Civil Liability Bill [HL]

Lord Mackay of Clashfern Excerpts

Committee: 2nd sitting (Hansard): House of Lords
Tuesday 15th May 2018 Lords Chamber

[Lord Judge (CB)]

My Lords, I apologise to the Committee that I was not here for the first 90 seconds of what the noble Lord, Lord Hodgson, had to say, but I came puffing in as quickly as I could.

In our discussions so far, which I entirely understand and support, one feature has not yet been mentioned: the advantage of the PPO in the process from the point of view of the unfortunate man or woman who has suffered serious or catastrophic injuries. Both at the Bar and as a judge, one thing that you have to look at is how long the unfortunate individual concerned will actually live. I am sorry to say so, but when you talk to your client and say, “We have to discuss how long you will live”, or to the parents of a child who has suffered catastrophic injuries, “We are discussing how long your little boy or your little girl will live”, you are treading on what is obviously deeply sensitive ground. The answer is that it has to be discussed if you are proceeding by way of lump sum, because the calculation of damages depends significantly on whatever the medical experts say the life expectation of the man, the woman, the little boy or the little girl is likely to be.

The medical experts I dealt with were men and women of the utmost integrity. They would do their best. They would say, “Well, the best I can do is X”, or Y or Z. What you discovered after a little while doing these sorts of cases was that, actually, what they were doing—and who can blame them?—was taking an average: “We have had so many patients aged between 21 and 25 who have suffered these sorts of injuries, and they have lived for so long and then they have died”. So in addition to the sensitivities that go into a discussion of how long will the victim—the plaintiff, as they used to be in those days—suffer, be alive, and how long will the damages have to cater for his or her interests, there is also the uncertainty of the medical evidence, because no doctor can tell you.

I still remember a very distinguished surgeon from Stoke Mandeville, who, when I asked him this question in a conference just before I became a judge, said, “Well, we are asked the most ridiculous questions. We do our best. We offer you the best. The truth is that we do not know when this man or this woman’s will to live will go. When the will to live goes, that is when they will die. Some will wish to live and will have the will to live for longer than others, so what we are offering you is the best we can do”. He did not say, and it would not be fair to say, that it is speculative: it is the best they can do but, inevitably, it is almost certainly not going to be right. The end result is that the damages will be too much or too little. The great advantage of the PPO system is that it caters for however long this unfortunate injured person actually lives. I support the idea behind this amendment.

[Lord Mackay of Clashfern (Con)]

My Lords, I am very interested and concerned in this matter because I was very concerned about it a long time ago. The problem, I think, is to know what you should say in the rules of court, assuming you are making new rules, about this. How do you commend the PPO, because, as has just been said, a PPO is more suitable in some cases than others? I would like to hear in due course what help we can get in that respect. How do you distinguish between the cases in which PPOs are going to be good and cases in which they are not? As the noble and learned Lord, Lord Judge, has just said, the difficulty of estimating life expectancy is extremely high; it is a very difficult thing to do. In a sense, whether or not a PPO is a good thing depends to a certain extent on how secure that estimate is. How you measure that is quite difficult.

As has been said, actuaries proceed on an average. The Ogden tables we used to have long ago were primarily actuarial tables which depend on averages. As the noble and learned Lord, Lord Judge, said, the one thing you can almost be certain about is that the particular case will not be average: it will either be less or more. How you determine that, unless you are a very shrewd prophet, is quite a difficult question. That is the difficulty that faces judges in these cases every day, particularly where the likelihood is that the injury will continue to have effects long into the future.

Not only do you have to consider the injuries and the effects of the injuries, but you also have to think a bit about what the noble Earl, Lord Kinnoull, pointed out, which is that what inflation is going to do to the costs of care may vary very considerably. So I appreciate the need to do what we can to encourage PPOs; on the other hand, I appreciate the difficulty of formulating the help that judges need.

Of course, ultimately this point will be determined by the judge in charge of the case, not by any rules that may be laid down in order to provide guidance. I am not very keen, I must say, on the Executive giving guidance to the judiciary. I honestly think that that is a dangerous line. I was not very keen on doing it for the magistrates. The Home Office tried to develop some way of doing that, which I did my best to discourage because I do not believe that it is for the Executive to give guidance to the judiciary. Their roles are completely different from and independent of one another. Let the Executive get on with their work, but let the judiciary alone get on with its work.

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[The Advocate-General for Scotland (Lord Keen of Elie) (Con)]

My Lords, I am obliged to my noble friend Lord Hodgson for setting out the background to this matter. His Amendment 55 would require what he referred to as new rules of court to be made that highlight features of periodical payment orders which may make them a more appropriate way for a person with a long-term injury to receive an award for damages for future care costs. I understand that Amendment 55 and the other amendments in this group are essentially probing amendments.

“Rules of court” in Amendment 55 means the Civil Procedure Rules. The purpose of the Civil Procedure Rules—and, indeed, all rules of court—is to govern the practice and procedure of the court and the parties in court proceedings. This may be a technical issue but that does not detract from the importance of ensuring that claimants who have suffered long-term serious injuries are well informed as to the implications of their choice between a lump sum payment of damages and a PPO. I am conscious of the point made by the noble and learned Lord, Lord Mackay of Clashfern, about the care that the Executive must always exercise in circumstances where it may be perceived that they are giving directions to the judiciary. I will explain why the Government therefore take a more modest approach to this issue but one which they feel will be effective.

Of course, some Civil Procedure Rules have been made in relation to the exercise by the court of its powers under Section 2(1) of the Damages Act 1996 to order that all or part of an award of damages in respect of personal injury is to take the form of a periodical payment order. These rules already require the court to consider all the circumstances of the case, as well as the preferences of the claimant and defendant and the reasons for them. I appreciate that there are instances in which PPOs may not be available; for example, a mutual insurer such as the Medical Defence Union would not be considered sufficiently well reserved to meet future liabilities. I appreciate also that there have been reservations among insurers about the use of PPOs because of the way in which they are required to reserve for them and the capital requirements related to that.

PPOs are certainly in principle considered a better form of taking compensation for future loss than a lump sum because they provide strong protection for claimants who may be concerned about the return on a lump sum. This Government certainly support their use. At the same time, we must keep in mind that the person behind a claim has a choice and is entitled to make one in such circumstances. We consider it important that claimants making a choice in these circumstances should be properly informed, irrespective of whether their particular case reaches such a stage that the court has to consider whether to order a PPO. Of course, not every case will reach the court; many will be settled before that and, at an earlier stage, claimants have to be properly informed as to which option they should adopt.

I note the point made by the noble and learned Lord, Lord Judge, with which I entirely agree. It is perhaps moot to say that no estimate of life expectancy is ever precisely accurate because they are just that—estimates—and one takes that out of the equation where you have a PPO.

The Government remain fully committed to ensuring that appropriate advice is available to claimants in all cases and stand by the commitments they made to action in their response to the Justice Select Committee. To pick up on the points made by the noble and learned Lord, Lord Hope of Craighead, the point made in paragraph 50 of the response to the JSC was a concern to ensure that guidance was provided to individual claimants. It is our intention to put in place appropriate guidance and to ensure that it is available. We aim to do that by the end of 2018. In addition, we are investigating whether current advice received by claimants on the respective benefits of lump sums and PPOs is effective, and whether there are other ways in which the use of PPOs could be increased within the present system. At present, we intend to complete this work by the summer of 2019.

I hope that goes some way to meeting the concerns expressed by the noble Earl, Lord Kinnoull, on these matters. He raised a further question on indexing and I think the noble Lord, Lord Monks, touched on this. The reason that the ASHE 6115 index is taken is that it is the specific care costs index. It may be that wage costs have not increased at the same rate as the wider RPI, which may explain the discrepancy the noble Earl pointed out. However, the ASHE 6115 index is a specific care costs index, which is why that has been employed in the past.

Amendment 92 would require the Lord Chancellor to conduct a review of the impact of setting a new discount rate on the extent to which PPOs are made by the courts, but within six months of the provisions in Part 2 of the Bill coming into force, and then to publish a report of the results within 18 months of commencement. As the noble Lord, Lord Beecham, hinted, that may be far too tight a timescale to produce an effective report. We certainly do not consider that a requirement to carry out a review of this nature at the time proposed would be particularly informative. That is because the first review of the rate under the Bill would probably not have been completed by the time at which completing the review under this amendment would be required. Effectively, that would mean that the review would have to focus on any impact that had resulted from the setting of the rate as of March 2017 under the present law, which was a rate of minus 0.75%. I suppose that such a review may, however, be of limited use given that the legal framework for setting the rate would have changed but I suspect that it would tell us only something about the past, not the future.

I also observe that the settlement of major cases can take some years to agree, whether or not they arrive at the door of the court, so it might be some time before there is sufficient evidence to draw meaningful conclusions about changes in claimant behaviour. We do not yet have the statistical information about the effect of the March 2017 change in the discount rate on the use of PPOs. We therefore do not know whether the lowering of the rate has diminished the take-up of PPOs, although there is certainly some anecdotal evidence to that effect. It is logical to assume that this would occur, given the size of the change that took place in March 2017.

