have been talking because they seem to think that what we have here is a great big government-funded handout that they can dip their hands in and have a share for their sailors.

Of course, the downside is that in saying no to them, we run the risk that this clever and inspired programme to force the compensation programme through for non-compensation payments will invite the dreadful comparison that the Government, who are concerned to prepare catch-up payments to all the sufferers of this disease for whom they can, should include responsibility for the Navy, which has deliberately discarded any responsibility for payments for people who are suffering similarly. I cannot imagine a more unfortunate juxtaposition.

The MoD has to understand that if it wants a solution to this problem, that must come out of its own resources. It cannot come from this scheme. When I first realised this, simply on the grounds that I did not know the answer I tabled my strange Amendment 47, which says that we have a problem for which we need an answer, and that we must find it when we get a sensible dialogue going with the MoD—which may or may not start tomorrow morning.

There are two other big problems with the MoD. First, it will have a hugely high percentage of what I call the household contamination problem. The sailors and workers will have gone home at night to their wives with their dirty washing from working in the boiler rooms of the intensely asbestos-lagged warships. We are going to have a huge problem of a different nature there.

Secondly, the MoD cannot run an insurance industry-based solution because it cannot insure its ships or people; that has to come from a different pot and a different source. It is absolutely unacceptable that we do not have a solution for the sailors in parallel with this, but it is not going to be compatible with this Bill. Forgive me for having put the clause in, which is completely wrong and irrelevant, but it really is a desperate call: we have got to have something instead. I want to put a marker down that the whole House must work towards this.

We must be totally intolerant of any fudge that does not give the Navy a fair deal. There are far too many affected persons out there. The way to get the MoD really interested in this is to threaten to write to the Queen and tell her how many of her crew of Royal Yacht “Britannia” have been killed by it. That will get the MoD’s undivided attention. I will continue to run that one.

I will withdraw my amendment as it stands, quite clearly, because I cannot run it here. I just wanted to leave it there for the moment. It is a hole into which I have got to get something put before we are through with this.

[Lord Alton of Liverpool]

My Lords, briefly, I support the two speeches which have just been made, not least because I agree with the noble Lord, Lord James, that there are other groups of people outside the scope of this Bill who are clearly looking to the Minister, who has done such a good job for this group of people: the 300 or so of the 2,200 who have unmet claims. He has done such a good job in dealing with this that there is the raised hope and expectation that other groups, whether they are in our Armed Forces or other groups entirely—such as those who have suffered from asbestos-related diseases of the kind to which the noble Lord, Lord Howarth, referred in his remarks—who will also be hoping that the noble Lord will in due course be able to come forward with other measures that might to meet some of those hopes and expectations.

I feel some sympathy with the Minister in this situation. I think it was William Wilberforce who was criticised by William Hazlitt for not dealing with problems of children who were being sent down into the mines; it would take Lord Shaftesbury to do that in due course. One of those who was defending Wilberforce, I think it was Henry Thornton, said it was rather like criticising Christopher Columbus for discovering the United States but also for not going on to discover Australia and New Zealand as well. The Minister is in that slightly invidious position at the moment. People will unfairly criticise him for not solving all the problems of the whole of mankind. What he is doing in the context of this Bill is incredibly noteworthy and all of us pay tribute to him for that. However, he should not neglect the points made by the two noble Lords, because they were well made and these amendments raise the point that there will be unfinished business even once this Bill has passed into law.

[Lord James of Blackheath]

Perhaps I may ask the Minister if he will have a meeting with me after I have been to the MoD so that I can get his advice and guidance on what to do next?

[Lord McKenzie of Luton]

My Lords, our Amendment 46 is in this group. I will say at the start that I thoroughly support the amendments of my noble friend Lord Howarth. I agree with the noble Lord, Lord Alton, that the Minister has almost made a rod for his own back in raising hopes and expectations. Those are challenges that he will have to face, and I am sure he is well up to the task. The noble Lord, Lord James, should not apologise for having brought forward his amendment. He is right to say that what he seeks is not an insurance-based solution, but there are issues around inviting comparisons with the progress that has been made.

As we have discussed, the payments scheme relates to those diagnosed with diffuse mesothelioma. It therefore excludes other asbestos-related diseases such as asbestos-related lung cancer and asbestosis. It also excludes other work-related, non-asbestos diseases such as pneuomoconiosis. The DWP’s June 2013 analysis quotes the HSE data on industrial diseases, which has an annual estimate of sufferers of asbestos-related diseases of some 3,500—that excludes those suffering from mesothelioma—and of non-asbestos-related industrial diseases of some 4,200. Many of these will face the same problem in identifying a negligent employer, or an employer liability insurer. The DWP’s June note acknowledges that many of the diseases covered do not share the same characteristics as mesothelioma, and that their severity and progression may vary, depending on the heaviness of exposure to asbestos.

