Legal Aid, Sentencing and Punishment of Offenders Bill
Lord Thomas of Gresford Excerpts(12 years, 7 months ago)
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Lord Thomas of Gresford
I congratulate the Government on the amendments that they are introducing into the Bill, which are the culmination of years of campaigning by my noble friend Lord Dholakia—within, and with the support of, the Liberal Democrats—to modernise the law.
Amendment 185FAA, in my name, was suggested by the Howard League, of which my noble friend Lord Carlile is president—unhappily, he cannot be with us tonight. Its purpose is to recognise that children may change in a shorter time than adults, something that the Minister has already recognised in his remarks today. The amendment affects a significant proportion of children with the opportunity to wipe the slate clean upon reaching 18 years of age. It refers to the question raised in the Green Paper that has been referred to: that the Rehabilitation of Offenders Act 1974 be amended so that children convicted of non-serious offences have a clean slate on reaching their majority. Paragraph 117 of the Green Paper says:
“We would welcome views on how we might do more for young offenders as we are aware that some people are, for example, finding their path to higher education blocked on the basis of juvenile convictions. ‘Wiping the slate clean’ once the offender reaches adulthood is a possible approach for all but the most serious offences”.
There is no reference to this suggestion in the Government’s response to the consultation, and I do not know whether any of the respondees actually dealt with the question that was asked.
Wiping the slate clean would have a big impact on the future employment prospects of young offenders. It is obviously intended to apply only to non-serious offences and the public will not be at risk of any harm. Clearly, the usual suite of public protection arrangements will continue to apply to jobs that involve working with children and vulnerable people. If this provision were adopted, it would be a powerful incentive for young people to rehabilitate as responsible adults in their communities. Such an incentive is important at a time when youth unemployment is at a record high and there is a risk of both crime and detention rates spiralling further.
The amendment has been crafted to ensure that rehabilitation periods are not spent before a young person completes their sentence. That does not mean that those who would otherwise be required to wait a long time before their conviction is spent would suddenly find themselves without any rehabilitation period at all, simply due to having committed an offence close to their 18th birthday. It would exempt those still serving their sentence at 18, including the licence period of that sentence, from the “wipe the slate clean” provision. In other words, if a young person committed a theft aged 17 and is sentenced to three years in detention, he would attract a rehabilitation period of three and a half years, commencing on the completion of his sentence at the age of 20. Therefore, the conviction would not be spent until he reached 23 years of age. However, if he committed a theft at the age of 14 and was sentenced to three years’ detention, instead of waiting until the age of 21 for the conviction to be spent his sentence would expire when he was 17 and his conviction would automatically become spent on his 18th birthday. This provision deals with the possible criticism that a person who commits an offence aged 17 years and 11 months would have his conviction wiped clean on his 18th birthday. That would clearly be unacceptable and is most certainly not the intention of this amendment.
The Government raised the question in the Green Paper but we have not had an answer. I would welcome a response from my noble friend.
Lord Ramsbotham
My Lords, briefly, I support the government amendments that have been tabled and echo the many warm things that have been said about the noble Lord, Lord Dholakia, for his persistence in pursuing this matter.
I merely mention that in 2001 I was invited to inspect the young offender institutions in the Caribbean. In Barbados, I found a system in which, at the age of 18, every child automatically had their convictions looked at and the slate wiped clean of all except those that it was deemed in a schedule should be carried forward. I brought that information back and fed it into the team studying Breaking the Circle at that time. Given all the points that have been made by the noble Lords, Lord Dholakia and Lord Thomas, it seemed particularly important that this should apply to young offenders so that they were not hampered, particularly in their further education, by crimes that they had committed as children.
Legal Aid, Sentencing and Punishment of Offenders Bill
Lord Thomas of Gresford Excerpts(12 years, 7 months ago)
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Lord Blair of Boughton
My Lords, I am probably the only person currently in the House who has actually carried out murder investigations. When you knock on the door and say you are investigating a burglary, nobody takes much interest. When you knock on the door and say you are investigating a murder, the reaction is very different. I am fully in support of the noble Lord, Lord Carlile, because murder is different. It is not just any other crime. In my opinion, it is actually the crime by which the public judge the criminal justice system.
I find myself somewhat surprised to be arguing against the noble and learned Lord, Lord Lloyd, but I think that the combination he used of sentences for murder and indeterminate sentences does not, in this argument, add up, because this is about murder. I am fully in support of almost everything the noble Lord, Lord Carlile, has said. I had expected to speak for longer; I came to the House to speak to this amendment. In fact, the noble Lord, Lord Carlile, has said almost everything that needs to be said—except for this emphasis that I would place before your Lordships’ House that murder is different. I believe that Parliament has a right—indeed, a duty—to set the tariffs from which judges then make their decisions about sentencing.
Lord Thomas of Gresford
My Lords, lest there should seem to be unanimity on these Benches, I support the noble and learned Lord, Lord Lloyd, in his amendment.
When I started out at the Bar, people did not plead guilty to murder at all. It was a throwback to the time when hanging was the only sentence that could be passed and therefore guilty pleas were sometimes simply not accepted and a person was told to plead not guilty so that the case could be properly proved. We have moved very far from that, to the present situation, which I find mechanistic. The gap between the 15-year starting point and the 30-year starting point is far too great, in my view. It is mechanistic in that once you get your starting point, you start to deduct for this and add for that, and at the end of the day, after this complicated arithmetic, you guess at what might possibly be the sentence and advise your client accordingly.
I do not find that a very helpful way of going about things. Today there are provisions for obtaining some guidance from the judge as to the sort of sentence he would pass in certain circumstances, and that is a better way of going. These artificial starting points of 15 years and 30 years have been laid down by people with no experience of how the courts work or how cases are brought to court, and with no personal contact with clients or anything of that sort, and are not the way we should be conducting our sentencing policy. I agree with everything that the noble and learned Lord, Lord Lloyd, has said.
Lord Thomas of Gresford
My Lords, I have Amendment 179ZA in this group. The Minister can surely take pride in the abolition of IPP sentences and in the fact that he and this Government are leading public opinion in this area. The Minister suggested earlier that the Government were not given enough credit for leading public opinion, but here they most certainly are.
There were many weaknesses to the IPP regime. It was imposed in far more cases than was ever expected when the regime was introduced, but a major weakness was that a defendant, a convicted person or a prisoner had to prove a negative: that it was no longer necessary for the protection of the public that he should be confined. That was the great weakness. When he tried to prove that he could safely be released, all he could he do was produce certificates that he had completed courses from programmes that were offered to him in prison, but the second great weakness was that those programmes might not be available or a prisoner would be transferred in the middle of completing a course from one prison to another and would have to start again. That is the basic reason why people have been kept after the expiry of their tariff.
The new provision for extended sentences unhappily retains the necessity for a prisoner to prove that it is no longer necessary for the protection of the public that he be confined, so that great weakness in the existing system is being continued in the system of extended sentences.
I propose in this amendment that the whole system should be tightened up in relation to those who are beyond their tariff date and are serving at the present time. It should be tightened up to the point of becoming, for the first time, a fair system. In subsection (1) of my amendment, there is a duty on the Secretary of State to “immediately refer” the case of a prisoner who has served the entirety of his tariff to the Parole Board. That should not be a discretion; he must do it immediately. Then it is the duty of the Secretary of State—not a discretion—to release the prisoner,
“on license as soon as the Board has directed his release under this section”.
Subsection (3) attacks most directly the weakness that I described to your Lordships:
“The Board must direct P’s release unless the Board is satisfied, on the basis of clear and compelling evidence which post-dates P’s conviction, that there is a strong and immediate probability that P will commit a serious violent or sexual offence on release”.
If the tariff is 10 years, the Parole Board should look not at what happened 10 years earlier but the current situation and what sort of risk the prisoner now threatens the public with. What is the evidence that he will commit a serious, violent or sexual offence if he were released? At the moment, we ask the Parole Board to make that judgement without evidence, relying merely on certificates of programmes completed and so on. A judgment without evidence is otherwise called a guess. A person’s liberty should not be decided by how the Parole Board guesses the future.
Subsection (4) suggests that,
“where the Board has declined to direct release,”
the Secretary of State must—it is his duty to— demonstrate,
“that provision has been made for P to undergo relevant programmes”.
He must also,
“refer P’s case … at 6 monthly intervals until such time as the Board directs P’s release”.
In other words, P will not be left languishing with no programmes presented to him for an indefinite period of time. I happen to know that someone I represented has done all his programmes and got all the certificates but he is still being kept in. On what evidence has that been decided? It is just the way that the Parole Board guesses he will behave if he is released.
Most importantly, subsection (5) contains a limit—or final stop, or buffer—which means that if a person has been in prison for five years after his tariff expired he must be released in the case of specified violent offences, or after,
“8 years post-tariff custody in the case of a specified sexual offence”.
That limit for existing prisoners serving IPP sentences is based on the limit contained in the new provisions for an extended sentence. That limit—or final stop, or buffer—is put into Clauses 115 and 116.
Grouped with this are my Amendments 179BZA and 179BZB, which attempt to amend Clause 116 to introduce, again, the need for,
“clear and compelling evidence … that there is a strong and immediate probability that P will commit a serious violent or sexual offence on release”,
for the Parole Board to refuse to allow him to be released when his tariff has been fulfilled. Similarly, Amendment 179BZD indicates exactly the same provision.