The evidence from the previous four years does, however, suggest that the use of PPOs is concentrated in the most serious and long-term cases, with the propensity to use them increasing with the size of awards up to about £5 million. They are not really employed in cases where the award of damages is lower than £1 million. That is largely because the use of PPOs is concentrated on provision for future care costs—long-term care costs, generally in cases of catastrophic injury. That is why there is a large percentage of cases in which PPOs are not considered appropriate. The National Health Service pays out PPOs in about 70% of awards over £1 million, while the equivalent figure for insurers is only about 36%, and there may be further work to be done. That is why we are going to look at the question of further guidance in order to encourage their use. Certainly, the take-up is far from negligible in serious cases.

On the comment of the noble Lord, Lord Beecham, this is not just about funding clinical negligence claims by the NHS. It goes far deeper than that; it is about ensuring fairness between claimants and defendants in the difficult process of assessing damages, particularly damages awarded for future care. I do not accept the noble Lord’s general point that we are simply trying to move the cost of future care from victims to somewhere else. That is not what we are about; this is concerned with ensuring fairness between claimants and defendants.

I have spoken about the way in which the amendments would require some sort of review. Amendment 92A would also require such a review to assess whether the fact that a PPO may be uprated by reference to an inflation index other than the retail prices index is having an impact on the relative merits of PPOs versus lump sums in the context of a revised discount rate. That would go beyond a consideration of the impact of the discount rate to the overall level of damages award, and how individual elements may be indexed for inflation. At present, the index used for PPOs is a very specific care cost index rather than the RPI.

We will, as I have indicated, be taking forward a range of initiatives to encourage the use of PPOs and to ensure that claimants are properly advised when choosing the form of their award. We hope to have the first part of that process completed by the end of 2018 and the wider investigation completed by the summer of 2019. We believe that those practical steps will encourage the use of PPOs where appropriate—we will, of course, monitor that—and create a situation in which a review requirement, such as that envisaged by the amendments, will not be necessary. Indeed, it would be more appropriate to move in this direction rather than find ourselves in the somewhat invidious position of the Executive sending out directions to the judiciary about how it should approach the award and determination of damages in such serious cases.

With that explanation of the Government’s position, I hope the Committee will be reassured that we are committed to effective action to encourage the use of PPOs. On that basis, I invite the noble Lord to withdraw the amendment.

[Lord Mackay of Clashfern]

Before my noble and learned friend sits down, I understood the noble and learned Lord, Lord Woolf, to have suggested that a PPO could be reviewed as the instalments were going ahead. That would be something of an innovation but it might be worth considering. I do not know whether my noble and learned friend has that in mind.

[Lord Keen of Elie]

We do not have that in mind. One of the concerns about such a proposal is the impact it would have on the insurers and their inclination to embrace PPOs. At present they are concerned about their reserving liability and their capital requirement on the basis of risk when it comes to a PPO. If we were to add to that equation the possibility of the PPO being revived at some indeterminate point in the future, I believe it would have a counteractive effect on the employment of PPOs by insurers. I have noted what the noble and learned Lord, Lord Woolf, said; I will take it away and consider it further, but my initial reaction is that it could act as a disincentive for the operation of PPOs.

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I therefore wanted to ensure in this amendment that the Lord Chancellor could set differential rates for something wider than classes, according to my meaning of classes: on the basis of the number of years of future needs, thereby following the successful Hong Kong and Ontario discount rate regimes.

[Lord Mackay of Clashfern]

My Lords, I have Amendment 57A in this group, which would add the anticipated scale or amount of the sums in question. It is worth mentioning that the amount in question may affect the rate of return.

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[Lord Faulks]

My Lords, the question of whether this should be a political decision or one taken by the panel is difficult. I thought carefully about this, as I am sure other noble Lords did. Ultimately, I respectfully submit that it should be a political decision taken by the Lord Chancellor. Of course, that decision will be critically informed by what the panel tells him or her. The provisions in the Bill provide that, when a Lord Chancellor makes a rate determination, he or she must,

“give reasons for the rate determination made, and … publish such information about the response of the expert panel established for the review as the Lord Chancellor thinks appropriate”.

My noble and learned friend will correct me if I am wrong, but, if the Lord Chancellor were to take a perverse view, ignoring all the advice or not giving sufficient reasons for it, he or she would potentially be liable for judicial review. Ultimately on the question of accountability, this is a political decision and a politician should be answerable for it.

Of course I yield to no one in my admiration for doctors—we have a number of distinguished doctors in your Lordships’ House, and they are the experts who can assist the House on questions of life expectation. However, with great respect, that is not quite the question that the panel is there to answer; it is there to answer the question of yield for investment having regard to an investor of reasonably cautious nature. While some doctors might have a view about this, I am not sure that questions of life expectation have anything to do with what is essentially an actuarial or financial calculation. Therefore, I am afraid that I am unable to support that suggestion.

[Lord Mackay of Clashfern]

My Lords, the Act which this Bill amends gave the Lord Chancellor this power. I suppose that, at that time, the Lord Chancellor had intimate relations with the judiciary—but he also had the responsibility of accounting to Parliament if there was a question about the matter. The connection between the Lord Chancellor and the judiciary has somewhat diminished since that time, but the Lord Chancellor still has a primary duty in relation to the judiciary that other members of the Government do not.

It is also important to have accountability in this matter. As my noble friend has just said, if the Lord Chancellor ignored the advice of the panel, he might have good reason for doing so, but it would be very difficult for him to explain it, because one would assume in this case that he or she would accept the judgment of the panel and he or she would be answerable to Parliament.

I share my noble friend Lord Faulks’s difficulty in relation to medical help. It is for the judge to decide on the length of time or the nature of the requirements for care, treatment and so on that a person may have. This particular exercise is primarily for those expert in the matter of investment.

I have perhaps interpreted the new schedule to which the amendment applies rather too generously. I assumed that there would be different rates of return fixed for different classes of case and that it might therefore be possible to change them on review—for example, to have no rate of return for a particular class or to enlarge the class that another rate of return applied to. It would be extraordinary if one could abolish this duty by the exercise of paragraph 8(2)(a). I do not think that that was intended—but my noble and learned friend may say that it was.

[Lord Hope of Craighead]

My Lords, perhaps I may add a footnote to the point made by the noble Lord, Lord Faulks, in favour of the Lord Chancellor having the decision. Paragraph 6(2) of the new schedule, on the way in which the panel is supposed to work, states:

“In the event of a tied vote on any decision, the person chairing the panel is to have a second casting vote”.


We then look at who is to chair the panel and see that it is the Government Actuary. I would much rather the Lord Chancellor assumed ultimate responsibility than the matter be determined in the event of a tied position by the Government Actuary. So the structure as set out supports the line taken by the noble Lord.

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[Lord Cromwell]

In that case, I shall speak in support of Amendment 77 and cover Amendments 82A, 85A and 90A, which are tabled in my name as probing amendments.

I do not want to make a Second Reading speech, but will open with three points. The first is on the context of the amendments in my name, which is that we are talking about a one-off payment. It has to last the recipient the rest of their days, which is a pretty daunting prospect. Will it keep pace with inflation? Will the recipient die before or after the money runs out? Will the UK and global economies do any good in the next 10, 20 or more years? What returns will be achieved each year from now until the recipient’s death? No matter how clever the Lord Chancellor or expert the panel, these will remain unknowns or, at best, haphazard guesses.

The one thing we do know is that if the discount rates rise, which this Bill is intended to achieve, returns to recipients will fall. By raising the discount rate, we are saying that the investor must—they have no choice—take on more risk. We oblige them to do so. This calls into question the underlying principle of achieving 100% compensation.

Let us not take false comfort from the idea of an expert panel. This is a group of five people who will have to come up with a series of “best guesses” and then seek to arrive at a “best guess of those guesses” to suggest to the Lord Chancellor. The Lord Chancellor remains free to override them.

My concern is that, in its enthusiasm for reducing costs to the NHS and others, the panel will be encouraged in various ways to impose risk on recipients which they are not equipped to gamble with. If the panel does not do so, the Lord Chancellor may. I expressed my concerns about the make-up of the panel at Second Reading, so I will spare your Lordships a repeat of that. We should not forget that the Chancellor is acting for the Government in many of the highest-value cases. That seems a conflict of interest.

What should we do? If the panel is trying to determine a rate on which so much life-altering importance hangs and if we are allowing the Lord Chancellor potentially to vary that rate, we need to be assured that, as far as possible, the rate arrived at is the result of a transparent process and not some magic number produced from a black box and then applied.

My amendments seek to achieve three things: to oblige the Lord Chancellor to a greater extent than the Bill suggests to take account of the panel’s deliberations; to make the panel more transparent in its deliberations and conclusions; and to enable the panel to take into account the realities that the recipient will face in the real world—taxation, inflation and management charges. In the Bill, it is the Lord Chancellor who may take these things into account.

Anyone who has worked in investments knows that such costs are a key determinant of actual returns. With RDR and MiFID II, such charges—for example, management charges—are becoming far less opaque than they used to be. Surely the panel should present the Lord Chancellor with a fully baked rate, not a half-cooked one that has significant ingredients missing.

