Legal Aid, Sentencing and Punishment of Offenders Bill

Lord Neill of Bladen Excerpts

Wednesday 7th March 2012 Lords Chamber

[Lord Ramsbotham]

My Lords, like my noble friend Lord Slim, I have one question to ask the Minister. I know that we discussed impact assessments in our debate on Amendment 6, which was moved and withdrawn by the noble Lord, Lord Bach, but when the Minister responds can he confirm or deny whether those responsible for drafting the Bill and drawing up its impact assessment discussed the impact of this clause with those who were responsible for drawing up the impact assessments on the Welfare Reform Bill and the Health and Social Care Bill?

[Lord Neill of Bladen]

My Lords, perhaps I may add a word to what the noble Lord, Lord Cormack, said. It seemed to me that he put his finger absolutely on the point. We are faced with a decision on whether the rule of law is being complied with in the proceedings on this amendment. It seems to me—and I have heard it from every speaker—that it is an indefensible provision. It is bound to have a terrible effect on a small group of disadvantaged people. They are required to build a case in this difficult area of welfare and social security law. Anyone who has had any personal experience of advising a litigant who is unaided and comes in saying, “Could you please advise me about this problem?”, does not need to look at the problem for more than five minutes before realising the difficulty in finding out what the law is. You have to find out the current state of the statute or the statutory instrument on which you seek to rely, which is quite a difficult area in itself with the rate of amendments that take place. Then there is the current state of case law or the latest court ruling in the relevant area, which could be almost inaccessible nowadays to ordinary people who have to have a lawyer. I am convinced by what I have heard that to segregate a group and say, “Legal aid and advice of any sort will not come to you from any public fund”, is something to which this House ought not, for one moment, lend its support.

[Baroness Shackleton of Belgravia]

My Lords, I speak in support of the amendment in the name of the noble and learned Baroness, Lady Butler-Sloss, as regards delegating to the mediator whether a person should be eligible for legal aid. I speak from my interest as a practising lawyer in this area. By delegating to the mediator, the lawyer cannot possibly be encouraged to take on work which would otherwise not be fit for purpose and it will simply be too late unless someone responsible can take the case on and protect the child in question.

Legal Aid, Sentencing and Punishment of Offenders Bill

Lord Neill of Bladen Excerpts

Wednesday 1st February 2012 Lords Chamber

[Lord Dubs]

My Lords, I should like to speak to Amendment 164ZA in my name and give my support to Amendment 164, which has just been moved by the noble Lord, Lord Thomas of Gresford.

The Bill contains a series of proposals that attempt to dent access to justice for people who have suffered harm. It reduces their damages quite dramatically by taking away the recoverability of success fees and “after the event” insurance premiums. The referral fee ban may go some way to curbing the abuses of some claims management companies, but it will also sweep up many organisations, including important victims’ charities and membership organisations, that do a lot of good hard work in ensuring access to justice, and it will do nothing to curb some of the abuses that have inhibited access to justice.

The noble Lord, Lord Thomas, referred to third-party capture. What is it and why is it so controversial? Perhaps I may quote from the Financial Services Authority’s guidelines on third-party capture:

“Third-party capture (or third-party assistance) is when an insurer deals directly with a person who has a potential claim against their policyholder, in order to investigate and settle the claim. Typically, an insurer offers a compensation payment to settle the claim directly to a third party, rather than settling through a legal representative for that party. This is mainly used for third-party motor claims. But sometimes it’s used in other types of insurance, such as employers’ liability.

Concerns have been raised by industry bodies and consumer groups that this practice could mean third parties do not receive fair and reasonable treatment and compensation.

The handling of all insurance claims by insurers—including third-party claims—is regulated under the Financial Services and Markets Act 2000. This means that an insurer’s conduct towards third parties must comply with our Principles for Businesses and, where relevant, the claims handling rules in chapter eight of our new Insurance Conduct of Business Sourcebook ... Complying with our Principles for Businesses includes acting with integrity, due skill, care and diligence and observing proper standards of market conduct”.

The trouble is that that is not how it works in practice, as the noble Lord, Lord Thomas of Gresford, has clearly shown.

The system is used by insurers, in their drive to maintain and increase profits, to collect premiums but reduce the amounts they pay out. In short, the insurers want to be their own judge and jury. The system should protect legitimate claimants who may have suffered great harm and be in great mental anguish and who are therefore susceptible to an approach that undermines their rights but ends the process quickly. They should receive what the law says they are entitled to, not what the insurance company says it is prepared to pay, and there is a big difference between the two. In the old days, it was not unusual for the same solicitor to represent both purchaser and vendor in a conveyancing transaction. Of course, there were clear conflicts of interest and major problems as a result. Thankfully, that practice no longer occurs.