This is an extremely important matter. More than 3,000 prisoners are still held after the expiry of their tariff. We cannot abolish IPP sentences and allow them to remain in prison indefinitely.
Lord Ramsbotham
My Lords, I entirely agree with what the noble Lord, Lord Thomas, said about congratulating the Government on introducing change. I have to admit that, along with many others, I have hated IPPs ever since they were introduced by the Criminal Justice Act 2003.
Of course there are people from whom the public must be protected, some of whom have been awarded sentences of natural life. I freely admit that all is not well with the release of prisoners about whose risk of committing violent or sexual offences prison governors feel uneasy. Yet I knew of the inability of the Prison Service to provide sufficient offending behaviour programmes for those who require them. Also, 60 per cent of lifers serving determinate sentences are already one year over tariff, mainly because of the inability to satisfy what the Parole Board requires before sanctioning release, so I simply could not see that such an ill thought through introduction could result in anything other than the prison population being needlessly increased by a steadily increasing number of those whose release date was deliberately made uncertain.
Cynically, having become used while Chief Inspector of Prisons to Home Office Ministers and officials living in a virtual criminal justice system and being unwilling to accept objective advice based on facts, I feared that no notice of any outsider warnings would be taken—and how right I was. Since then, attempts have been made in this House to alleviate the IPP problem by raising the minimum tariff threshold, but the numbers of those above the original ministerial forecast and those who have exceeded their tariff already have continued to grow.
I was therefore delighted to hear the Secretary of State announce that IPPs were to end and see that confirmed in Clause 113. However, as the noble Lord, Lord Thomas, has stated, the Government have not said that they intend to alter the arrangements for those currently serving IPPs to earn their release, which will mean that such prisoners will continue to clog up the overcrowded prisons for years to come unless something is done. My amendments, and those to which I have added my name, are designed to end this situation as quickly as possible, in line with the Government’s aim of reducing the size of the prison population.
Before I speak to the amendments, I beg the indulgence of the House while I say something about some of the residual effects of indeterminate sentences, because they must not be disregarded when any meaningful consideration of the problem is taken. Prisons are fragile places in that, to work effectively, they depend on relationships of mutual trust, if not affection, between staff and prisoners. Let those break down and you are in trouble, which is precisely why it is so important that numbers of prisoners are kept as low as possible and that our understaffed and overcrowded prisons are looked at very carefully. As chief inspector, I introduced what I called the healthy prison test, in which I asked whether everyone felt and was safe, whether prisoners were treated with respect as fellow human beings, were enabled to improve themselves by access to purposeful activity and were enabled to prepare for release and maintain contact with their families.
IPPs fail every test on every account. The uncertainty that they introduce has encouraged too many of those awarded IPP sentences to take their own lives, and has also brought on much mental distress. It is inhuman to award anyone a sentence of 99 years, which is how indeterminate sentence length is described on the internet, when the prisoner does not know how or when he may qualify for release. It is patently wrong for release to be dependent on courses and programmes that simply are not available. I have lost count of the numbers of letters of complaint that I have had from families who simply do not know when their relative or loved one can qualify for release. In other words, IPPs have been an obscene, inhuman and expensive disaster.
My amendments are in two parts. Amendment 180 links with Amendment 179, tabled by my noble friend Lord Wigley, in that it seeks to establish a proper end game to the issue through a statement from the Secretary of State that individual plans have been made for the release of all those currently serving IPPs. I am not suggesting that all IPP prisoners should be released in three months, but that plans should be made in that period. For them all to qualify for that release, plans must ensure that those qualifications are both available and satisfied. Urgent plans must be made for the release of the 3,750 prisoners who are already over their tariff, which I accept will demand much detailed work, and probably resources.
However, urgent remedial action is required to put right a situation that should have never been allowed to develop, before it costs the taxpayer yet more millions of pounds. In saying this, I am conscious that the Parole Board, under its excellent chairman Sir David Latham, is already under extreme pressure, and that any alteration to current arrangements, such as the introduction of six-monthly reviews, would need to be very carefully considered because, at present, it would be unworkable. I know that Sir David is sympathetic to any proposal intended to produce release as soon as possible after tariff expiry, but it must be realistic. In the best interests of the Parole Board, therefore, and of enabling the Prison Service to better direct the use of its limited resources towards protecting the public by preventing reoffending, there is all the more reason for coherent planning of this release process.
Lord McNally
I am sure that my noble friend’s comments will be noted in the proper places, particularly at reshuffle time.
There will always be debates about whether or not sentences are deterrent. I am not usually in favour of mandatory sentencing and deterrent sentencing, but it is hard to deny that deterrent sentencing could have an effect. It is not just a matter of some barrack-room lawyer; a hardened criminal would know the consequences of reoffending. I share a lot of the concerns about putting declaratory sections into Bills, but sometimes they have their place.
This clause introduces a new mandatory life sentence for an offender who has committed a second very serious sexual or violent offence. Both offences must be so serious as to merit a determinate sentence of 10 years or more. The offence must also be contained in Schedule 15B to the Criminal Justice Act 2003, which is inserted by Schedule 16 to this Bill. Schedule 15B contains the particularly serious offences that were in Schedule 15A to that Act. Previous Schedule 15A convictions make offenders eligible for IPPs and EPPs even if they have not reached the two-year tariff threshold. Schedule 15B also includes further child sex and specific terrorism offences, and the offences of causing or allowing the death of a child or vulnerable adult.
The new mandatory life sentence will affect only those who have committed, on separate occasions, two very serious sexual or violent crimes deserving a custodial sentence of 10 years or more. That is a small number of offenders, but this provision is intended to provide reassurance to the public that very serious repeat offenders of this type can expect to be held indefinitely in prison.
Lord Thomas of Gresford
Perhaps the Box can have the chance to deal with this question. Has any analysis been carried out as to how many people would be liable to a life sentence for committing an offence that is not subject to a life sentence at the moment? It seems that they would be liable to a life sentence if the maximum was only 10 years. Has an analysis been carried out of how many offences in the schedule do not carry a life sentence?
Lord McNally
My Lords, an impact assessment was made and I think they were talking about 20 cases a year.
Lord Thomas of Gresford
That is not quite the point that I am making. It may be that only 20 people would be sentenced to life imprisonment, but would they be sentenced to life imprisonment under this clause, when for the actual offence that they had committed, they could not receive a life sentence? In other words, many serious offences carry life sentences; some do not. I would be grateful for an analysis as to how many would not have a life sentence were it not for this clause.
Lord McNally
As far as I understand it, the second serious offence would carry a life sentence.
Lord Thomas of Gresford
That is not what it says, as I understand it—perhaps the Box can help him.
Lord McNally
That is as I understand it, but I will write to the noble Lord if I am wrong. The other point that has been made—but of course if you try to be reasonable, you are derided—is that the courts are exempted from imposing the mandatory life sentences where they believe it is unjust to do so in all circumstances. It is the policy intention that offenders who have committed two serious offences not carrying life sentences will be liable to the mandatory sentence. However, we cannot at this moment assess the likely numbers that would be affected by that.
As I said before, we have a sense of schizophrenia about this. Perhaps I may finish with a quote from Sadiq Khan:
“Through their “two strikes” policy, the Government absolve themselves totally of any responsibility to identify the serious, violent offenders who are most likely to reoffend. That should be done at the time when the first sentence is handed down for the commission of a heinous crime”.—[Official Report, 1/11/11; col. 796.]
There is not much sense of rehabilitation or reform there. We have to deal with a serious set of reforms and what we get is headline-grabbing attacks on the basis that we are going to let out violent criminals and the rest of it. That is why I hope that some of the unity that was shown earlier about penal reform will resolve itself around support for the Government as we try to manage these proposals through the House.
Lord McNally
My Lords, if Clause 117 is to stand part of the Bill, Amendments 179C to 179F will ensure that the Secretary of State’s power to amend by order the release test that the Parole Board must follow when considering the release of prisoners applies consistently to all categories of determinate sentence prisoner whose release is determined by the board. Currently, the clause applies to the release test for IPP and extended sentence prisoners but there are some other types of determinate sentence which also include a period of parole eligibility and are subject to the same release test. We think the order-making power to change the test should apply equally in those cases. These amendments therefore propose to extend the order-making power to the other categories of determinate sentence to which it does not currently apply. These are: first, the 1991 Act prisoners serving four years or more who are parole eligible between the half and two-thirds points of sentence; and, secondly, the 2003 Act extended sentences imposed before 14 July 2008, when release between the half and end points of the custodial period is at the discretion of the Parole Board. This is simply about ensuring the order-making power in this clause is applied consistently to all determinate sentences when the same release test is used. I beg to move.
Lord Thomas of Gresford
Your Lordships will recall that in connection with an earlier amendment I referred to the existing test—which will continue to apply under this Bill—for the Parole Board to apply in considering whether a person should be released. The existing test is that the board is satisfied that it is no longer necessary for the protection of the public that the prisoner should be confined. Your Lordships will recall the criticisms that I made of that. In his reply, the Minister said that Clause 117 gives power to the Lord Chancellor to change that test. I am a little bit puzzled, and I ask my noble friend to explain why that power to change the test is in there. Furthermore, I am very pleased that it is, because I think that the present test is neither fair nor just. The power to change the test is in subsection (1), where,
“the Parole Board … must direct the prisoner’s release if it is satisfied that conditions specified in the order are met, or … must do so unless it is satisfied that conditions specified in the order are met”.