Turning to the specific amendments, Amendment 77, to which my name was added, obliges the Lord Chancellor to take proper account of the panel. It relates to Amendment 78 in a later group, but that requires matters not to be left simply to the Lord Chancellor’s opinion. I anticipate others speaking to Amendment 77, so I shall leave it there and speak to Amendments 82A, 85A and 90A which are in my name. On Amendments 82A and 90A, the expert panel are supposed to be the experts but they are denied the opportunity to consider the rate in the round, rather than give the Lord Chancellor the half-baked suggestion I referred to a moment ago. The Bill as drafted just provides the Lord Chancellor with opportunities to select his or her own rate. Amendments 82, 82A and 90A place the making of key assumptions where they belong: with the expert panel. Amendment 90A also requires a reasoned explanation by the panel of its decision. This is vital for transparency and understanding. It is also the basis, one hopes, for its voting and for discussion with the Lord Chancellor, including any override that he or she may choose to impose.

Finally, Amendment 85A in my name is again about transparency. Under the Bill as drafted, the Chancellor must give reasons for and publish,

“such information about the response of the expert panel … as the Lord Chancellor thinks appropriate”.

No, my Lords: the Lord Chancellor should publish what the expert panel advises and give a reasoned explanation if he or she departs from its advice. Echoing the point made by the noble Lord, Lord Sharkey, a few moments ago, just as the Bank of England publishes the voting pattern, so the voting pattern cast by this panel should be published. Only then will we have a clear basis for understanding how the rate has been suggested, whether the Lord Chancellor has altered it and, if so, why. The setting of the rate, we should remember, will have fundamental effects on the lives of people in very distressing circumstances. Surely, they and we have the right to an understanding of what has gone on. My amendment builds on what is already proposed in the Bill but will, I suggest, lead to clearer and more transparent outcomes that are therefore more meaningful, more useful and less open to the temptations of distortion.

[Lord Mackay of Clashfern]

My Lords, I want to say just one thing about the nature of the Lord Chancellor’s judgment in this case. The noble Lord, Lord Cromwell, said that the Lord Chancellor is acting on behalf of the Government, but that is not the nature of the decision: it is the Lord Chancellor’s decision as representing the Lord Chancellor himself. He has the responsibility of a personal decision in this matter, in the way this Bill is drafted. Certainly, when I had responsibility for these matters, it never occurred to me that I should consult the Cabinet about it.

[Lord Keen of Elie]

My Lords, I begin by acknowledging the point made by my noble and learned friend Lord Mackay of Clashfern. The Bill makes perfectly clear that this is a decision of the Lord Chancellor as Lord Chancellor, and it is in that context that it has to be seen and understood.

Amendment 61 would replace the proposed three-year maximum review cycle for the second and subsequent reviews of the rate with a system under which the need for the rate to be reviewed would be determined by the expert panel by reference to changes in returns on investment. Of course, there are then consequential and supplementary amendments. The effect would be to add a new and distinct responsibility to the role of the panel. It would in effect, as I believe my noble friend Lord Hodgson acknowledged, require a standing panel to be created. If more than a year had passed since the rate was reviewed, the expert panel would be required to assess the need for a review and then to advise the Lord Chancellor to review the rate if it considered that the nature of return on investment had changed enough to justify a review. If the panel decided that this condition had not been satisfied, it would have to report its reasons for this view to the Lord Chancellor.

The concept of a review based on changes in investment returns was canvassed as an alternative to a fixed review period in the Government’s 2017 consultation on how the rate should be set, and it was supported, let me be clear. However, basing the review requirement on changes in investment returns would, we believe, create more uncertainty and be less predictable than a regular fixed-date review. The introduction of a requirement for the panel to consider the need for a full review annually could further fuel such uncertainty.

I appreciate the concerns raised by the noble Lord and others at Second Reading about the potential for a fixed review period to prompt undesirable litigation behaviour and the possibility of what is sometimes termed the gaming of the system in anticipation of a change to the rate. However, this problem would not be avoided by the system which the amendment proposes. Litigants would still know when the panel would be required to consider whether the rate required reviewing. Indeed, such occasions would be more frequent under the amendment than under the three-year cycle proposed in the Bill. One can imagine a stop-start mentality emerging leading up to the time when the panel was expected to report.

A further consequence of the amendment would be that the expert panel would have, in practice, to exist independently of the review of the rate, rather than being convened by the Lord Chancellor for each review, as the Bill currently provides. In effect, a standing panel would be required, which would have to exercise judgment as to the timing of reviews, rather than confining itself to the technical matter of advising the Lord Chancellor on the factors that might be considered in the setting of the rate, which is the purpose of the expert panel. The amendment would therefore make a very significant change to the proposals in the Bill regarding when the rate should be changed. The Government’s proposals for a fixed-period maximum cycle for the review of the rate have, as I say, been developed through consultation and been the subject of pre-legislative scrutiny, and we consider that they provide a simple and certain method by which reviews can largely be predicted.

Amendment 74 would require the Lord Chancellor to adopt any recommendation from the expert panel as to whether the rate should be changed and, if so, what the rate should be. Clearly, such a change would diminish significantly the responsibility and accountability of the Lord Chancellor for any review outcome—indeed, it would essentially remove it. Amendment 74 would also remove the requirements on the Lord Chancellor, the panel and the Treasury set out in paragraph 2(6) and (7) of new Schedule A1 to comply with or to take into account the duties of the Lord Chancellor in relation to the setting of the rate that are set out in paragraph 3 of new Schedule A1. What we would have is the elevation of the panel from an advisory role to essentially an executive role. That would be a major change and clearly greatly alter and increase the role of the panel.

The creation of the expert panel to advise the Lord Chancellor is, of course, one of the most important changes introduced by Clause 8. The panel is central to the Government’s proposals for the way in which the rate is set, introducing new expertise and transparency. The panel will play a very important role in providing assistance to the Lord Chancellor in setting the rate, but it would not in our view be appropriate for the panel’s recommendations to bind the Lord Chancellor in deciding whether the rate should change and what it should be. The setting of the discount rate requires the weighing of different potential outcomes for individuals in relation to a range of possible rates. An element of value judgment will ultimately be required. It is important, therefore, that the decision-maker should be politically and publicly accountable for decisions on the rate. That is why the Lord Chancellor is, in our view, the appropriate person to make that choice. Indeed, this was recognised by the Justice Select Committee, which stated in its report that:

“Setting the discount rate has repercussions on the taxpayer through Government expenditure and also consumers through its impact on insurance premiums and inflation; therefore we think it is right that the decision to set the discount rate lies with the Lord Chancellor”.


We agree with that assessment.

In addition to being influenced by the pre-legislative scrutiny carried out by the Justice Committee, the proposals we have put forward have been developed through the public consultation process. In response to the question of by whom the rate should be set, the largest single group of support was for the rate to be set by the Lord Chancellor following advice from an expert panel. I note the support for that which has been given, in particular, by my noble and learned friend Lord Mackay of Clashfern, expressing his experience as Lord Chancellor and underlining the distinct role of the Lord Chancellor in this context.

Civil Liability Bill [HL]

Lord Mackay of Clashfern Excerpts

Committee: 1st sitting (Hansard): House of Lords
Thursday 10th May 2018 Lords Chamber

[Lord Beecham]

There surely has to be a medical definition—and where better to get it from? The medical profession deals with injuries that are labelled “whiplash injuries”. There may be some argument about the definition, but surely it can be decided only on the basis of medical skills.

[Lord Mackay of Clashfern (Con)]

My Lords, I thoroughly agree with the proposition that is highly desirable for the definition used as the basis for later provisions in this part of the Bill to be on the face of the Bill. The difficulty I have had so far is in identifying what we want to do. It is the area of exaggerated claims, or something of that sort, that underlies the Government’s proposals. I agree that it must be, ultimately, a medical definition, because a medical report saying that you have this injury is an essential requirement for you to come under this part of the Bill.

The difficulty, however, is that the doctors have to know where these exaggerations take place. I have been instructed by people who suggest that if you go for the back, and the rest, you are extending the thing beyond the real position. I have, therefore, some sympathy with the amendment restricting that, which I think is to be moved or spoken to later. I do not, however, profess to know exactly what the problem is, in the sense of the area of medical expertise that is being used by the claimant industry to exaggerate claims. That is their idea: to exaggerate these claims and ask for more than they are worth. As I said at Second Reading, I have some experience long past of the difficulty of actually quantifying the correct amount for these injuries, particularly if they are serious—and they can be quite serious, I think. This is my problem and I would be glad of help when the Minister comes to speak.

[The Advocate-General for Scotland (Lord Keen of Elie) (Con)]

My Lords, I am obliged for all the contributions that have been made so far this morning. I observe that it appears to be generally recognised that the Bill is addressing a very real issue about which policy decisions have to be made and implemented. I quite understand the question raised about where the definition of whiplash injury should appear. The definition in the Bill seeks to limit injuries to those soft tissue injuries that affect the neck, back or shoulder and arise from road traffic accidents. The vires in the Bill are tightly drawn to enable regulations to be made by the Lord Chancellor that would apply only to a discrete number and type of injury.

It is interesting to see the diversity of amendments that have come forward this morning. That may underline the particular challenge we face in arriving at a suitable definition, be it in the Bill or in regulation. We have sought to address an issue that involves reconciling a legal understanding of this matter with a medical definition—one which covers both injury and the symptoms of injury. That involves us engaging with not only medical expertise but a degree of legal expertise. In addition, while I am not going to go through the detail of every amendment, because I understand what lies behind them, I will note this much. The noble Earl, Lord Kinnoull, set out three points for consideration, and in doing so underlined the very real problem that we need to address here. It was emphasised by the suggestion that if you go to a particular claims management site you are encouraged to believe that even if you have no symptoms you may still have a claim.