Third-party capture has the same risks to consumers attached to it. The insurer, who has a responsibility for paying out on a claim, also decides how much to pay, more often than not on the basis of no, or inadequate, medical evidence and without the claimant having the benefit of legal advice. There could not be a clearer conflict of interest between a big insurance company playing the numbers and an unrepresented, unadvised claimant, but the great irony is that insurers end up actively encouraging claims with the direct approach of offering to settle quickly without the purported inconvenience of a medical examination.

A further irony is that the idea of putting forward a whiplash claim can be put in the mind of a claimant when they had not originally thought of claiming. Of course, the newspapers are full of such behaviour. The insurers are, in some respects, playing the numbers. They think that if they can buy off 10 whiplash cases for, say, £1,000 or so—even if some of them are, dare I say, fraudulent—it will cost them less than paying out the correct compensation to properly advised claimants on, say, four or five of them. That benefits insurers significantly. It can be no surprise that that has led to an increase in low-value whiplash claims and the undersettlement of more serious claims.

The insurance industry and the personal injury industry have been playing games for too long at each other’s expense. The result has been that genuine victims of harm lose out—and lose out significantly. Third-party capture is a damaging practice and I urge the Minister to accept either this amendment or the other one.

[Lord Neill of Bladen]

I support this amendment. The practice that it outlaws seems to be absolutely disgraceful, with an insurance company being paid by its own side—by the defendant—and then approaching the plaintiff to try to do a cheap deal with him for the benefit of the defendant. It seems to me that the conflict of interest is so gross that it ought not to be permitted at all. I am a little surprised by the words in the amendment, which mention knowing that the plaintiff is represented, because I am not quite sure how the amendment would cover a situation where the plaintiff had no representation. When thinking about how one would refine the language, I think one might consider taking out that qualification, because, with a general ban on this practice, your Lordships would simply agree with the amendment.

[Lord Bach]

My Lords, we welcome Amendment 164 in the name of the noble Lord, Lord Thomas of Gresford, and Amendment 164ZA in the name of my noble friend Lord Dubs. I also welcome the remarks of the noble Lord, Lord Neill of Bladen.

Amendment 164 is really about motor insurance and motor accidents. All Members of the Committee will agree that motor insurance is a social good. It is unique among financial service products in that it is not just necessary but carries with it the coercive powers of the law. As we all know, failure to insure a motor vehicle is a criminal offence with a fixed penalty of having the vehicle wheel-clamped, impounded or destroyed or facing a court prosecution and the imposition of a maximum fine.

That is all well and good and we all agree with that philosophy, but the private industry that delivers this social good is, as has already been said in this short debate, frankly deeply dysfunctional at present. That is perhaps an understatement. Its protagonist, the road traffic personal injuries sector, which comprises 75 per cent of all litigation, has developed deeply dysfunctional behaviours too. The arms race between road traffic personal injury lawyers and the insurance industry is completely dysfunctional.

The Transport Select Committee in another place has studied this twice in the past year. My right honourable friend Jack Straw has led a campaign to fix these structural issues in a market that is very flawed. We have seen the rise of an industrialised road traffic accident personal injury market, aggressively marketed as though it were a consumer good and operated a bit like a sweatshop, with non-lawyers hired at cheap rates to process hundreds of thousands of claims a year. This number is still growing at a startling rate.

--- Later in debate ---

[Lord Thomas of Gresford]

I am disappointed with that response. I do think it adequately addresses reality as it exists today in the approaches by insurers to accident victims.

In answer to the noble Lord, Lord Neill of Bladen, subsection (1) of my amendment prohibits the third party’s insurance company soliciting a claimant,

“where to the knowledge of the insurance company, the claimant is legally represented”.

Subsection (2) refers to a situation where that is not the case: the claimant is not legally represented or the insurance company does not know that he is legally represented. It sets out three terms: that the offer to settle can be made only when the insurance company,

“has obtained adequate medical evidence … and has disclosed it to the claimant; and … the claimant is advised when the offer is made of his right to obtain legal advice; and … the offer is in full and final settlement of the cause of action”.

The sanction that I have quite deliberately put into this amendment is not that it is an offence or anything of that sort but that a settlement made in breach of those subsections shall be void, which means, in effect, that if a person has been bought off for a small sum, he can reopen the matter without any problems. He can go to a solicitor, get proper advice, get a proper medical report and come back. To my mind, that appears to be the right way forward.

[Lord Neill of Bladen]

Another sanction would be that if a settlement has been made, the money is irrecoverable. Under a void agreement, insurers might get their money back again, but you could have a provision expressly about “money paid by way of settlement”, because a claimant may not find out until later that he has been swindled.

[Lord Thomas of Gresford]

I am very grateful to the noble Lord for that suggestion.