I know that my noble friend, as he earlier confessed, is a follower of Blackpool football club, but at the weekend he may have had the opportunity of watching the Wales versus Ireland rugby match at Lansdowne Road. An incident there perfectly illustrates the situation. There was a pile-up over the line and the referee, instead of making the decision and awarding the try which Wales had so clearly scored, called in the TMO and said, “Has the try been scored—yes or no?”. Immediately, that illustrious and brilliant commentator Jonathan Davies, a brilliant player in his own day, said, “He’s asking the wrong question. The question he should ask is: ‘Is there any reason why this try should not be awarded?’”. By asking it as, “Has he scored it—yes or no?”, the referee was pushing the decision over to the TMO; but if he were to ask the second question, he would be taking responsibility by saying, “I am going to award the try unless you tell me that there is a reason why I should not”.
Applying the same approach to the release of a prisoner, the Parole Board should not be asking whether the prisoner has complied with this or that test; it should be asking: “Is there any reason why we should not release this prisoner? Is evidence being produced for us to look at in reaching a conclusion on whether this prisoner can be safely returned to the community?”.
That is the reason why I support Clause 117—in the hope that the second alternative, in subsection (1)(b), is adopted, and that the Lord Chancellor will then very quickly see the necessity of changing the Parole Board’s test to one that is far fairer: “Is there any reason why, after serving the period of the tariff that the judge has imposed”—which is supposed to be what the judge would have awarded by way of a sentence had he taken that course—“this person should not be released?”. I commend this clause and suggest that the power should be exercised very quickly.
Lord Ramsbotham
My Lords, I gave notice of my intention to oppose that the clause stand part in order to be consistent with my now failed hope that the Government would accept the earlier amendments on the IPP. As they did not, it is obviously irrelevant now to say that the clause should not stand part. I shall therefore not oppose it. For all the reasons that the noble Lord, Lord Thomas, outlined, the clause contains some very important measures which provide the Secretary of State with tools to bring about many of the things that we hope will happen to the IPP sentence.
Legal Aid, Sentencing and Punishment of Offenders Bill
Lord Thomas of Gresford Excerpts(12 years, 7 months ago)
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Lord Clinton-Davis
I rarely disagree with the noble Baroness, Lady Howe, but I do on this occasion. I do not think that there is any evidence that women prisoners are dealt with more harshly than men. That is a point which should not have been made because it is irrelevant. In my experience as an advocate, quite the reverse is true.
On the amendments, I largely agree with what the noble Lord, Lord Wigley, has said, but they would not add very much to the present practice. The probation service always gives a social history—whatever that may mean—of the offender, and it goes into great depth. It also considers the effect of sentencing on dependants. Both those points, which are relevant for debate, are irrelevant as far as the law is concerned.
We have heard a great deal about stalking today. Stalking is a very serious offence and we ought to consider the report, but this is not the occasion to do so.
It is essential that whatever the probation officer has to say in a case is taken seriously and in my view, it invariably is. However, that goes to show that offenders must be represented if that provision is to take effect. All too often, the offender is not represented; by and large, it is important that the points which are made in the amendments are taken into account. So I urge that, wherever possible, the defendant is represented.
Lord Thomas of Gresford
I have some sympathy with Amendment 175. Listening to the noble Lord, Lord Clinton-Davis, I was taken back into the past. He said that probation reports go into great depth on the effects of sentencing on the offender. The noble Baroness, Lady Howe, spoke about reports looking into the background of offenders. That used to be so, but in a serious case in which I was involved within the past 12 months, when a verdict by the jury of murder was reduced to manslaughter, I was shocked to discover that the probation service simply interviewed my client over a video link while he was in Belmarsh prison. He was given no notice; he was spoken to for about half an hour; and the ensuing report was simply a question of assessing the risk for the purposes of an indeterminate prison sentence.
Lord Thomas of Gresford
It was put before the court, and the request was made for an adjournment for a probation report to follow as it used to, with relatives being interviewed and the court being given some idea of the person’s background and some concept of why he could have committed the offence. However, I am very concerned that at the moment the pressure on the probation service is such that it is forced to take these shorthand approaches of video links with a person you have never met before, carried out by someone much younger who makes no attempt to look into the background. In my view, it is a denial of justice in the individual case.
Baroness Farrington of Ribbleton
My Lords, I seldom disagree with my noble friend Lord Clinton-Davis. However, on this occasion I have heard accounts directly from individuals who have been the victims of stalking. One common thread appears throughout these accounts. Individual instances are taken into account but the severity and length of the offences that currently fall under “harassment” are not always fully taken into account. Even looking at the best case, what happens is that incidents may be looked at as a group or a collection.
Some of the victims of stalking have been victims of the same stalker for years. Like many other noble Lords, I have heard the woman who is conducting the campaign that has been set up on this subject. She is a former senior police officer who has said that repeatedly a joke is made when the woman first complains to the police. We need quite a large change in attitude. The joke that was referred to this morning on the radio was, “Don’t you feel flattered that somebody is attracted to you?”, when the victim went to the police.
On Amendment 176, spoken to in my noble friend’s absence by the noble Lord, Lord Wigley, it is extremely important that we look at the circumstances of the offence. I cite repeated shoplifting as an example. In my experience, there are two different sorts of repeated shoplifting. There are people who go on shoplifting sprees, sometimes in groups, in order to resell goods for profit. There are other people who shoplift to get tins of baked beans for their children’s tea. The fact that it is a repeat offence should not necessarily mean that those children are deprived of their mother if there are other means of tackling the issue. I hope that the Minister will give a positive response to this set of circumstances in which women might be incarcerated and say that it is an example where, even though we may be dealing with different sums of money, funding projects that help give women self-esteem, and do not separate them from their families, is a more cost-effective and socially effective means of tackling many of the circumstances of these women.
Lord McNally
I could not agree more with the noble Baroness. That was very much the thrust of the Corston report and of what the Government are trying to do in carrying through their justice reforms, particularly in the treatment of women offenders.
Lord Thomas of Gresford
I am concerned about the instructions given to probation officers who carry out pre-sentence reports. Will my noble friend look into the matter before Report and find out in what circumstances it is acceptable for a probation officer to fashion a pre-sentence report based simply on a videolink and ticking boxes on a form on the other side? When is that permitted and what particular guidance is given to probation officers in those circumstances?
Lord McNally
One of the reasons why I am always at a disadvantage when dealing with my noble friend is because he usually has some recent case in which he has personally participated that proves the case he is making. I have noted what he said and will check whether that is regular practice. As I said, the Appeal Court has made it very clear that if reports are not asked for or are deficient, that in itself could be grounds for an appeal.
Legal Aid, Sentencing and Punishment of Offenders Bill
Lord Thomas of Gresford Excerpts(12 years, 8 months ago)
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Lord Thomas of Gresford
My Lords, Part 2 of the Bill has its complexities, but all sides are agreed on two principles.
Baroness Anelay of St Johns
My Lords, I am aware that the noble Lord, Lord Thomas of Gresford, is hesitating so that he may have the Minister’s ear.
Lord Thomas of Gresford
All sides are agreed on two principles—access to justice must be maintained and undue cost must be squeezed out of civil litigation. The issue is what the best framework is for achieving these ends. Unlike with Part 1 of the Bill, public money is not directly involved in supporting the litigation that we are referring to in Part 2.
All sides recognise the unforeseen and unintended consequences of the Access to Justice Act 1999, which threw the burden of the success fee and the ATE insurance premium on to losing defendants and removed from the claimant any interest in the amount of the success fees and premiums that they were only theoretically obliged to pay. Save for the recent changes introducing fixed fees in Road Traffic Act litigation, lawyers have been able to charge 100 per cent success fees, whether or not they undertake other, riskier cases. Insurers have fixed levels of premiums with which not even the costs judges on taxation are able or willing to quarrel.
This policy may have helped claimants by allowing them to retain the full amount of the damages awarded to them. However, the removal of the restraint of competition as to the size of success fees and ATE premiums has put an undue burden of fourfold cost on defendant insurers. Ultimately, this is not in the public interest, because insurers take their profit and pass the burden on in increased premiums for motoring, household, employers and public liability insurance. Self-insured large companies and public bodies such as the NHS and public authorities that are funded from the public purse generally carry the burden themselves.
The Bill proposes to shift the burden. The claimant will pay the success fee, which will be limited to 25 per cent of his damages for pain, suffering and loss of amenity and loss of earnings and expense to the date of trial. He will also carry the burden of the ATE premium to an amount that is not limited. The champagne corks will indeed be popping in the City by relieved liability insurers and in NHS trusts, town halls and board rooms all over the country. If these defendants win, all their own costs will be paid by the ATE insurers—assuming, of course, that there is still an ATE market and that the premium is affordable—unless a regime of one-way cost shifting that I talked about on Monday last is introduced at the same time, which will require defendants, win or lose, to pay their own costs.