I was reminded of an incident some years ago where I was acting for an American pharmaceutical company. The US attorneys showed me a photograph of a genuine roadside sign that had been erected in the state of Mississippi. It said, “If you’ve taken drug X and suffered a fatal heart attack, telephone this number”. The lengths to which we lawyers will go know no bounds, and our belief in the Almighty is always there. There is a very real industry out there. I do not use the term “racket”, but others have—and with some justification.

Looking to the current position, the noble Lord, Lord Sharkey, correctly observed that the regulations that we have produced in draft to elaborate the definition of whiplash injury have only just appeared. I quite understand the need for noble Lords to consider those regulations in more detail. In turn, I will consider in more detail whether we should incorporate a more precise definition in the Bill. But I stress that, even if we were to take that step, it would be necessary for us to bear in mind the ability of government to proceed by way of regulations to support any definition in the Bill. We are well aware that flexibility will be required with regard to any final definition so that we can meet the way in which claims development occurs—the way in which this sort of market develops—in order to put limitations on claims.

At the end of the day, the detailed definition of whiplash injury will need to reconcile the current legal understanding with an accurate medical definition covering both injury and symptoms. Our aim is to achieve that objective, but to what extent we achieve it by incorporating the definition in the Bill is not a matter on which I would take a final position. I quite understand the suggestion that we should consider further the extent to which the definition can appear on the face of the Bill, and also allow noble Lords the opportunity to consider the scope of the draft regulation that has only recently been made available. In the light of that, and understanding that these are essentially probing amendments, I invite noble Lords not to press them at this time.

European Union (Withdrawal) Bill

Lord Mackay of Clashfern Excerpts

Report: 5th sitting (Hansard): House of Lords
Wednesday 2nd May 2018 Lords Chamber

I do not share in the opprobrium that has been heaped upon the Scottish National Party from time to time during the debates. Scotland is a proud country with a population larger than 10 of the current 28 states that form the European Union. The SNP seeks to take back control. It is prepared to take the risk of economic collapse to gain sovereignty—whatever that means, as someone once said—and it pursues a mirage of prosperity by leaving not the European Union, but the union of Great Britain and Northern Ireland. I would have thought that there are people in this House who might understand that. I understand its position, but I do not agree with it.

[Lord Mackay of Clashfern (Con)]

My Lords, it is appropriate that I should follow the noble and learned Lord, Lord Hope of Craighead, on the Scottish amendments. The First Minister took the unusual step of sending these amendments to the Lord Speaker. I do not think she expected him to put them before the House.

I narrated in Committee how I had been invited to accept some briefing from the Scottish Government through Michael Russell, with whom I have had very pleasant and genial talks and communications since. I should acknowledge that he kindly said in a statement to the Scottish Parliament that he was grateful for the help that the noble and learned Lord, Lord Hope, and I had given, as well as many people in other parts of the House. Relations between us have been extremely good. I have communicated with nobody about it except for Mr Russell and the Lord Advocate. I have not sought to involve anybody else in these communications, except, of course, the Government of the United Kingdom, with whom I was authorised, if you like, to negotiate. I have enjoyed the best possible approach of the Government of the United Kingdom in the Minister responsible and the Bill team. The officials responsible for the negotiations have been extremely helpful. Like many others I am sorry that the Scottish Government have not yet found it possible to agree with the arrangements that have so far been made.

I will take a word or two to explain what I understand the new government Amendment 89DA amounts to. If EU law is removed from the Scotland Act, all EU law comes immediately either to Scotland if it is a purely local country legislation, or, if it covers more than one of the countries of the UK, to the UK Parliament. That happens on Brexit day unless something is done. From what I understand, the proposed new section before us in the amendment will suspend the application of the new arrangements until arrangements are made for the single market—or the internal market—in the United Kingdom. There are, as all of us know, provisions in EU law for that single market. They might require amendment in light of the fact that the EU is no longer the authority for the law, but it is important to keep them in place until it is possible to get them amended in a way that is satisfactory to the United Kingdom, including the devolved Administrations —I include Northern Ireland in that phrase. Therefore, a power is given in the proposed new section to suspend that part of the immediate operation of the Brexit treaty so far as it affects the law.

It is important to see that proposed new subsection (2) says that that kind of restriction does not apply to any modification of EU law so long as it was, immediately before Brexit day, within the competence of the Scottish Parliament. That restricts it to the kind of provision relating to the common market. That is what the amendment proposes in that situation, in the light of the discussions set out in the agreement—the noble Lord, Lord Thomas of Gresford, spoke of that in a general way that applies to Scotland as well as to Wales. As far as I am concerned that is a reflection of the kind of amendment I proposed in Committee to try to get a better arrangement for negotiation. I am glad to know that such a memorandum of agreement has been accepted by the Welsh Government and, I hope, will be accepted by the Scottish Government.

Civil Liability Bill [HL]

Lord Mackay of Clashfern Excerpts

2nd reading (Hansard): House of Lords
Tuesday 24th April 2018 Lords Chamber

[Lord Mackay of Clashfern (Con)]

My Lords, this is an extremely interesting Bill for me, for reasons that I will explain in a moment.

I will not say much about the first part of the Bill and the types of injury it deals with. That is because long ago, when I was in practice in Scotland, the system was still that juries awarded damages in personal injuries cases. I acted for the defendant in a case of whiplash injury. The lady came to the jury to explain how bad her injuries were. We had put in an advance offer—as was usual—for what we understood, from the medical evidence, was a reasonable estimate of the worth of the injuries. At the jury trial the lady was very good at explaining how bad the whole thing was, and she got an award considerably above our offer. My reputation as an estimator was, therefore, adversely affected by that experience.

I had the great advantage, however, that the late Lord Fraser of Tullybelton—as he became—was the presiding judge. In those days the judge was not supposed to give much indication: it was a matter for the jury and he was not supposed to intervene to say it should be this or that. Lord Fraser—as those who knew him will remember—was an excellent judge who observed that requirement meticulously. He came to me afterwards and said that he thought I had been very badly treated by the jury, which shows how difficult it is to estimate genuinely on this type of injury. I have no doubt that there may be some question about precisely what the rate should be when the whole thing is lumped together as if it were a reasonably common experience, with reasonably common results.

However, I want to speak primarily about Part 2 of the Bill, because I am in the remarkable position of seeing that this part would amend a Bill that I introduced, and which became an Act, in 1996. My recollection of that—it is over 20 years ago, as your Lordships will quickly be able to observe—was that the judges were having a lot of difficulty in assessing damages, particularly for the whole of life, as some cases required. They were of course experiencing the benefit of actuaries and other people who ran investments, and so on. This involved a very large amount of work in the individual cases and the judiciary were anxious—I am subject to correction by members of the judiciary who may remember this situation—to avoid the necessity for this repeated excursion into financial administration. The other thing is that at that time, in 1996, the markets were probably a bit less volatile than they are now.

Eventually we passed that Bill, which required the Lord Chancellor to fix the discount rate. Fortunately, I had managed to retire before I had to do it so it fell to the noble and learned Lord, Lord Irvine of Lairg, to fix it, which I am sure he did to the best of his ability. He had to take the advice of the Government Actuary but he was not confined to that. He fixed the rate and that rate has lasted until 2017. The great thing about that matter is that if it changes after such a lapse of time, it is going to be quite a change and the effect on the estimates within various bodies, particularly public bodies such as the National Health Service, is terrific. I entirely agree that something more regular is required and that it is a difficult task, because the effects of the kind of injuries that may come before the court can vary tremendously, from those which will last for a lifetime to those which are much shorter.

I want to look at the assumptions that the Lord Chancellor is required to make under the Bill and I venture to suggest that they form a bit of a challenge. The Bill says in Part 2:

“The Lord Chancellor must make the rate determination on the basis that the rate of return should be the rate that, in the opinion of the Lord Chancellor, a recipient of relevant damages could reasonably be expected to achieve if the recipient invested the relevant damages for the purpose of securing that—


(a) the relevant damages would meet the losses and costs for which they are awarded”.


That is fairly easy to say on a day-to-day basis. But Part 2 then says that,

“the relevant damages would meet those losses and costs at the time or times when they fall to be met by the relevant damages”.

These will be years ahead in some cases, so it is quite an assumption that the Lord Chancellor has to make. The last provision is really crucial. It says that,

“the relevant damages would be exhausted at the end of the period for which they are awarded”.

When I chaired the Select Committee that looked into the Assisted Dying Bill, one thing we learned was that doctors had great difficulty in assessing the length of life. One of the great difficulties is to assess when the damages should be finished, because in the life cases, which are now a very substantial part of the damages that have to be paid by the National Health Service, life expectancy is very difficult to estimate. Even as you get near the end of life, life expectancy seems to be very difficult to estimate. When a baby is born and the results affect that baby for the rest of its life, you can imagine the difficulty of trying to determine that.

The Lord Chancellor has to go on, having made these assumptions, to assume,

“that the relevant damages are payable in a lump sum”.

He is not allowed to take account of the fact that you can now pay in instalments. The second assumption is,

“that the recipient of the relevant damages is properly advised on the investment of the relevant damages”.