This problem will become more and more obvious as time goes on. As I said, I am disappointed with my noble friend’s reply, but for the moment, I beg leave to withdraw the amendment.

House of Lords: Reform

Lord Neill of Bladen Excerpts

Wednesday 22nd June 2011 Lords Chamber

[Lord Neill of Bladen]

My Lords, I am number 82 in the list of speakers in the debate and I agree with my predecessor who has just spoken that everything that has to be said has already been said. I should like to summarise my views by saying that I agree with what the noble Baroness, Lady Boothroyd, said yesterday and what the noble Lord, Lord Grenfell, said today. I also agree strongly with the statement made yesterday by the noble Baroness, Lady Royall of Blaisdon:

“the changes to the House as it is currently constituted, and its replacement by an elected senate, will automatically affect the primacy of the House of Commons”.—[Official Report, 21/6/11; cols. 1161-62.]

I am opposed to the destruction of the present House of Lords and I am opposed to the creation of a new Chamber as per the model in the White Paper and the draft Bill. I also object to the spurious urgency that is being heaped upon the committee which has been asked to look at the White Paper. It should have all the time that it could possibly want in order to carry out the job. However, it has really been given the wrong agenda because the Bill and the White Paper are, to put it rather mildly, not 100 per cent on course. What the committee should be thinking about are what incremental changes are needed and can be made without damaging the overall fabric.

I want to spend a little time on the principle that underlies the desire for having elected Members in this House. The benefit of being elected will be conferred upon 80 per cent of the Members, but there will be another 20 per cent who will not have it. Part of the scheme provides that some 20 per cent of the House will be illegitimate by the test of direct election. There are also the 12 bishops who, on the same test, would not have that benefit; and then the Ministers, however many there may be, would be specially nominated by the Prime Minister to serve in this House. So there will be a group of people who will not have been blessed by the touch of the people.

Where does this principle come from and where does one find an exposition of it that is applicable to our circumstances? We have a country in which the entire electorate has its own Member of Parliament in the form of some 60,000 people per constituency. They have a right to call upon their MP to look after their own interests or the interests of the constituency in the form of local interests, and indeed national matters if that is their concern. It is the duty of the MP to answer those concerns. The Chamber in which their MPs sit is accorded primacy under a system of conventions which have been set up, so their representatives sit in a Chamber which has the final call on what legislation is enacted. Look at all that and then look at what the Prime Minister and the Deputy Prime Minister say in the foreword:

“In a modern democracy it is important that those who make the laws of the land should be elected by those to whom those laws apply”.

That condition is fully met in the case of the House of Commons, but why, one asks, does it have to be met for a second time in relation to the House of Lords?

I do not know how well your Lordships remember the passage getting on a bit in the book where there is some discussion about the European Convention on Human Rights and the composition of the House of Lords. I shall read paragraph 428 on page 162 to your Lordships.

“The Government is not aware of any Strasbourg case-law on the composition of the second chamber of a member state of the Council of Europe. There is a variety of types of membership: in the Czech Republic all members of the Senate are directly elected; in Austria all members of the Bundesrat are indirectly elected; the Seanad in Ireland includes appointed members; the Senate in Italy includes a few appointed members and a few ex officio members; the Belgian Senate contains directly elected members, indirectly elected members, co-opted members and hereditary/ex officio members. In other words, while first chambers must be elected by the people in order to comply with the Convention, second chambers will frequently have a different form of composition, which may or may not involve direct election. If one looks beyond Council of Europe member states, all the members of the Canadian Senate are appointed”.

So there is absolutely no widespread recognition of any general principle that applies to the appointment to a second Chamber and I call that in question.

I want to draw attention, as has been repeatedly referred to, to the extraordinary feature of the elected Members—that they get a 15-year term and they are never questioned or brought up for review at general elections as they come and go over those 15 years. The matter is taken even further by the provision in relation to payment, that their salary has to be set below that of the MPs because they,

“would not have constituency duties”.

What an incredible phrase. One might expect there to be funds for an office to be set up for this huge constituency of pushing on for half a million. One might expect special funding for that, but there is not a word about that. It is not conceived. There is a completely dead hand; once the vote has been given in their favour they are in for 15 years. There is nothing to stop them setting up an office—true enough—but there is no concept of that; it has not be dreamt of or thought of by those who make these proposals and that is an extraordinary feature.

Those who propound the democratically-elected principle must believe in it. One is amazed then that they fall short of demanding a 100 per cent elected House. Why are these other 20 per cent deliberately selected as not having the benefit of this electoral process? They nevertheless get a 15-year term, unquestioned, however they perform their duties. One is surprised at the poverty of the demand. One would expect that, if they really believed in the importance of this principle, they would be going for 100 per cent.