It also highlights the fact that, for example, only a small proportion of asbestos-related lung cancers are compensated through government schemes, because of the range of different causes of lung cancer that mask an asbestos cause. Notwithstanding this, and perhaps somewhat strangely, in computing the effect of extending the scheme, it has been assumed in the data that the same proportion of those with diffuse mesothelioma who can access the scheme proposed by the Bill will be able to access an extended scheme, that the same level of scheme payment will be received, and that the same amount of benefit will be recovered. Those are fairly broad-brush assumptions, to say the least. In resisting the amendment, the Minister will doubtless point to the costs of bringing forward an extension of the scheme. On the basis of their estimates over a 10-year period, they suggest that there will be 5,100 successful applicants for other asbestos-related diseases, and 6,100 non-asbestos work-related diseases. There will be an additional levy on insurers of £478 million and £564 million respectively.

At face value, the figures are shocking. It is not so much the amounts as the suggestion that over 10 years, some 11,200 people will miss out. By how much will depend on benefit recovery arrangements, but they could miss out to the tune of £1 billion. If the concentration were just on the other asbestos-related diseases, not expanding the scheme will deny 5,100 people, who will miss out just because an employer has gone out of business or cannot be located and a relevant insurer cannot be established.

The amendment requires the Secretary of State to bring forward proposals within a year to establish other schemes to cover these other diseases. On reflection, limiting this to diseases covered by the 1979 Act may not be the most appropriate approach, and we might seek a different definition on Report. We have been clear that we do not want the pursuit of broader coverage to hold up the scheme of diffuse mesothelioma, and there is no reason why acceptance of the amendment, or my noble friend’s variations, should cause this to happen. It is accepted that it will be difficult to graft on to the mesothelioma scheme the tariff approach, given the varying degrees of suffering that some of the other diseases entail, and that there may be convoluted issues around causation. Therefore, while continuing to acknowledge the merits of the mesothelioma scheme, we should no longer look aside from those people—many thousands on the Government’s own figures—who face terrible suffering because of the negligence or breach of statutory duty of an employer. This is all the more important where access to the state lump sum and social security support is more difficult, as it is for some.

The Minister has come thus far and we have supported and congratulated him on doing so. Indeed, he has expressed sympathy for a broader scheme. Accepting the thrust of these amendments would add to that journey, which I beg him to undertake.

[Lord Freud]

My Lords, I thank the noble Lord for these amendments, and clearly I am sympathetic to the desire to provide for as many people as possible. Let me deal with the amendments tabled by the noble Lords, Lord Howarth and Lord McKenzie, and the noble Baroness, Lady Sherlock, in the first instance, and then perhaps I may turn to the amendment tabled by my noble friend Lord James regarding members of the Armed Forces.

I recognise the wish to provide for other groups of people who fall foul of poor record-keeping by the insurance industry and so cannot bring a claim for civil damages. There could be another scheme for these people in the future, but as the noble Lord, Lord McKenzie, has just acknowledged, it cannot and will not be this particular scheme. It is neither possible nor realistic to extend it in this way, and that is the reason I must reject these amendments.

The remit of the Bill is strictly related to mesothelioma. However, like many noble Lords, I hope that the momentum generated by this legislation will not dissipate and that further work will be done in the future. Perhaps I may explain why we cannot be flexible on this. I should start by reminding noble Lords about the distinctive characteristics of mesothelioma. The Bill allows for a relatively straightforward and quick scheme to be established. The key points are mesothelioma’s undeniable link to asbestos exposure and lack of co-causality with other factors such as smoking. The unique elements of diffuse mesothelioma allow us to establish a tariff payment scheme of this nature. A streamlined scheme like this would not work for other long-tail diseases. The law of causation is favourable to mesothelioma victims in the sense that it is an indivisible injury. It does not matter who exposed the victim or how many people exposed him, they will all be jointly and severally liable for the same damage. This allows for simplicity when assessing whether someone is eligible for a payment. Assessing liability for other diseases where the causation rules are not the same would involve a degree of complexity that this scheme has not been designed to allow for.

I join noble Lords in their hope that, in the future, other people will be provided for. Until such time, there remain state payments that sufferers of other long-tail diseases can apply for, such as payments made under the 1979 and 2008 Acts. I hope that I have explained and made it clear why this scheme will succeed only if it deals exclusively with mesothelioma, and I urge the noble Lord to withdraw his amendment.

Let me now turn my attention to the amendment tabled by my noble friend Lord James of Blackheath regarding the creation of a scheme to cover retired or current members of the Armed Forces who were exposed to asbestos and have since developed a related disease. I should clarify that, when I denied the 10 o’clock meeting, one of my representatives sitting behind me today will be at that meeting, and so I will be given good intelligence on what happens.

[Lord James of Blackheath]

Can we have an indication by paw of who will be attending the meeting?

[Lord Freud]

The paw has been raised. I am more than happy to hold a meeting with the noble Lord after that meeting if he so desires.

[Lord James of Blackheath]

The noble Lord is taking a big risk in sending the best looking member of his staff to the Navy.

[Lord Freud]

The noble Lord must be very careful about making remarks like that. I think that we should strike them from the record.