That seems a fairly easy assumption to make. It is not so easy to know what the right advice would be. The third assumption is,

“that the recipient of the relevant damages invests the relevant damages in a diversified portfolio of investments”.

You would think that might be covered in proposed new subsection 3(b), but for clarity it has been separated out. Proposed new subsection 3(d) is the one I want particularly to draw attention to because we may want to look at it in some detail in Committee. It says:

“The assumption that the relevant damages are invested using an approach that involves … more risk than a very low level of risk, but … less risk than would ordinarily be accepted by a prudent and properly advised individual investor who has different financial aims”.


I assume these are different aims from the people who are investing the damages award for the injured party.

The assumptions that have to be made by the Lord Chancellor on this basis all seem very reasonable, but I think it would require the Lord Chancellor to have a certain element of the prophet about him or her to enable these assumptions to be taken with any degree of accuracy—we really need to look at this. I imagine that the promoters of this Bill have looked at this very carefully and if it is going to be accurate from the point of view of awarding damages, these conditions have to be fulfilled. The difficulty about it is how you satisfy yourself that that will be true. That is what I would like to hear a little about.

The expert panel included an actuary, but my understanding of actuarial science—it is a limited understanding—is that it is very much based on the statistical evidence on length of life. The trouble is that each case is separate; it is not the average, it is an individual case. How do actuaries go about doing this? I am interested to know. The Government Actuary has to do all that kind of thing and does it extremely well, but it is not by any means easy. Getting an expert panel to agree—it includes an actuary and investment people—will be very difficult.

The Bill deals with making fair the system of awards in civil liability. Two distinct aspects are covered in the Bill—the particular kind of injuries are dealt with in the first part and the discount rate in the second part, but the system is bigger than that. One of the important elements in the present system is an Act of 1948 in which Section 4(2)—I am sorry, Section 2(4); I had better get them in the right order—indicates that the damages are to be calculated on the basis that the medical attention is given on a private basis. I can see that in 1948, when the health service was very young, that might be appropriate, but I think modern times have crept up on that and it is rather doubtful whether that is a good basis.

There is another point in relation to that. One of the biggest areas of claim for the National Health Service is in obstetrics. The trouble with an obstetric injury is that it is likely to have effect for the rest of the person’s life and, as I say, you have to forecast what that is. My understanding is that the amount of private practice in obstetrics has almost disappeared for the reason that the premium for an operator in obstetrics is so large as not to be worth while; he is better to be in the National Health Service. I am not sure about that but it is what I understand to be the case. If so, it strengthens very much the need for a revision of a rule that requires you to assume what is not there as a basis for damages. Assessing damages is difficult enough without trying to assume what now is no longer practised.

European Union (Withdrawal) Bill

Lord Mackay of Clashfern Excerpts

Committee: 11th sitting (Hansard - continued): House of Lords
Wednesday 28th March 2018 Lords Chamber

[Lord Mackay of Clashfern (Con)]

My Lords, I understand that that political point can be shortly made and it would dispense with all our consideration of this Bill altogether.

I played quite a part in the 2011 Act—along with the noble Lord—in stating what the position in law was for EU law in this country. I was keen to point out that the treaty did not of itself have that effect. It became an argument later when the noble Lord, Lord Pannick, argued about these and other matters in the Supreme Court. However, the point was that the authority for EU law in our country is the 1972 Act. This House affirmed that and the House of Commons accepted it.

The important thing about the 2011 Act is that its repeal is consequential on the repeal of the 1972 Act and our departing from the European Union. Matters that are consequential are usually covered in schedules. If noble Lords wish to discuss purely consequential legislation, so be it, but it is not necessary. As the noble Lord, Lord Adonis, said, we have used it quite a few times and, given the amount of time we have spent on this Bill, it is appropriate that this provision repealing the 2011 Act should be in a schedule.

[Lord Adonis]

My understanding is that it is not consequential that the repeal of the 2011 Act under this schedule will take place when this Bill becomes law at a point determined by a Minister, whereas we only repeal the European Communities Act 1972 on Brexit day, 29 March next year, or later under Clause 14(4) if a Minister chooses to extend the date.

My understanding—it is important to tease out these issues because we are a revising Chamber—is that this is being done deliberately by the Government. They want to forestall any cases coming under the 2011 Act as soon as possible. I assume they have read the legal opinion which raised doubt about the interpretation of the 2011 Act and do not want them rumbling through the courts before the repeal of the European Communities Act 1972 takes effect.

[Lord Mackay of Clashfern]

That does not prevent the repeal of the 2011 Act being consequential on the main provision in this Bill.

[Lord Dykes]

My Lords, one has distinct memories of the European Union Bill and it then becoming an Act. The noble Lord, Lord Adonis, has done a great service by referring to it, although his objectives in so doing might be somewhat different from noble Lords in other parts of the House. That Bill was introduced at the beginning of the coalition period. I have always thought that the coalition was agreed too quickly. Both leaders, understandably, were keen to get going with it and some aspects of the agreement were left vague and unresolved. There was a great deal of excitement about the initial period of this unusual and first-time type of coalition. For those of us who pompously describe ourselves as good Europeans—rather than just fairly keen on the EU— this was a painful moment. Given the celerity of the agreement of the coalition at the beginning, the contents of the Bill were never properly gone into or discussed, despite the substantial vote in the House of Commons to which the noble Lord, Lord Adonis, referred. Again, that was because it was the beginning of the period of this new exercise of the interesting and fascinating coalition.

I believe David Cameron was not much interested in the legislation. He regarded it as a routine inclusion in the incipient contents of the coalition’s programme—not the things that appeared later on—but for the Liberal Democrats it was important. I remember it being described by a senior colleague who was then a member of the coalition representing the Liberal Democrat portion of it—I will not say who—as, “Just routine smoke and mirrors, old boy, don’t worry about it”. However, it was not easy for people to accept it in that sense and I remember vividly a substantial rebellion within the Liberal ranks in the Lords on this matter. There may have been a small one in the Commons as well—I cannot exactly remember those details—but in the Lords there was a substantial rebellion led by Baroness Shirley Williams and others in the team who were not members of the coalition Government because they objected strongly to the contents of the Bill.

The contents were elusive, vague and cynical, That is what put off people who regarded themselves as enthusiastic members of the European Union—members of the club—unlike some other people in Britain who were only half-hearted members of the club, including politicians. For example, a transfer of powers to Brussels had to be accompanied by a referendum and could take place only if the Government got the authority of Parliament to do so. However, the Government could suggest that something was too minor a matter to bother about and just leave it aside.

An extraordinary, ironical conclusion of one of the important items was that the enlargement of the Union would not be included in the Bill. In those days there was a rumour that Turkey was going to join at some stage—there were endless discussions about that possibility—and yet that would not have been part of the matter discussed in the democratic Parliament of the United Kingdom, particularly in the House of Commons. There were other anomalies which looked like opportunism. The rebellion was substantial among the Liberal Democrat ranks here, and the legislation was then forgotten and buried.

I always thought that rather than object to the repeal—I can understand why the noble Lord, Lord Adonis, is suggesting it—the infamous 2011 Act should be repealed as quickly as possible. That needs to be on the agendas of both the Lords and the Commons for the future. At the moment, therefore, I am torn between agreeing with the noble Lord, Lord Adonis, for the reasons he has enunciated, and saying that it would be a mistake and that this should be included in the total repeal list. After all, getting rid of that obnoxious legislation would not be a precursor to any other anticipated legislation following the same theme later on.

--- Later in debate ---

[Lord Adonis]

My Lords, I have always disregarded health warnings on the grounds that one would never eat anything at all if one proceeded down those lines.

The debate has been disappointing in that I do not think the two key points I made have been responded to. I have huge admiration for the noble Lord, Lord Pannick, and the noble and learned Lord, Lord Mackay of Clashfern, but they have not addressed the point that, in the way the Bill is framed, the repeal of the 2011 Act is emphatically not consequential on the repeal of the European Communities Act 1972. Rather, it is consequential on the enactment of the Bill and it will take place well in advance of Brexit day and the repeal of the European Communities Act 1972. If it was indeed consequential on the repeal of that Act, which I fully accept it should be because we would not be a member of the European Union at that point, I would have no difficulty at all with the repeal in Schedule 9. It is because it is being deliberately accelerated in advance that there is an issue.

[Lord Mackay of Clashfern]

It cannot happen until immediately after Parliament has passed a Bill fixing a date for leaving the European Union. The 2011 Act has no substance or content at all apart from the European Union treaty, so this idea that it has to be consequential in time is an extra. It is consequential in its subject matter. That is what is really important.

[Lord Adonis]

My Lords, we might not leave the European Union next year. We have not enacted the legislation to do so. At the moment there is no treaty. The 2011 Act would be repealed under the terms of the Bill. The two are clearly not consequential.

European Union (Withdrawal) Bill

Lord Mackay of Clashfern Excerpts

Wednesday 21st March 2018 Lords Chamber

We are looking for some clarification and transparency from the Minister on this because it seems an extraordinary power. He has helpfully quoted other pieces of legislation in earlier debates in aid of his argument about whether or not the powers that the Government are seeking under this piece of legislation are reasonable. Perhaps he can give some examples and explain to us the circumstances in which this particular power would be of value to this and other Governments. Maybe he can explain to us when it has been used in the past because that would at least enable us to understand the circumstances under which what on the face of it seems extraordinary would be acceptable. I am not happy about the powers sought here and neither was the Constitution Committee. For those reasons, I beg to move.