The Jackson report, which sets out all the consultations that Lord Justice Jackson undertook, demonstrates that insurers and public bodies are up for it and accept that one-way cost-shifting, a system that has operated in legal aid cases since 1949, is a fair price for removing from them their present liability for uncontrolled success fees and uncontrolled “after the event” premiums. If one-way cost-shifting is introduced, at a stroke a claimant will lose the fear of having to pay the defendant’s costs if he loses the case, costs that might ruin him and remove the roof from over his head. At a stroke, the “after the event” insurance premium, which is currently in place largely to cover the defendant’s costs, will be savagely cut back. A claimant will have to cover only the risk that if he loses he will be responsible not for the defendant’s costs but for his own disbursements, court fees, expert and medical fees. Just as it is conceivable that in competing for business a solicitor might advertise that he will not charge a success fee, a solicitor with a large standard practice might well be prepared to absorb disbursements in the cases that he loses. We shall have to see whether that happens.
All this is by way of introduction to my amendments, which deal with a discrete area of litigation—environmental law, involving public law and private claims and the tort of nuisance. Public law cases are judicial review claims brought mainly by individuals concerned by inappropriate development—for instance, whether planning permission has made proper allowance for the effect on local flora and fauna by a particular development or whether a waste dump is in the right place. Private nuisance has enjoyed a real renaissance through the help of independent solicitors since the access to justice scheme came into being. A private nuisance is an interference to land or to rights associated with land caused by the unreasonable conduct of the defender. It is the last resort for local residents who need injunctive relief from a polluter who will not run his enterprise with proper concern for his neighbours, and where the regulator is unable or unwilling to take steps to abate the problem.
I am indebted to Stephen Hockman, Queen's Counsel, a former chairman of the Bar, Stephen Tromans, Queen's Counsel, named as environment/planning Silk of the Year at the Chambers Bar Awards 2011, and Gordon Wignall, a barrister specialising in nuisance cases and editor of the third edition of the Law Society’s Guide to Conditional Fees. I have circulated copies of their joint opinion on the impact of the Aarhus convention on costs and funding rules that are applicable in environmental cases.
The Aarhus convention is concerned with access to justice in environmental matters and was ratified by the United Kingdom in February 2005 at the same time that it was ratified by the European Community. The relevant text is set out in the opinion, but the effect is that the United Kingdom is bound to provide “adequate and effective remedies” in this area,
“including injunctive relief as appropriate, and be fair, equitable, timely and not prohibitively expensive”.
The convention applies both to judicial review claims in the administrative court and to private law actions in nuisance. The Supreme Court, in a recent case, has referred the question as to the test to be applied in order to determine whether proceedings are “prohibitively expensive” to the European Court of Justice. In one case that is quoted in the opinion, for example, a defendant’s costs amounted to well over £3 million. Is that prohibitively expensive?
Since the Minister and others already have a copy of the full opinion, I will simply put the conclusions of the learned counsel on the public record. First, the current costs rules run contrary to the international treaty obligations of the United Kingdom, which the United Kingdom voluntarily accepted. Problems arise largely out of the insistence on the “costs follow the event” rule, which tends to lead to inconsistency with the aims of participating in environmental justice and results in a claimant’s liability to pay prohibitively expensive costs.
Secondly, the compliance committee’s last deliberation in the ClientEarth case required the United Kingdom to review its costs rules and recommended rectification. Thirdly, two detailed reviews relevant to environmental proceedings in England and Wales have subsequently been undertaken and presided over by members of the Court of Appeal. The learned counsel are referring to the Jackson report, which we have been discussing, and to the report of Lord Justice Sullivan on access to environmental justice. These have been endorsed by the senior judiciary, and the primary recommendation was that the use of qualified one-way cost-shifting in environmental cases would have a dramatic inroad into the “costs follow the event” principle.
Fourthly, by withdrawing the recovery of “after the event” premiums, the size of which cannot be met by claimants or their legal representatives, without providing at the same time for one-way cost shifting as a replacement in environmental claims, the Government have elected to retreat from the full proposals of the Jackson report and the Sullivan report, which were conducted by those eminent Lords Justices. Fifthly, the consequence is that the United Kingdom, already in breach of its convention obligations, is diverging from rather converging with its own environmental expectations and those of the international community.
Sixthly, the further consequence is that claimants who wish to protect the environment and participate in environmental justice are even less likely to be able to do so than at present. This is predominantly because of the risk of incurring a liability for defendant’s costs that may well be prohibitively and grossly expensive in any event, but also because of the uncertainty that claimants face about their liability for those costs, which under the Government’s proposals will be known only once the litigation, whether public or private, has been concluded.
Claimants in environmental cases do not want damages; they want relief from the consequence of poor decision-making by public bodies or protection from the degradation of their environment. Even in multiparty actions, damages-based agreements are not a solution. My amendments would enable the Government to honour their international environmental obligations rather than turn their back upon them.
Amendment 147 would provide in subsection (2A) that in an environmental claim the losing defendant would pay the premium in respect of disbursements by way of fees for expert reports paid by the claimant. In subsection (2B), the losing defendant would pay the premium on the costs insurance policy if he had agreed to do so prior to the commencement of the proceedings. There are occasions when a defendant will agree to pay the claimant’s premium for “after the event” insurance whether he wins or loses, because if the defendants succeed then they will get all their costs from the ATE insurers.
Amendment 150 defines “environmental claim” by the same definition as is contained in the Aarhus convention. The use of this definition would ensure that only nuisance cases that were truly environmental in nature would be within the scope of my amendment. Insurance recovery claims and private nuisance—for tree-root subsidence, for instance—would not get the amendment of the amendment.
Amendment 157 would introduce qualified one-way cost-shifting in both environmental claims and other claims. The amendment was drafted before I had refined my own views, which I explained at small length on Monday last on this topic. The word “unreasonably” therefore appears in the amendment but I repeat my objections to the vagueness of the word “unreasonable” and reiterate the necessity for clarity by expanding what is unreasonable, as Lord Justice Jackson did, into the familiar expressions of “fraud”, “frivolous and vexatious conduct” and “abuse of the process of the court”.
Why should we single out environmental law for different treatment from other areas of litigation? Essentially, I am not. In the amendments I am arguing for one-way cost-shifting as a precondition for change and for the premium for cover for disbursements—a far lesser amount than the current premiums recovered against the potential defendant’s cost liabilities—to be recovered from the losing defendant. That is very similar to what I was saying on Monday, when I suggested that there are positive benefits in dividing liability for these lesser premiums between the claimant and the defendant in a staged way. In any event, the issue is far more urgent in environmental cases because of our obligation to comply with the Aarhus convention.
A tidy mind might try to bring every aspect of litigation into one structure, one piece of architecture—the word that the Minister used on Monday—but litigation is not like that. Time and again the Jackson report emphasises that one size does not fit all. I quote from page 44:
“many submissions during the Costs Review have emphasised that ‘one size does not fit all’. The Bar Council, for example, states: ‘What is abundantly clear, from Jackson LJ’s Preliminary Report and from the Bar Council’s review, is that “One size does not fit all.” Particular types of litigation give rise to particular issues, be they funding issues, case management issues or otherwise”.
That is a recurring theme in the Jackson report and every practising lawyer will agree.
Lord Carlile of Berriew
I apologise for interrupting my noble friend. Before he sits down, will he help us on this matter in relation to his narrower point on the Aarhus convention? He was kind enough to circulate the learned opinion of Mr Hockman and others, including, as I understand it, to my noble friend the Minister. Will my noble friend tell the House whether he has had a response to the opinion of Mr Hockman and others? If not, does he agree with me that it might shorten the debate if, after he has sat down, the Minister were to indicate whether or not the Government accept the premise of the Hockman opinion?
Lord Thomas of Gresford
I am most grateful to my noble friend for interrupting me with one paragraph to go, which would have relieved your Lordships a great deal. The opinion has only recently been produced to me and the Bill team has had it only for a day, so I could hardly expect an immediate response. I hope that my noble friend the Minister will be able to deal with some of the issues that are raised and the issues that I am raising in my remarks.
To conclude, that one size does not fit all is a recurring theme in the Jackson report. Every practising lawyer will agree with that. Proof of the issues that arise in litigation—sometimes liability, sometimes causation, sometimes quantum, and so on—gives rise to different risks and therefore to different solutions. This very Bill, for example, proposes different statutory instruments making different provision for different types of case. I look forward to hearing my noble friend’s response in due course. I beg to move.
Lord Lester of Herne Hill
My Lords, I must choose my words carefully because I do not wish what I say to be taken to be outright opposition to my noble friend’s amendments, although I have a certain degree of agnosticism, if not scepticism. I suggest that those who are interested in this area might read the New Yorker article of a couple of weeks ago, which described the abuse of power by the claimant lawyers in the Exxon South American environmental litigation case. That indicates the need for very careful safeguards, even in an environmental setting.
The only reason I speak at all is because it occurs to me that there is a less radical solution to some of the problems that has been fashioned by the courts themselves without any legislative intervention: namely, the protective costs order. I see that the noble Lord, Lord Beecham, shakes his head. I shall explain what I am talking about. The problem with English cost rules is, of course, the winner-takes-all rule, which can, as my noble friend has indicated, have a seriously chilling effect on the ability to bring public interest litigation. It is the fear of claimants and their advisers of having to pay the legal costs of the defendant that has a chilling effect.