The noble Lord was clearly referring in particular to those working in the boiler rooms of those three ships—HMS “Britannia”, HMS “Furious” and HMS “Albion”—a great many of whom would have been exposed to asbestos during the course of their service. We all in this Committee, I know, are deeply sympathetic to a tragic situation. However, as the noble Lord acknowledges, it is not possible for this Bill to be the solution for that, mainly because the MoD was not and is not covered by employer liability insurance. It would not be appropriate to raise finds for such a scheme from the employer liability insurance markets; they are entirely different issues. I know that the noble Lord has particular issues with the arrangements which the MoD has in place for compensation, so I will not go into those. They are dealt with by the MoD and I suspect that they will be the subject of conversation tomorrow.

[Lord Freud]

My intelligence on this comes from my noble friend Lord James, who told me that the estimate was 300 people. However, I stand to be corrected by him.

[Lord James of Blackheath]

The provisional estimate is up to 300 dead already and 180 contaminated. However, the figure we need to be concerned about is the number of wives who have got it, too.

[Lord Freud]

The noble Lord has put that on the record. Clearly, there is a difference in the sense that the MoD as a public authority does not use employer liability; it effectively self-insures. The noble Lord is concerned about the terms of when it pays compensation; I know that he is looking to address that issue with the MoD.

I share the concern of noble Lords in the Committee to help to provide for as many people as possible who have a terrible disease through absolutely no fault of their own. However, this scheme is addressed precisely at one part of that. It is not stretchable in that way.

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[Lord Freud]

Regrettably, I am not in a position to make any kind of commitment along those lines. We responded to the consultation document which the noble Lord, Lord McKenzie, launched, and our considered view was that this was the most urgent thing to tackle. That is the only commitment that I am in a position to make today. Having urged other noble Lords to withdraw or not to press their amendments, I ask the noble Lord, Lord James, not to press his amendment either.

[Lord James of Blackheath]

For the sake of accuracy, I will just correct the figures to this extent. The Navy’s figures include subcontracted staff in naval ports.

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[Lord James of Blackheath]

I might be able to ease the noble Lord’s concern on this. I believe that when the major reinsurances were written, they were limited as to the dates when an infection was identified and the reinsurance applied only to the names of those who had a registered claim at that time. That was all that was relevant for a claim; there is no question about that. Lloyd’s of London did not buy its first computer until 1986. It has nothing that goes back to this period.

[Lord Howarth of Newport]

I am always disposed to defer to the noble Lord as he has a depth of knowledge on this matter that I do not think is matched by the rest of the Committee. However, if Lloyd’s of London did not get a computer until a rather late date in the history of that august market, it none the less had brown cardboard files. It seems to me that strong procedural safeguards and impeccable record-keeping are always central to the upholding of property rights and the protection of people who enter into contracts. I cannot see how employer’s liability insurers at any phase of their history could ever have been justified in allowing the documents to disappear. There might have been a fire in the warehouse but we have not been told that there has been such a fire at any of these insurers. Other than in an extraordinary circumstance of that kind, it must be normal and basic practice to keep the documentation and to pass it on to the successor insurers and reinsurers. I cannot see how anything else could have been appropriate.

We are looking here at a spectrum of wrongdoing that runs from inefficiency and muddle through negligence to, very possibly, deliberate criminality in some places. Indeed, the scale on which the documentation has gone missing suggests that there could have been widespread criminal intention on the part of some people in an earlier generation of insurers. I say “an earlier generation”; they may no longer be active in the market but many of them may still be extant as individuals.

Another recent major scandal has occurred in terms of record-keeping. I refer to the sub-prime lenders in their Gadarene rush towards 2008. The banks, in issuing huge numbers of mortgages and eagerly selling them on, took to neglecting procedural safeguards. The combination of disregard for procedural safeguards with fraudulence led to the catastrophe of 2008 and in the years following, from which we continue to suffer. It reached a point where, with millions of mortgages in default, the banks abandoned the attempt to examine individual documentation to certify that a particular person owed a certain amount of money on a mortgage, which was the asset being sold on, and took to what was known in the trade as “robo-signing”. Instead of examining the individual records, they hired a person simply to sign masses of these documents without even examining the records.

The temptation for businesses not to keep full, accurate and proper records when it is convenient to do so clearly can be very great. We do not suppose—I do not think we do; I certainly do not—that the banks which were guilty of that systematic failure of proper record-keeping should be able to walk away from the scene of what they did and just get away with funding a token scheme. Equally, it seems to me that in the interests of justice and for exemplary purposes, there should be a proper investigation of what went wrong with the employer’s liability insurers. Of course, ELTO has been created and that improves the methodology of tracing claims and liability. However, a disastrous failure has occurred in this regard for a great many people. As I say, it seems to me that this is a major scandal. That is the reason why I have tabled Amendment 43—to require the Secretary of State to establish a commission to investigate and report on what happened in this history of inadequate record-keeping, which I do not think anything can possibly have justified. I beg to move.