[Lord Mackay of Clashfern (Con)]

My Lords, I strongly support the amendment. It is essential that the status of retained EU law in our law should be determined by Parliament as part of this Bill. I supported an amendment that the noble Lord, Lord Pannick, moved earlier to say that retained EU law should be treated as primary legislation. It is so treated by the Bill for the purposes of the Human Rights Act. It is highly desirable that this should be fixed definitely as part of the arrangements and not left to be decided, as it were, ad hoc from time to time by the use of the power to which the noble Lord, Lord Bassam of Brighton, has drawn attention.

Originally, the amendment that the noble Lord, Lord Pannick, proposed covered the whole of this law. I am inclined to think that the Clause 2 provisions, which are already in our law, have the status given by our law already. Some of them are statutes and some are subordinate legislation. Having considered this a little further since we discussed this some long time ago, I am inclined to think it might be wise to restrict the provision that this should be regarded as primary legislation to the Clause 3 provisions.

[Lord Pannick]

My Lords, in the previous debate the Committee deliberated on the vice of Clause 17(1). The amendment proposed by the noble Lord, Lord Bassam of Brighton, identifies a specific reason why Clause 17 (1) is so objectionable. When the Constitution Committee put to Ministers our concern, to which the noble and learned Lord, Lord Mackay of Clashfern, has just referred, that the Bill should identify the legal status of retained EU law, the answer from Ministers was that if necessary or appropriate they could use the powers conferred by Clause 17(1) to designate what legal status retained EU law would have, and designate different parts of retained EU law for different purposes. The Constitution Committee made its view very clear in paragraph 69 of its report:

“It is constitutionally unacceptable for Ministers to have the power to determine something as fundamental as whether a part of our law should be treated as primary or secondary legislation”.


We debated what legal status should be given to retained EU law earlier in Committee. I respectfully agree with the observations made just now by the noble and learned Lord, Lord Mackay of Clashfern. I emphasise, however, that it is the width of Clause 17 (1) that is so objectionable as it enables Ministers to assert that they could use it to make changes of such constitutional enormity to our legislation. I agree, therefore, with the concerns that the noble Lord, Lord Bassam of Brighton, has expressed.

--- Later in debate ---

[Lord Carswell (CB)]

My Lords, I had not intended to intervene in this debate, partly because I was not present at Second Reading. I apologise to your Lordships for that but there were certain problems that I had at home. But I am impelled to do so by what has been said so very eloquently by many of your Lordships today.

I have lived the whole of my life in Belfast and been through a considerable amount in that time. I have lived there even longer than my noble and right reverend friend Lord Eames, whom I have known, liked, respected and admired—no less so today—for many years of that time. I have known the noble Lord, Lord Alderdice, and I like and respect what he has had to say. I am very happy to support the principles of what they have both said. I will come back to what I mean by “the principles” in a moment.

I was very close, personally and professionally, to what we have referred to by the usual euphemism of the Troubles. It was a dreadful time and I would hate with every fibre of my being to think that we might go back to that. The fact that we have had peace—maybe not perfect, but a great deal better than what we had before—for 20 years now has been of great importance in the life of the Province. That it should continue is also of great importance, not merely because it gives a better approach to normal life in the Province but because it conditions people to feel that that is the proper way to conduct their lives, which of course it is. If the continuance of the Belfast agreement helps in that, then I am emphatically on the side of those who say that it should be taken account of.

The only caveat I have is on the wording. The Belfast principles include certain things, uncontestably, but what else? A great deal of my professional life, both at the Bar and on the Bench, was spent in interpreting statutory wording and attempting to find its proper and expressed meaning—the way in which statutes should be approached—while trying to see either loopholes or where other people would look for loopholes. That is the great problem in drafting anything, particularly something as important as this. Therefore, that is the only reason I issue a note of warning. I would be perfectly happy to see a clause of the nature proposed on the statute book. But if it is to be done, I simply warn that defining the Belfast principles, or leaving them undefined, could allow the wording to be put to purposes which we might not think of today but which some other people will think of at some time. I leave this thought with the Minister who is replying and with your Lordships.

[Lord Mackay of Clashfern]

My Lords, I have not spoken on this subject but today I am moved to do so: first, because I had the honour of serving in government with my noble friend Lord Patten of Barnes before he was a Member of this House; and, secondly, because I held the responsibility for most of the justice arrangements in Northern Ireland for about 10 years in the middle of the Troubles. Therefore, I am extremely conscious of the difficulties of Northern Ireland and of the immense privilege of it having had a great degree of peace since the Belfast agreement and since John Major initiated the first talks, which was quite difficult to do, during my term of office.

I am convinced that the only real solution for the Northern Irish and Irish border is in some form of treaty to deal with customs matters and with trade. At the moment, we have a law under the jurisdiction of the European Union for these two matters. The Government have said, and I understand this, that we are leaving both arrangements. But it is possible to make similar arrangements under a treaty: we would not be part of the EU but part of a treaty arrangement with the EU, which would reflect that. I believe something of that kind is absolutely essential. The Belfast agreement did a terrific amount for the peace of Northern Ireland and long may it continue.

[Lord Bassam of Brighton]

My Lords, I have a few words to add to what has been a hugely interesting and entertaining debate, led off by the eloquent and entertaining noble Lord, Lord Patten of Barnes, who speaks with great knowledge and experience on this, as do many others. My amendment was stimulated by anger at those former Ministers who decided that it was worth the price of Brexit to suggest that we should rethink the Belfast agreement, which has brought so much peace, tranquillity and good order to governance in Ireland, and the north of Ireland in particular.

Amendment 316 seeks simply to ensure that, when this Bill passes, there should be some further thought because I do not think that much thought has yet been given. This is one of those debates that happen simply because of the unintended consequences of Brexit, and not enough was thought of by the Brexiteers in the run-up to the leave vote on 23 June 2016. That is why that amendment is there, although the one proposed by the noble Lord, Lord Patten, is far superior, because it takes us to the principles that are fundamental and lie behind it.

I can see that both Front Benches want to get on, so I shall speak only briefly to my amendment, but it is right that we have these things at the forefront of our minds. Perhaps when we come back at Report, we will have something there enabling us to focus on this and give it further thought, as well as enabling the Minister to say something better than what has been said before—that instead of the Bill being merely about transposing one set of legislative rules into a new set, we recognise what has happened before and the impact of the Belfast agreement on the future governance of our country post-Brexit.

European Union (Withdrawal) Bill

Lord Mackay of Clashfern Excerpts

Committee: 9th sitting (Hansard - continued): House of Lords
Wednesday 21st March 2018 Lords Chamber

[Lord Mackay of Clashfern (Con)]

My Lords, my Amendment 318A is in this group. As your Lordships know, I am a lawyer, but I have already got limited support from the noble Lord, Lord Wigley, who has repeatedly explained that he does not suffer from this disadvantage—I will do my best to take him along with me.

As I have indicated, I was first introduced to this matter in a discussion with a very distinguished SNP Member in the other place, when we were travelling together from the north. I mentioned to him that I had had no briefing of any sort from the Scottish Government. The next day I got a message from the Scottish Government to say that the Lord Advocate and Mr Russell, the Minister, were very willing to speak to me. I was able to speak to the Lord Advocate that afternoon and to Mr Russell in the early afternoon that Wednesday. I was very emphatically assured by Mr Russell that the Scottish Government were keen to reach an agreement. I am quite satisfied that there is no indication in the attitude of the Scottish Government that this is an attempt to further their ultimate political aim, and that they are seeking to solve this matter in a way that accords with the dignity of the Scottish Government. I said that I did not want to do or say anything that would impede agreement, and I now hope to show how agreement can be reached.

Before I explain the amendment, I will say a word or two about the law that lies behind it—I will take Scotland as an example, as the other Administrations have similar provisions. The devolution settlement in the Scotland Act is subject to EU law. That considerably restricts what the Scottish Administration can do at present, but when Brexit comes along that limitation will disappear. Included in those limitations are the legislative powers of Brussels to legislate in the United Kingdom. From one point of view, it is wise to analyse these powers in this way: a power that can be made effective within a single area of legislative competence in the United Kingdom should go straight to that level—in other words, to the devolved Administration. That is, if the power does not require more than one of our legislative areas in order to be effective, it should go straight to the devolved Administration.

But there are EU powers which can be effective only when they cover more than one of our legislative areas. The one that is of most relevance in this connection is that which provides for the single market. As your Lordships know, and as the Scottish Government certainly know, the single market is quite an important feature of the present negotiations. Part of that single market is the single market in the United Kingdom. It is 100% obvious that, if you are going to legislate for the single market in the United Kingdom, it is legislation that affects all of the countries within the United Kingdom and the legislatures that support them. Therefore, it is absolutely plain that the ultimate power to settle the single market provisions lies with the United Kingdom Parliament.

But—and this is an important consideration—it is extremely wise to proceed by agreement where it is at all possible. A good deal of agreement has already been reached. As I said, I was assured by Mr Russell when I first spoke to him—and again when he later saw my amendment, which he welcomed subject to qualifications such as the noble Lord, Lord Wigley, will propose—that the Scottish Government are very anxious to reach agreement.