I was involved in the Corner House case for a small NGO that was seeking to challenge the lack of proper consultation by the Secretary of State in relation to anti-corruption provisions in the export guarantee area. This was not an environmental matter but it did concern public law. The problem was that the little NGO had absolutely no funds to pay for me but, more importantly, the department. The department would not give an assurance in advance that if it succeeded, it would not ask for the whole of its costs against the NGO. Therefore, the puzzle was how the NGO could bring the public interest proceedings not simply by dealing with the claimant’s position but dealing with the other side.
Sir Henry Brooke, to whom I pay tribute and who throughout has led thinking on this issue within the judiciary, advocated the use of a protective costs order, which enabled us to go before the court and say, “Even if we lose, can we please have a protective order that protects us against the risk of having to pay the other side’s legal costs in advance, so that we know that the worst thing that could happen to the Corner House NGO would be if it had to pay its own costs?”. I am glad to say that that was what was eventually decided and the result was that the Corner House was able to litigate.
I am embarrassed to say that I signed a 100 per cent success fee agreement without realising the consequence, which was that I actually profited from what I had thought to be a public-spirited case. I did not return the money, since it was being paid by the Government. I am against 100 per cent success fees and I would never do it again—ever.
However, the point I am making is not about success fees, but that if one develops through the courts, on a case-by-case and flexible basis, a way of softening the winner-takes-all rule in appropriate cases—not just environmental but all cases—that would enable the weak and impecunious to avoid the effect of that rule. The Constitutional Court of South Africa has decided that the winner-takes-all rule should never apply in important constitutional cases, and that in a proper public-interest case each side should at least bear its own costs and, in some circumstances, the Government should be required to pay the claimant’s costs, or give an undertaking in advance to give that protection.
This is a slightly long-winded way of saying that there are other means that perhaps are to be encouraged by the legislature, or perhaps not. There are other means that the courts themselves have been developing that can deal with some of the points made by my noble friend without something quite as radical as the proposals suggested in his amendments.
Lord Lester of Herne Hill
Actually, I cannot agree, because the Court of Appeal’s decision was a kind of precedent and it has been followed. There have been arguments about what limits there should be on claimants—whether they should be like an NGO or otherwise—but it would be perfectly possible for a rule to be made by the Lord Chancellor expressly empowering the courts to apply protective costs orders on a more general basis. This was not just a one-off decision; it applied in a line of cases and has been developed since.
Lord Thomas of Gresford
I am sure that my noble friend would agree, however, that protective costs orders are matters of discretion for the judge who hears an application, and that the threshold is extremely high. In his particular case, he obviously advanced matters of considerable public interest that were much wider than only the issues in the litigation that affected his clients. So a protective costs order can be applied for in such cases. However, I was involved in the case following the flooding of houses at Aberfan that occurred as the result of the spoil banks placed there after the disaster. In that sort of case, where individual householders were affected, protective costs orders would not have met that threshold.
Lord Beecham
My Lords, at the risk of being accused of unqualified one-way sycophancy, I must again congratulate the noble Lord, Lord Thomas, on the clarity of his presentation of this complex issue. Although I somewhat dissociate myself from the preamble to the substantive part of his speech, I entirely concur with his amendments. At this stage, I should also express my thanks to the learned counsel whose advice has instructed me in a matter about which, hitherto, I knew nothing. Aarhus meant absolutely nothing to me up till now. It seems that I may have shared that failing with Her Majesty's Government. We shall see from the Minister’s reply whether that is a correct inference or not.
The noble Lord referred to the ClientEarth case in which the Aarhus Convention Compliance Committee observed that the cost rules pertaining in the United Kingdom placed it in systemic breach of Article 9.4 of that treaty. The committee concluded that we had not as a country adequately implemented our obligation to ensure that procedures are not prohibitively expensive. Counsel's opinion, to which the noble Lord referred, identified two particular issues. The first is that of uncertainty. The second is the sheer amount of the defendant’s costs that might fall on unsuccessful claimants. The noble Lord referred to the case of Barr and Biffa waste company, which arose from a complaint about odours emanating from a landfill site, where the costs were indeed nearly £3,250,000.
Lord Justice Jackson has much to say about those issues. His remedy is, as the noble Lord pointed out, a move to qualified one-way cost shifting. He gave six reasons for his conclusions, which are germane to the thrust of the amendments. He said:
“This is the simplest and most obvious way to comply with the UK’s obligation under the Aarhus Convention in respect of environmental judicial review cases”.
He continued:
“For the reasons stated by the Court of Appeal on several occasions, it is undesirable to have different costs rules for ... environmental judicial review and... other judicial review cases”.
His third reason was that the requirement for permission,
“is an effective filter to weed out unmeritorious cases. Therefore two way costs shifting is not generally necessary to deter frivolous claims”.
They simply do not arise. His fourth point was that,
“it is not in the public interest that potential claimants should be deterred from bringing properly arguable judicial review proceedings by the very considerable financial risks involved”.
He pointed out that:
“One was costs shifting in judicial review cases has proved satisfactory in Canada”.
His final point, which goes to the issue raised by the noble Lord, Lord Lester is that the protective costs order regime,
“is not effective to protect claimants against excessive costs liability. It is expensive to operate and uncertain in its outcome. In many instances the PCO decision comes too late in the proceedings to be of value”.
So with respect to the noble Lord, the protective costs order regime is not, in the view of Lord Justice Jackson, an answer to the difficulty.
Lord McNally
I am not sure that I am able to commit to anything as rash as following up a recommendation that is a mere 62 years old. As always with interventions by my noble friend, I will take that away, but I should also make the point, given that this is the last of a series of amendments chipping away at—to use the term that I used the other night—the central architecture of the reforms that we are trying to introduce, that we have consulted on these matters. We have indicated the idea that PCOs may be a way forward in our commitment under the Aarhus convention. I will certainly make sure that the learned counsel’s opinion is fully studied. As I have explained, the Government’s view is that the best way forward is within the rules rather than within legislation, but this has given a good airing to the issue. The whole House is now more familiar with the Aarhus convention—I understand it is a Danish town—and we are the better for that debate. I therefore ask my noble friend to withdraw his amendment.
Lord Thomas of Gresford
My Lords, it is a relief to know that the Ministry of Justice, like New York, never sleeps. No doubt the opinion will be pored over and there will be further discussions before we get to Report.
I invite my noble friend to do this now. He says that the proper way to proceed is for one-way cost-shifting to be introduced by tailored Civil Procedure Rules. Your Lordships will recall that on Monday the noble and learned Baroness, Lady Butler-Sloss, and I made the point that there should be guidance from Parliament, not simply a discussion between the Executive and the Civil Procedure Rule Committee, about the parameters of those rules and what the boundaries and structure are to be. I would be grateful to know from the Minister the position on this particular point. He is shifting the burden of the success fee and the ATE premium over to the successful claimant. Is that going to be co-ordinated and timed to come into effect at the same time as one-way cost-shifting? That is the key issue. If you do not have one-way cost-shifting, you are shifting to the claimant the liability for the defendant’s entire costs, if he should lose, and consequently an enormous premium. We heard of premiums of £900,000. I am familiar with a premium of £80,000. I think that the standard is in thousands for any sort of claim. If, on the other hand, one-way cost-shifting comes in and the defendants’ costs are paid by the defendants win or lose, we will be concerned with a premium for a much smaller thing, which is the disbursements of the claimant, should he lose. The risk is that much smaller.
Lord Bach
We on this Front Bench agree absolutely with the question that the noble Lord, Lord Thomas of Gresford, has asked the Minister. It is crucial. To broaden the point slightly, the great danger in the Bill is that we are changing the current arrangements, but the way that they will work in practice is subject to regulations of which there is no sight at present. We need from the Government a statement about how they intend to implement this part of the Bill if they get it through. We have no idea at all. The example that the noble Lord gave is the best one of all. It is critical, but there are other examples where a great deal relies on regulations that are to be made at a later stage, sometimes to be passed by affirmative resolution, sometimes by negative resolution. It is not really a satisfactory way of changing the civil law in such a fundamental way. I would be grateful if the Minister, in his reply to the noble Lord, Lord Thomas of Gresford, would deal with the general point as well.
Lord McNally
The pained look with which the noble Lord, Lord Bach, comes to the Dispatch Box and implies that the Government is the first Government in the world to bring forward legislation with further consultations needed about specific regulation is a bit rich. The implications of this Bill will come into force in April 2013. We have a period of time for such consultations. As I said before, I take the point that there has to be a synchronisation in these matters. I do not think we are doing anything unusual by legislating in this way, but we take on board the points made in this debate.
Lord Thomas of Gresford
I am grateful to my noble friend for saying there will be synchronisation. The scales of justice have been tipped against defendants by this fourfold cost that they have been calling for over a period of time. The purpose of this Bill is to even the scales of justice up. If there is any period between shifting from that side to this side the success fee and the ATE insurance without providing one-way costs as the balance, the scales will go completely in the opposite direction, and it is the suffering claimants who will come out the worst in a situation like that.
