Health and Safety: Common Sense Common Safety

Lord Sugar Excerpts

Thursday 25th November 2010 Lords Chamber

[Lord Sugar]

My Lords, I am grateful to the noble Lord, Lord Young, for having initiated this debate. I am sure that, like me, having spent many years in business and industry, he is somewhat frustrated at how the adherence to some of the health and safety regulations has impacted on the normal day-to-day running of businesses, small and large, to such an extent that in some cases it may become counterproductive or burdensome.

We find ourselves with a host of rules and regulations in the workplace, where, to put it bluntly, it sometimes feels as if the world has gone mad. I appreciate that the introduction of these regulations was designed to reduce the number of accidents and deaths in the workplace, which in turn would, for example, prevent loss of work hours and save costs to the NHS, but as with all new regulations there is a spin-off or side-effect. It relates to the new industries that sprout up commercially to exploit vulnerabilities that exist in companies, small and large, that strive to be compliant.

I refer, first, to the so-called health and safety consultants or experts. Your Lordships may be surprised to hear that there is no mandatory qualification required to call oneself a health and safety consultant. Indeed, any of your Lordships could become one, which in itself tells a story. In many cases, the advice given is no more than common sense. There is a lack of awareness. For example, the Business Link website offers excellent advice and guidelines as well as checklists where companies can see what they need to do to be compliant. Despite that, companies employ these so-called experts to give advice and in many cases there is an overkill scenario in order to justify high charges.

Compliance has highlighted certain areas or facets in businesses that can expose people to financial claims. In some cases, the cost of indemnity insurance or extra staffing has made certain parts of businesses unviable. The cost of liability insurance has rocketed, particularly for small companies that carry out some form of physical work or service, such as hairdressers, restaurants and builders. Running a small business now not only requires the focus on competitiveness of the general day-to-day running of the business, but also gives rise to the burden of worrying about possible claims, which in some cases could even bankrupt these small companies or seriously damage them financially.

This brings me to my next topic—the compensation culture that has been referred to. I referred earlier to industries sprouting up and one such industry is claim management companies. They advertise on TV implying that they can get consumers substantial amounts of money for injuries that they have sustained. To add insult to injury, some of them are simply brokers who sell their inquiries on to solicitors; they are not solicitors themselves. I point out here that National Accident Helpline is not one of those organisations.

The legal system in this country was one that we could be proud of compared to the ambulance-chasing activities of our cousins in the United States. However, since, I believe, 1999, it has been possible for lawyers here to work on a contingency basis offering a no-win no-fee basis to their clients. While this change had some genuine and positive merit in assisting deserved causes, like all things it has been exploited in most cases to bring derisory claims against companies.

The issue concerns claims from a certain breed of people, some of whom have had the seed of an idea to make a claim planted in their minds from those terrible adverts that they see on TV. The mechanism, as I am sure your Lordships will know, is that the client becomes somewhat irrelevant in the overall scheme of things. The client is simply a catalyst among the solicitors, the claim management companies and the new breed of litigation insurers. It is the client from whom these people make their money. Once equipped with a client, these people become a massive thorn in the side of companies that have substantial assets or their own indemnity insurance. I do not wish to get into too much detail on what contingency lawyers charge, but it is near to outrageous that they can in some cases get double their normal fee.

However, most claims end up being settled by negotiation. Despite knowing that the claim is derisory, companies recognise that to defend it fully will cost a lot and those costs are not recoverable on victory, as the plaintiff usually has no assets. Commercial decisions are made by defending companies that have learnt that fighting on principle is simply bad for the balance sheet. The new breed of these—I am sorry to call them this—vulture-type lawyers knows this only too well, as do some insurers. It is almost a licence to print money if you can convince a member of the public to make a claim. I have even heard of members of the public being paid a modest fee of, say, £500 up front if they agree to become a plaintiff.

Something has to be done about these rogues. The Government should, first, examine what the Advertising Standards Authority can do. I am sure that, if they so desire, they can tighten up the regulations as to what promises can be made and make advertisers issue warnings in the advert to the effect that they are not lawyers and that bringing false claims is an offence. Perhaps, more importantly, there needs to be reform in the law. The Law Society needs to clamp down on some of these unethical lawyers and set some examples. Dare I suggest that, if it was ever possible to make those lawyers responsible themselves to pay for abortive costs when they lose a derisory claim, it would, I can assure your Lordships, kill off this industry in one fell swoop?