[Lord Forsyth of Drumlean]

I am very interested in this concept, which my noble and learned friend is putting forward, that powers which affect the single market that is the United Kingdom should be taken at a United Kingdom level. Does he see that operating both ways? For example, the Scottish Parliament has the power to set unit pricing for alcohol, which of course affects the single market that is the United Kingdom. Does the proposition that powers which affect the single market should be taken at the UK level mean that, as well as the powers which will come from the European Union when we leave it, powers might also be returned to Westminster from the Scottish Parliament? He might find that Mr Russell is less enthusiastic about that.

[Lord Mackay of Clashfern]

I am not suggesting that for a minute. I am suggesting that what is required is a single market which is the necessary concomitant of having cross-border trade. I do not think that the price of alcohol in Scotland would necessarily affect that. It might be wise for me, if I wanted to buy alcohol, to do it when I was here rather than in Scotland. I may say at once that I am not particularly keen to do that either. That is not an example of the need for there to be no obstacle at the border, because if I have to pay for the whisky in Scotland, I can take it with me, subject to not coming on an aeroplane, I suppose. It is a matter of what is required.

It is realised by various people who were at the meeting of the Joint Ministerial Committee that framework agreements will be required in certain areas. That is because, for the single market in the UK to be effective, there must be agreement across the legislative areas. It follows, as night follows day, that the legislative vehicle for dealing with a market which is across the whole of the UK is a vehicle which has jurisdiction over the whole of the UK. It cannot be otherwise. That seems to be common sense and you do not need to be a lawyer to think that.

My next point is the “but” I was coming to before I was helped by my noble friend. I stress that it is highly desirable, when you are seeking to get a single market, to get the agreement of the components. They have different interests, but there is a very strong pressure to secure a single market. I am sure the Scottish traders do not wish to have something at Berwick-upon-Tweed which requires them to pay out money to English customs. It is absolutely clear that there is a very good pressure to reach agreement. As I say, I am assured by the White Paper that the Welsh Government put forward some considerable time ago, which was referred to earlier. I say in passing that that paper addresses itself to wider constitutional issues about future government in the United Kingdom and how it is not working very well and what-not. But I need something that will work now for the very limited purpose of getting the single market arrangements secure before Brexit comes into effect.

I have suggested in my amendment that there should be set up a group which consists of representatives of all four countries. I think it is wise to specify who they are. I have also specified, to try to reach agreement, that the chairman of the group should be decided on by the group. The Lord Advocate mentioned to me that one of the features of the present committee is that it is always a UK Minister who presides. There will be a certain amount of interest in the skill of the chairman in reaching agreement. It is often quite an important position—I have not been chairman of many committees that have not reached agreement—and it is an important aspect of the matter. I have therefore suggested that.

Of course, the details of this are very much matters for your Lordships to consider, but that is the ultimate thing: that the group should look at all these questions. If, as I am assured, they are very keen to reach agreement, I have no doubt whatever that there is a very high prospect that they will reach agreement—I emphasise that—when you consider that new rules must come into operation at the point of Brexit or the end of the implementation period, whichever is the later, and that if there was failure to reach agreement it would require the action of the United Kingdom Parliament. I am prepared to limit the amount of time for that to three months to emphasise my confidence that agreement will be reached and that therefore a formal legislative enactment in the United Kingdom with full consent from all four members of the committee would be the result.

This is a simple way of dealing with the matter, which is dealt with in a rather complicated way by the government amendment. The government amendment appears to inject powers into areas which may be devolved in fact. Mine makes it absolutely clear that the devolved powers are to be immediately made available to the Governments of the devolved legislatures; it is only the single market power that I consider needs to be reserved.

My very good supporter, the noble Lord, Lord Wigley, has suggested in his amendment that there should be some extraordinary—I do not mean that in a pejorative sense—tribunal to decide when there is disagreement. I certainly hope that there will not be disagreement, but I have provided that if there is disagreement the group itself must specify what that disagreement is, to make the issue for the United Kingdom Parliament as small and definite as possible. In my analysis, the single market is within the legislative competence of the UK Parliament. All the four countries are represented there. I remember that the Scottish party that got many seats in the 2015 election said that one of the purposes was to provide a strong voice for Scotland in the Parliament of the United Kingdom. I have no doubt there is a pretty strong voice for that purpose. Having all four countries represented is as good as any kind of remarkable thing with Speakers. I am not sure if my noble supporter has asked the Speakers whether they want to take this on, but I think that is not in their competence. That is a job for the legislative assembly of the United Kingdom which is set up under our constitution and which I believe would reach a very good agreement on this point, if it had to. In the meantime, I sincerely hope it will not be necessary for it to do anything except legislate with a form agreed by the four constituents.

[Lord Wigley (PC)]

My Lords, I tabled Amendment 318AA as an amendment to the amendment in the name of the noble and learned Lord, Lord Mackay. I did so with due deference and with considerable temerity to be trampling on the legal pastures in which he has such expertise and I am a layman. None the less, I confirm that I have had conversations not only with Mr Mike Russell, to whom the noble and learned Lord referred, but with people from the Welsh Government—and, as he raised the question with me, yes, I have discussed it with the Presiding Officer of the National Assembly, Elin Jones, who sees no difficulty at all with such a mechanism.

With that prelude, I thank the noble and learned Lord, Lord Mackay of Clashfern, for tabling Amendment 318A, which he did following the earlier debates in Committee. Those debates pointed to a crying need for a sensible mechanism to be found for dealing with the vexed issue of securing agreement between Westminster and the devolved legislatures regarding those matters which the UK Government feel must be handled on a UK level, even though they deal with areas that may be of devolved competence.

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[Lord Forsyth of Drumlean]

That is an open admission of it. As I look at the amendment, I think, “Who will speak for England?”.

[Lord Mackay of Clashfern]

It tells you.

European Union (Withdrawal) Bill

Lord Mackay of Clashfern Excerpts

Committee: 8th sitting (Hansard - continued): House of Lords
Monday 19th March 2018 Lords Chamber

[Lord Broers]

I want to point out two things in response to the noble Viscount. First, I have introduced this amendment because research and development was ruled by the Public Bill Office to be outside the remit of the safeguards Bill, so it had to be brought here. Secondly, the fusion projects are large and collaborative; they are not projects where we can decide what we want to do and where we want to do it. We would be hopelessly underresourced if we did not join these European projects. That is why we have to join them. At the moment, we are major players in them and have always been so, but we have relatively small resources. ITER costs €13 billion—it has to cost that amount. It is certainly worth that amount. It is a tiny fraction of what we spend on energy, but, unless we collaborate with the other nations in this project, we will be nowhere.

[Lord Mackay of Clashfern (Con)]

My Lords, I recall many years ago in private practice acting on the instruction of the late Lord Weinstock to fix the price of Hunterston A. At that time, we were in the very lead of nuclear energy development. I regret to say that I have the feeling that we are slightly less in the lead now than we were then. I do not have anything like the expertise of the noble Lord, Lord Broers, but I want to emphasise the need to ensure the important place of nuclear energy in our future plans.

[Lord Adonis]

My Lords, can the noble and learned Lord remember what price he fixed it at? How does it compare with Hinkley Point B?

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[Viscount Hailsham (Con)]

In order to indicate cross-party support, I will say that I support this amendment.

[Lord Mackay of Clashfern]

My Lords, I am just wondering whether the noble Lord who moved this amendment is thinking that the House of Lords should not reject an SI outright once it has been confirmed by the House of Commons but should ask that it be reconsidered, and whether that should be the only option apart from approving it.

[Lord Lisvane]

My Lords, I think that if it were an SI concerned only with imposing a fee or charge, noble Lords would not have it laid before them.

--- Later in debate ---

[Baroness Goldie]

I have tried to make it clear that we are not attempting to equate delegated legislation with primary legislation. I have been trying to clarify when the Government consider primary legislation is appropriate and should be used—for policy change, for example. However, we are in an extraordinary situation, as all noble Lords acknowledge. It is beyond argument that the Government are having to contemplate the transfer of a body of law of huge volume and massive complexity. We owe it to the people and businesses that rely on that law to make a good fist of getting it transferred from A to B by the critical point of exit day.

My noble friend Lady McIntosh mentioned the Civil Contingencies Act 2004, which is one of the very few examples of where statutory instruments made under an Act can be amended by Parliament. The emergency regulations made under that Act are very unusual instruments. The nature of the situation with which they are intended to deal is self-explanatory. It is in a state of emergency and is such that Parliament cannot scrutinise these instruments before they are made. None of the normal scrutiny procedures of this House applies. That is intrinsic to the very unusual approach under that Act, drafted for unusual and extraordinary circumstances. Noble Lords may be interested to note that in the history of the Civil Contingencies Act no Government have ever made any emergency regulations.

We are not proposing in this Bill anything of the sort of action envisaged by the Civil Contingencies Act. I cannot think that allowing amendable SIs is the solution to the concerns expressed by my noble friends. Nor, I repeat, is reform of the legislative process the role of this Bill. It is merely intended to provide continuity and certainty in our statute book.