I cannot resist coming back to the question of protective costs orders, having heard my noble friend Lord Lester. Protective costs orders are applied for in public interest cases. I am not concerned simply with public interest cases. These could be the private individual, the householder whose house is flooded, in the example that I gave—
Lord Thomas of Gresford
It is as my noble friend says. Lord Justice Jackson examined it and he came to the conclusion that the noble Lord, Lord Beecham, referred to. There is much more discussion to be had. I shall take my noble friend outside—as I once said in relation to one of the Ministers in the previous Government—and have a discussion with him there. For the moment, I withdraw this amendment.
“Third party litigation funding
(1) A third party litigation funding agreement which satisfies all of the conditions applicable to it by virtue of this section shall not be unenforceable by reason only of it being a third party litigation funding agreement; but any other third party litigation funding agreement shall be unenforceable.
(2) A third party litigation funding agreement is an agreement under which a third party (“the funder”) agrees to fund (in whole or in part) the provision of advocacy or litigation services to another person (“the litigant”) by a person other than the funder in exchange for remuneration.
(3) For the purposes of subsection (2), “remuneration” includes—
(a) a payment or any other transfer of value representing or calculated by reference to the value of a judgment or settlement; and(b) an assignment of the proceeds (in whole or in part) of any judgment or settlement.(4) The following conditions are applicable to a third party litigation funding agreement—
(a) it must be in writing;(b) it must not relate to—(i) proceedings which by virtue of section 58A(1) and (2) of the Courts and Legal Services Act 1990 cannot be the subject of an enforceable conditional fee agreement;(ii) a multi-party action, representative action or any proceedings which are the subject of a group litigation order; or(iii) any other proceedings of a description prescribed by the Lord Chancellor;(c) it must comply with such requirements as shall be prescribed by the Lord Chancellor.(5) Regulations under subsection (4)(c) may—
(a) require any person which enters into a third party funding agreement with a litigant to first obtain a license from a licensing body to be designated by the Lord Chancellor; and(b) set out conditions to be satisfied in order to obtain such a license.(6) In this section “advocacy services” and “litigation services” are as defined in section 119 of the Courts and Legal Services Act 1990.”
Lord Thomas of Gresford
My Lords, in June 2007, the Civil Justice Council—a body headed by the Master of the Rolls and comprising members of the judiciary, the legal professions, civil servants and lay people with knowledge of consumer affairs, CABs, businesses and employers—published advice to the Lord Chancellor recommending the proper regulation of third-party funding; that is, investment by an external party otherwise unconnected to a claim in a lawsuit in order to gain a maximum return upon its investment. In this country, it used to be called maintenance and champerty, and it was both a crime and a civil tort. In 1641, maintenance was described by the jurist Coke in his Institutes as:
“A taking in hand, a bearing up or upholding of quarrels or sides, to the disturbance of the common right”.
“Champerty” is the “maintenance” of a person in a lawsuit on condition that the subject matter of the action is to be shared with the maintainer. It was abolished as a crime in the United Kingdom in 1967 but as recently as July 2009 a solicitor in Hong Kong, where the offence still exists and carries a maximum sentence of seven years, was sent to prison for some 15 months. It remains illegal also in New Zealand but not in the United States.
As the practice has spread across the water into this country, specifically targeted at claim by small and medium business enterprises against large corporations, the Civil Justice Council formed a working party to consider the issue further. Consultations took place in February and July 2008 when a draft code of conduct for a third-party funding, which the working party had produced, was considered.
Following Lord Justice Jackson’s recommendations —he obviously considered this as well as conditional fee agreements—the draft code of conduct was revised. In February 2010, the Civil Justice Council held another stakeholder event to consider the revised code. The working party, under the chairmanship of the very eminent solicitor and Queen’s Counsel Michael Napier, chairman of Irwin Mitchell, which is essentially a leading claimants’ firm, produced a voluntary code of conduct for litigation funders, which was published on 23 November 2010. This voluntary code sets out standards of practice and behaviour to be observed by funders who are members of a newly founded Association of Litigation Funders of England and Wales. Without in any way impugning the very hard work of the members of the working party or the motivation of the new association, I am not at all content that this development in litigation funding should be subject to a voluntary code without any parliamentary debate, approval or control—of course I appreciate that it was put together under the auspices of the Civil Justice Council.
Lord McNally
My Lords, I am sure that that postscript will be studied by the Lord Chancellor, and he will carefully study this debate. As I was saying in my concluding remarks, I thank my noble friend Lord Thomas for introducing this subject and noble Lords for expressing a variety of views on it. The Lord Chancellor would like further time to reflect and I ask my noble friend to withdraw the amendment.
Lord Thomas of Gresford
My Lords, I am most grateful to all noble Lords who have spoken. I accept that the opposing view, put forward by the noble Lord, Lord Davies, was certainly an arguable one. I have not suggested that third-party funding should be banned but that it should be subject to statutory regulation, as opposed to the voluntary code.
I could not help reflecting on my rugby days and the occasional game in which the leader of the forwards, an extremely formidable person, would observe the scrum-half dropping the ball and say to us in the pack, “Boys, they’ve had their chance. We’re not going to give it to them again”. Consequently, everything changed and we adopted a different tactic.
Here, a voluntary code has been brought in. They have had their chance. In formulating the voluntary code, they did not include what Lord Justice Jackson rightly set out as the essential needs of such a code. They decided not to do that. When approached by the industry to say that they should limit themselves to commercial litigation, they decided not to do that. A two-page code has been produced of nine clauses which gives the broadest possibilities to the funders for the way in which they operate. I am not satisfied with that. I am most grateful to the noble and learned Lord, Lord Mackay, and the noble Lord, Lord Boswell, for their support. There is a perception of a genuine problem arising.
I look forward to further discussion with my noble friend and, perhaps, the Lord Chancellor, and we will see whether we can take forward this matter for Report but, for the moment, I beg leave to withdraw the amendment.
“Third party’s insurance company
(1) A third party’s insurance company may not solicit a claimant who has a cause of action for personal injuries against its policy holder, to settle that cause of action where to the knowledge of the insurance company, the claimant is legally represented either under legal aid or a conditional fee agreement.
(2) A third party’s insurance company may not make an offer to settle in circumstances not prohibited by subsection (1), unless—
(a) it has obtained adequate medical evidence of the personal injury and has disclosed it to the claimant; and(b) the claimant is advised when the offer is made of his right to obtain legal advice; and(c) the offer is in full and final settlement of the cause of action.(3) Any settlement made in breach of subsections (1) and (2) shall be void.”
Lord Thomas of Gresford
I apologise for wearying your Lordships once more. The amendment would ban the practice of third-party capture life insurance companies. Third-party capture is something with which many people, including many insured people, will not be familiar, but I have heard about it. Frankly, it is a nefarious practice.
The amendment would ban an insurance company—we are talking about banning in this amendment, not regulation—from directly contacting third parties who have been involved in accidents. That is currently commonplace behaviour following road traffic accidents. An accident happens, two drivers exchange with their details, driver A submits full details to his or her insurer and that insurer contacts driver B and offers an early settlement, usually at a much lower rate than would be achieved through due legal process. Insurers frequently make offers to accident victims that are far lower than the claim is worth, denying a person who has suffered an injury caused by someone else the redress that they deserve. They frequently make settlement offers without proper medical examination to ascertain the full extent of the injury, again denying the accident victim real evidence-based representation.
In this way, insurers seek to close off a claim without offering accident victims the opportunity to seek independent legal advice. There is obviously a conflict of interest. Insurers are acting both for the defendant, their policyholder, and the accident victim. Given that the insurers’ primary objective is to minimise the level of payments, they have little interest in securing a fair deal for accident victims.
There is another, equally unpleasant practice carried out by insurance companies where they contact a third party who has been injured in an accident with one of their policyholders and suggests that he or she makes a personal injury claim through their legal services arm. Other insurers simply refer the case details on, at a price—we will be dealing with referral fees shortly—to an independent personal injury lawyer. That is a major revenue stream for insurance companies, but it overrides common sense and is a substantial conflict of interest for insurers.
Since I tabled the amendment, I have been approached by the Association of British Insurers. It has kindly sent me its code of practice. The ABI code of practice for third-party assistance occupies some 11 pages, unlike the two-page code I was referring to in the previous amendment, and presents advice for insurers on how to contact unrepresented claimants, what they are to say to them about the injuries that they have received, how they are to deal with the damage to their vehicles and how to hire other vehicles. A section headed “Managing the Relationship” says:
“This section sets out how the insurer will manage the relationship with the unrepresented claimant where they have agreed on a provision of services, and covers where a claimant goes from unrepresented to represented”.
It sets out the policy, how to arrange medical treatment and so on. I suppose that in one way this could be said to be good practice. If the insurer is to be allowed to interfere with the other side in this way and to make offers of settlement, it is good practice to advise him to get a proper medical report and so on, as the ABI code says. However, there is absolutely nothing to enforce it. An insurer—and there are many insurance companies—may have a copy of the ABI code of practice but there is nothing to require him to adhere to what it says. Therefore, not only can the insurer ignore the provisions of his own code of practice but he can directly approach the other side. That is what my amendment seeks to prevent. I beg to move.
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 McNally
The noble Lord says he speaks from very long experience. As this Bill progresses, I have found that quite often noble Lords on all sides of the House who have more experience than me of the legal profession tell me that there is often a gap between what is written down and the reality of the day-to-day practice.