The amendments would not only fundamentally alter the nature of secondary legislation but imperil the Government’s programme of secondary legislation and Parliament’s opportunity to scrutinise it. If this legislation is subject to continued movement back and forth, we run the risk that crucial provisions are not in place in time to allow businesses and individuals to prepare for exit, and that so many SIs would become bunched at the end of the process that they would not be properly scrutinised. I have endeavoured to deal—I hope—fully with the very important points raised by colleagues in the Chamber, and I hope that my explanation reassures noble Lords and the noble Baroness. I ask that the amendment be withdrawn.

[Lord Mackay of Clashfern]

I was wondering whether my noble friend had any special comment on proposed new sub-paragraph (4) in Amendment 248, which seems to have nothing much to do with the amendments and seems in conflict with what the noble Lord, Lord Tyler, was saying earlier.

[Baroness Goldie]

At this time of night my reading qualities are not at their most alert. May I look at that in more detail and revert to my noble and learned friend?

European Union (Withdrawal) Bill

Lord Mackay of Clashfern Excerpts

Committee: 5th sitting (Hansard): House of Lords
Wednesday 7th March 2018 Lords Chamber

[Baroness Ludford]

It is highly relevant to whether people are being guaranteed their existing rights to legally reside in this country. I am quite surprised that the noble Lord thinks it is not relevant to an amendment that is about maintaining and guaranteeing the existing rights of EU citizens. The confusion is caused by the Home Office’s lack of clarity, not by me.

I end on that note. I would like some answers from the Minister to these detailed questions and many others.

[Lord Mackay of Clashfern (Con)]

My Lords, I want to make two short points. The first is that the precedent of giving rights in other countries when there is a separation is set up very well by the arrangements between ourselves and the Republic of Ireland in relation to Irish citizens and their rights in our country, which are guaranteed by statute in a number of cases.

Secondly, on the idea that we have to refer all these matters to the European court, anyone who reads the judgments of our courts from day to day will realise that the fairness they exhibit towards foreign citizens is of the highest possible standard. I know of no country in the world and no court in the world that succeeds in getting a higher standard; there are others that have an equally high standard, but I know of none that has a higher one. It would be a most retrograde step for this House to do anything that suggested to people in Europe that they could not get justice from the courts of this country.

[Lord Foulkes of Cumnock]

Just to clarify, my amendment does not suggest that—quite the reverse. It would be the British court or the British tribunal that took the decision whether or not to refer such matters to the CJEU. It would still be the decision of a UK court.

[Lord Mackay of Clashfern]

I think that is meant to be an intervention, because I have not quite finished. The situation is that the British courts, the Supreme Court in particular, have discretion to look at any judgment that they wish, and to raise any question they wish in these judgments. There is nothing in the present Bill that impedes that, except in respect of questions of European law, because the courts themselves, and the members of the Supreme Court, have been anxious that if they paid too much attention to the European court after Brexit, they might be accused of being involved in politics. They have sought a direction from Parliament on this matter, and that has been attempted, and I hope it is successful.

I personally do not share the animosity that exists in some quarters towards the European Court of Justice. It is over 30 years now since I often appeared before them, and I have nothing but praise for the way in which they do things. They do things very differently to us. There are far fewer oral hearings—at least, there were when I did it, which was a long time ago. There is much less oral pleading than there is in our courts. Actually, our courts have moved slightly in that direction in recent years, since I was last involved with them—and in some cases quite far in that direction.

The respect I have for the European Court is of the highest order, but I do think there is a difficulty because, after Brexit, no judges or advocates-general of the British Bar will be members of the court or advocates-general in the court. That is an important factor to be taken into account in the arrangements. I am not part of the negotiations—I have nothing to do with them—but I do believe that that point has to be taken into account. There is a usual rule that the people administering justice are the people who are in accordance with the arrangements between states. International courts, for example, may not have representatives from all the states that appear before them, but there is a question to be considered in that connection, because the Court of Justice referred to in the amendment will not be the Court of Justice as it is now.

[Lord Hope of Craighead (CB)]

My Lords, I would like to intervene, following what the noble and learned Lord, Lord Mackay, has said, and referring to the amendment that was moved by the noble Lord, Lord Foulkes of Cumnock. One of the problems I have faced since looking at this Bill, is trying to find hard examples of situations in which the Supreme Court would wish to refer a matter to the European Court of Justice.

There is a very good example reported in Monday’s Times of a case called SM (Algeria) (Appellant) v Entry Clearance Officer. I will take a moment to explain what the case is about, because it is a good example of citizens’ rights. SM was a little girl, who was placed into the legal guardianship of EU citizens, who happened to be in Algeria. The question concerned her position in coming to the United Kingdom as a member of that family under the Immigration (European Economic Area Regulations) 2006. Merely referring to those regulations reminds us that they would become, as I understand the position, retained EU law under Clause 2 of the Bill.

The problem arose because the court saw that the regulation had been transposing wording from a directive, which is the normal way in which these things work, but the transposition was inaccurate. This is a situation I have encountered before—it happens from time to time. The question is how to deal with the inaccuracy. The inaccuracy was that while our regulation talked about “family member”—somebody who was put into the legal guardianship of a couple, would normally be regarded as a member of the family—the directive was talking about “direct descendants”, and she was not a direct descendant, because she was not actually related, in that sense, to the people who had become her guardians. In order to resolve that problem, the court found it necessary to refer the matter to the European Court of Justice—which it did on Monday. That was under the existing position.

In resolving the point raised by the noble Lord, Lord Foulkes, it may help to ask how that matter would be handled after exit day. I may be wrong, but my understanding is that it would be for the Supreme Court to resolve the issue itself. The directive would come into EU retained law under Clause 3, so we would have both pieces of legislation to look at. I think that the court, having regard particularly to the way in which we had translated the directive, would give great weight to our own language and regard this little girl as part of the family and therefore entitled to take the benefit of the regulation.

In explaining the situation, I hope I have not made it too complicated, but it is a good example of citizens’ rights, accorded by our own regulations, giving effect to EU law. There must be very many in the corpus of regulations which forms part of EU law. It comes back to the point made by the noble and learned Lord, Lord Mackay of Clashfern. The Supreme Court looks very carefully at the interests of children and would accord every weight to the normal rules about the priority given to the interests of the child in construing the regulation in a sense that fits with our own language. I should have thought that, after exit day, the question of referring the matter to the European Court of Justice simply would not arise because the court would be capable of resolving the issue itself without being bound by the problem of having to refer something which was not that clear. If I may use the English expression, it was not crystal clear; therefore they were bound to refer. Under the situation after exit day, any superior court will be fully able to resolve the problems of interpretation that arise. Will the Minister confirm that, in this situation, there would be no need for a reference because our courts would be able to deal with it perfectly properly, looking at the language of our own regulations, despite the problem that might have arisen in translating them from the directive into English?

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[Lord Foulkes of Cumnock]

I am obliged to the noble Lord, Lord Kerr of Kinlochard, for pointing out that although the Minister has all the legality behind him, perhaps his argument is lacking in humanity. It is humanity that the European Union citizens deserve, not the legality that we have heard.

I was about to conclude by saying that this may not be the right time but it is certainly the right place. I look forward to returning to this, and I know that many noble Lords who have spoken do also, to argue and to fight for the rights of not just UK citizens on the continent, who matter as well, but the European Union citizens who have given so much to this country over the years and continue to do so.

[Lord Mackay of Clashfern]

It is worth pointing out that these citizens have existing rights by law in this country, and that will remain the case until these provisions are repealed, if and when they are.

[Lord Foulkes of Cumnock]

The noble and learned Lord is a distinguished lawyer and had great distinction as the Lord Chancellor. Perhaps he can explain to the European Union citizens in Scotland, where he and I both live, why they were allowed to vote in the Scottish referendum but not in the European Union referendum. Many of them have asked me but I do not have the intellect or ability to answer them; perhaps the noble and learned Lord can.

[Lord Mackay of Clashfern]

That does not appear to be entirely relevant to the present debate and it is a bit late anyway. I had very little to do with the formulation of the franchise.

European Union (Withdrawal) Bill

Lord Mackay of Clashfern Excerpts

Committee: 4th sitting (Hansard - continued): House of Lords
Monday 5th March 2018 Lords Chamber

[Lord Pannick]

I do not think that the courts have accepted that proportionality can be a challenge by way of judicial review where you are not raising an issue of EU law or convention law—but we have come a very long way towards recognising proportionality as a principle of the common law. That is one reason why I am asking this very important question. I simply do not know whether you can challenge retained EU law after exit day by reference to traditional common law principles.

One reason why this matters is that the Supreme Court, in the HS2 case, suggested that this might be possible under existing law. As was raised in the debate last Monday, we should also bear in mind that, under Clause 2, retained EU law includes statutory instruments that do not owe their legal basis to the European Communities Act. They include statutory instruments enacted through other mechanisms, albeit that they are linked to EU law. At present, one can challenge those instruments by reference to traditional common law principles. Therefore, if Clause 1(1) were intended to prevent such a challenge after exit day, it would be a significant change in the law.

[Lord Mackay of Clashfern (Con)]

Are these questions affected by the proposal to make this particular branch of law statutory? In that case, certain principles of our constitution might cause some difficulty.

[Lord Pannick]

The noble and learned Lord is absolutely right. If retained EU law were to be categorised as primary legislation, such challenges could not be brought. But the Minister resisted that suggestion in our earlier debate. I am concerned with the Bill as it is at the moment. What is the Government’s intention in this respect?