Third-party contact does not, in itself, cause detriment to consumers and may be to their advantage as a claim can often be resolved quickly. In addition, this practice can allow insurers to reduce the legal costs associated with handling a claim, and this in turn reduces costs for all policyholders. However, I am aware of concerns around the potential risk of conflict of interest and the need for the claimant to have independent legal advice before any settlement is agreed. The FSA undertook a review of third-party contact during 2009-10 and did not find conclusive evidence that unrepresented third parties could have achieved higher compensation had they obtained independent legal representation.
Following the FSA’s review, which was referred to by the noble Lord, Lord Thomas, the Association of British Insurers published a code of practice, to which he referred, in June 2010. The code contains specific guidance for insurers on contacting claimants. This limits unsolicited contact. For example:
“Insurers will not make unsolicited visits to an unrepresented claimant at their current address, including hospitals”.
I know we will be returning to some of this later. The code also requires that claimants are informed of their right to seek independent legal advice and of other options available to them to resolve their claim. As I have indicated, the practice was reviewed in 2009-10 but was not found, overall, to be disadvantageous to claimants.
In summary, most of the issues that these amendments seek to address in respect of the handling of third-party contact claims are already covered by existing regulation. The FSA rules require that insurers fully inform third-party claimants of their legal rights, including to independent legal advice, and of alternatives to settling directly with the insurer. In the light of this, we do not believe it is necessary to go along the lines of the noble Lord’s amendment, and I ask him to withdraw it.
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.
Lord Thomas of Gresford
My Lords, before the noble Lord does what he is going to do with his amendment, I just make one comment. He said that the Minister was on his own. When I was a young solicitor, I would have given my eye teeth to secure some union work. I did some at the Bar, but it was very difficult in a small firm to compete with a large firm, as I am sure the noble Lord will agree. If I thought I had to pay money to the union to get their work, that would have made it considerably worse. The money that is paid to the union by the lawyer is ultimately reflected in the hourly rate that the lawyer charges to his client—it eventually falls on the client, or on another client. It is not just disappearing or being absorbed by the large firm.
Lord Beecham
Not all firms are large firms, and it will not surprise Members to know that my firm was not—and is not—a large one. However, we have had that kind of relationship. The profitability of firms conducting litigation of this kind is not high in any event, even without the question of referrals. I do not think that there are the kind of consequences that the noble Lord assumes to be the case. Equally, organisations with members seeking to derive the best service that they can for their members ought to be free to do that. I repeat that I do not think this Bill is at all on the right lines in what it is seeking to do. I again respectfully direct the Minister’s attention to the peculiar circumstances that subsection (8) proposes.
I was going to finish by commending again the amendment tabled by the noble Lord, Lord Pannick, about solicitor-to-solicitor arrangements. He made a very strong case there, and I regret that the Minister seems to have just dismissed it out of hand. Certainly—
Lord Carlile of Berriew
My Lords, I want to say a few words in support of these clauses and indeed of all the amendments that my noble friends have spoken to. One of the most unwelcome trends in litigation in recent years has been its commoditisation, and if this is not stopped I see the development of litigation futures as a commodity that will be traded, just like potato futures and metal futures.
I do not know whether any of your Lordships has had an experience like mine a few months ago. I was involved in a road traffic accident as a rear-seat passenger in a vehicle on a country road in Northern Ireland at about 11 o’clock one morning. I came back by air to Heathrow the same afternoon. I had not been injured in the accident, although it was quite unpleasant. As I was standing on the Heathrow Express platform, coming back into central London, I received a text message from a claims-farming business that referred to the accident I had had the same morning. Now if it happened to me, it must be happening to an awful lot of other people. I suggest that Amendment 165 nails this problem for that kind of activity. That kind of low-level claims farming, but on a very large scale, is putting up insurance premiums and the cost of litigation. Perhaps worst of all, it is encouraging people to make claims that they otherwise would not have made, and which may in the end cost them if not money, a great deal of anxiety.
Lord Thomas of Gresford
Does my noble friend not agree that in the instance that he described and in which he was involved there could have been an element of corruption with people being paid when they gave information about that accident?
Lord Carlile of Berriew
There is certainly that possibility.
I wanted to add something else about hospitals. When I was a Member of another place, I often visited a celebrated orthopaedic hospital in the next county. At that time—I cannot say whether it is the case now—at the end of a long corridor in that hospital there was a solicitor’s office. That was an unusual arrangement but one that no doubt brought some rent to the hospital. I have real reservations about that kind of arrangement. I am all in favour of general advertising and it is right that solicitors’ firms should be able to advertise in local and national newspapers so that people are aware of the kinds of specialist services that they provide. But we must take this opportunity to reject anything that smacks of ambulance-chasing.
Legal Aid, Sentencing and Punishment of Offenders Bill
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“(b) the maximum limit must be expressed as comprising either or both of the following—(i) a percentage of the descriptions of damages awarded in the proceedings that are specified in the agreement; or(ii) a percentage of the amount of fees which would be payable to the person providing legal services including advocacy if they were not acting under a conditional fee agreement,”
Lord Thomas of Gresford
My Lords, I have to apologise for the length of my opening remarks, but as your Lordships will have seen, this is a very large group of amendments and it covers some three discrete topics.
Clause 43 deals with the conditional fee agreement—a CFA or no-win no-fee agreement—under which the successful claimant wins from the defendant both damages and costs to pay his lawyer’s fees. The fees under a CFA include a success fee, an uplift of the basic fees by an agreed percentage. The rationale behind the success fee is that it is not the lawyer’s prize for winning his case but his insurance; an uplift on his fees when this client wins covers the value of his time and effort when another client loses and he receives no fees at all. If the claimant loses, he does not have to pay his own lawyer’s fees, because it is no-win no-fee, but he is liable for the money paid out on his behalf for court fees, expert and medical reports, and witnesses’ expenses.
The Government’s purpose in Clause 43 is to amend the current position under the Courts and Legal Services Act 1990 to provide that the success fee payable to the successful claimant should no longer be payable by the unsuccessful defendant but should be paid instead by the successful claimant out of the damages he receives. All the losing defendant will pay by way of costs is the claimant’s lawyer’s base fees and his own costs.
When the 1990 Act, led on in this House by the noble and learned Lord, Lord Mackay, was originally enacted by the Conservative Government to provide relief for the MINELAs—middle income not eligible for legal aid—it was expressly provided by Section 58 that the costs payable by a losing defendant to a successful claimant should not include the success fee payable under a CFA. At the beginning, no success fee was paid by defendants, but in 1999 the Act was amended by Labour so that the success fee was recoverable from the losing defendant, along with the claimant’s base costs. Labour’s policy at that time was to abolish the grant of legal aid to all—the impoverished as well as the MINELAs—in all personal injury cases save clinical negligence. The carrot was that defendant insurance companies would pay the success fee instead of the claimant. The proposals in this Bill seek to return to the original concept of the noble and learned Lord, Lord Mackay, in 1990.
The 1990 Act did not change the general rule that the losing party pays the winning party’s costs; costs follow the event. Therefore, if a claimant lost his case, he did not have to pay his own lawyer’s fees—no-win no-fee—but under the principle of costs following the event, he was liable to pay the successful defendant’s costs, which could be a very considerable sum. To cover this possible liability, an insurance market quickly grew up whereby the claimant would insure himself against the risk of losing; that is, “after the event” insurance, or ATE. The original 1990 Act said nothing about the cost of the insurance premium for such cover and accordingly a claimant was responsible for the premium.
Section 29 of the Access to Justice Act 1999 expressly provided that the premium paid by a successful claimant who had insured himself against the risks of losing was recoverable as well as the success fee. The policy was that an injured claimant would recover his damages in full without any deduction, so the losing defendant—usually an insurance company or a company so large that it was self-insured—paid four times over: the damages to the claimant, the base costs of the claimant’s solicitors, the success fee, and the ATE insurance. As it happens, I raised the issue of the extension of CFAs and its impact on insurance in a dinner-time debate some 14 years ago, on 9 March 1998, before the 1999 Bill was introduced. I was very much against the abolition of legal aid in personal injury cases and at that time was promoting the CLAF scheme that is so successful to this day in Hong Kong and fully supported by the Bar Council. Two particular matters stand out from that debate. My late noble friend Lord Kingsland—and I do mean friend—then the leader of the Conservative Benches in this area, said he applauded the long, hard look the noble and learned Lord, Lord Irvine, was taking at legal aid. He said:
“In his overall review of legal aid, the Opposition applaud particularly his desire to extend legal aid into areas such as the provision of social welfare, immigration and other areas where preventive legal advice will save so much money by avoiding ensuing litigation. All that is to be greatly applauded”.—[Official Report, 9/3/98; col. 93.]
In that debate, the noble and learned Lord, Lord Irvine, said:
“Premiums for personal injury proceedings, in which conditional fee agreements have been allowed since 1995, are typically £100 to £150. For many of those who will gain access to justice, which they are denied now, that is not an excessive sum”.—[Official Report, 9/3/98; col. 96.]
The legislation was passed in the context that the noble and learned Lord, Lord Irvine, believed that insurance premiums for ATE insurance were £100 to £150. The past 11 years have witnessed the unintended consequences of the 1999 Act and the urgent need for reform.
It was emphasised in the Jackson report that the maxim “once size fits all” is certainly not the way to go. In personal injury cases, the defendant who caused the injury will have acted negligently, not deliberately. In defamation or breach of privacy cases, the harm is quite deliberate, usually with the motive of selling newspapers. Personally, I am intensely relaxed about the newspaper that libels an individual or breaches their privacy having to pay the lot—the injured party’s success fee and ATE premium—although I am afraid that neither the Mirror nor the European Court of Human Rights would agree with me. The defendant does not, in a libel case, have to pay for future care or future loss of earnings, and the damages award is usually small. Therefore, different concerns apply in different categories of cases.
Lord Thomas of Gresford
Before my noble and learned friend leaves this issue, he knows that my concern is that this amounts to a dialogue between Government and the Civil Procedure Rule Committee, with no input from Parliament whatever, and no guidance to the Civil Procedure Rule Committee on how it should proceed and what the parameters are. What I was seeking to do, in broad terms, with my amendment was to introduce certain specific things—for example, that the word “unreasonable” should not be used in these procedure rules, but we should revert to familiar territory, such as “frivolous”, “vexatious”, “abusive of process” and “fraudulent claim”, actually spelling out where a judge should have a discretion and where he should not. “Unreasonable” has such a broad meaning that it would put any litigant off if he were to be told by his solicitor, “We will take this case forward, but you have got to appreciate that, at the end, the judge may look at it and say that your conduct is unreasonable”. What does that mean?
As I endeavoured to show in my remarks, in explaining that concept in the report Lord Justice Jackson used the term “fraudulent, frivolous”, although he did not use “vexatious”. I am seeking clarity. The Civil Procedure Rules will come out of the air from somewhere and will not have any proper parliamentary scrutiny. They will have been drawn up as a result of discussion between the Executive and the Civil Procedure Rule Committee, which is entirely made up of judges and lawyers. I would have thought that there would be a constitutional position. It is more serious than anything else in the Bill.
The Civil Procedure Rule Committee should have guidance, as elsewhere in this Bill it does. Over and over again in the Bill, we come across regulations being made by the Lord Chancellor. There is specificity about that. But this position is highly unsatisfactory. If the Minister cannot put something in the Bill in the way in which he has described, what assurances will Parliament have that the Civil Procedure Rule Committee will act in accordance with certain principles?
Lord Beecham
I absolutely agree with everything that the noble Lord has just said. This is a fundamental change in the way in which litigation is to be conducted. It should not just be referred to a wholly unaccountable, although no doubt extremely worthy, group of people on the rules committee. Obviously, they are very eminent but they are not accountable, in the sense that the normal framework would be, to approve changes of this significance. Perhaps, as he develops his reply, he would deal with the point of restricting this significant change to personal injury cases when Lord Justice Jackson advocated it across the piece. Perhaps he would care also to reflect on a point made when colleagues and I met the Association of British Insurers no less, which, for example, said that it did not support means testing for qualified costs shifting at all. But, as I understand it, that is to be part of the scheme—if that is what presumably the rules committee, since it will not be part of the Bill, will say.
The noble Lord is absolutely right to raise these issues and I hope that the Minister will take this back and think again about how matters are to be progressed given the significance of the change.
Lord Wallace of Tankerness
My Lords, it is very evident from the three interventions that this matter is clearly exercising the Committee. I certainly note from the experience of the noble and learned Baroness, Lady Butler-Sloss, having chaired a rules committee that perhaps we are going into territory which we may not have been in before. As to what my noble friend has said, I sometimes hesitate to put things on the face of the Bill because, as we all know, once there, they limit what a rules committee might be able to do if faced with an obvious set of circumstances where it does not believe there should be one-way costs shifting, and it can inhibit that. However, I take the point that unreasonableness could be going too far towards the other extreme in terms of its lack of clarity.
My noble friend asked: if it is not possible to put something in the Bill, what assurances could be given? That is something we shall certainly want to reflect on when considering these contributions. I am sure that we shall have an opportunity to address this again at the next stage of the Bill, and if there are assurances that can be given, I would hope that we would be able to do so. Perhaps I may leave it at that for the moment. We recognise the importance of the points that have been made.
I should restate that there already appears to be broad agreement that there should not be a primary financial threshold in personal injury cases for QOCS, although that would not necessarily apply were QOCS to be extended at some later date to other categories of personal injury. I hope that reassures my noble friend on that particular point.
Amendments 143 and 144 seek to replace the Lord Chancellor’s discretionary power under Clause 45(2) with a duty to make regulations in respect of the recovery of “after the event” insurance premiums relating to expert reports in clinical negligence cases. I can give the Committee the assurance that we intend to allow for this recoverability so that poor people can get expert reports in clinical negligence cases without having to pay for them upfront. However, we have deliberately kept a degree of flexibility around the drafting of the regulations.
The effect of Amendments 144A to 144D is to extend the recoverability of ATE insurance premiums to all civil cases. Unlike the current exception for clinical negligence, the proposed exception is intended to apply to ATE insurance which covers the risk of paying opponents’ costs as well as funding expert reports.
Lord Thomas of Gresford
My Lords, with great respect, I advanced the amendments in the context that one-way cost shifting will go through, as the Government say it will, in which case the defendant’s costs are immaterial. The only ATE insurance that will be required will be for the disbursements of the claimant himself, which would not otherwise be covered. That is the area to which I am referring in those amendments.
Lord Wallace of Tankerness
My Lords, we believe that the package of proposals seek to end ATE insurance premiums being charged to the defendant with the specific exception of clinical negligence cases. To start unpicking it in such an important respect would not retain integrity of the proposals as a whole. I hope that I am not misinterpreting what he said, but my noble friend has suggested that it might be possible to split or share the recoverability of success fees or ATE insurance premiums. Indeed, I think that the Bar Council has suggested that some success fees or ATE insurance premiums should be payable by the losing side with the remainder payable by the claimant. Lord Justice Jackson made alternative recommendations on partial recoverability of success fees and ATE insurance premiums in the event that his principal recommendations were not accepted. But the Government had a full public consultation on both the primary recommendations and the alternatives and gave careful consideration to the responses. We decided to take forward the primary recommendations—abolishing the recoverability of success fees and ATE insurance premiums—as the best way of restoring proportion and fairness to the CFA regime.
It has been suggested, as referred to in Amendment 146, that the market may not provide for or adjust itself sufficiently to take account of these. The amendment requires the Lord Chancellor to,
“have regard to the financial and commercial viability of the insurance market”,
in making regulations under Clause 45(2). I accept that the changes the Government are seeking to implement are fundamental, but we expect the insurance market to respond positively to them. It is easy to say ahead of an event that all sorts of appalling things will happen, but after 1999 the market certainly adjusted to the opportunities with ATE premiums, and it is not surprising that those who wish to maintain the status quo are making substantial representations to that effect.
Lord Wallace of Tankerness
I think I understand what the noble Lord is saying and I think I gave an indication on that point. Let me just try to find that—
Lord Thomas of Gresford
May I help by saying that my Amendment 162 goes directly to that point?
Lord Wallace of Tankerness
As I said in response to my noble friend Lord Thomas, we do not believe that that is necessary because it is the Government’s intention that such matters would be included in the definition of non-monetary benefit awarded to the claimant in any event should the additional penalty be calculated in that way. Clause 53 gives us the flexibility to do that so that the rules can be made across all categories of law. It is our intention that they should be. However, perhaps I may put that in writing, in a letter to the noble Lord that I will circulate to other Members of the Committee, to explain the matter in more detail.
Lord Thomas of Gresford
My Lords, I am most grateful to all noble Lords who have spoken in this debate and, in particular, to the noble and learned Baroness, Lady Butler-Sloss, for her support on the issue—which I regard as having constitutional significance—about whether the Civil Procedure Rules should be formulated without Parliament having any input into them at all. It seems to me that it is for us to decide, one way or the other, what the particular parameters should be.
Let me just pick up on two points. First, should the means of the claimant come into it at all? The insurance industry does not want that, but the proposal in the Bill is that the claimant’s means should be taken into consideration. What about the meaning of “unreasonable”? The meaning is so broad that it should really be narrowed down. On that issue, I want to hear further from my noble and learned friend and I shall be talking to him about it between now and Report. I will take the issue further if necessary.
Secondly, on the question of splitting the burden of the insurance premium, it seems to me that that is a sensible way to go forward. The corks from the champagne bottles will be popping down in the City when people read my noble and learned friend’s response that the premium will fall entirely upon the claimant. Why should it not be split? There would be advantages both ways in splitting the premium: first, there would be an incentive for the claimant to ensure that premiums are not too high and are not, as at the moment, left completely in the air; on the other hand, if you split the premium in the staged way that my amendment proposes, there would be a great incentive on the defendants to settle. The course that I have suggested includes advantages beyond the mere way in which the liability falls. I would like to hear a little bit more about why the Government prefer Lord Justice Jackson’s first proposal, as opposed to his alternative proposal, which I am not persuaded is the better one. I shall certainly return to that matter again.
I remind my noble and learned friend that, on this side, I have accepted that the success fee should be paid by the claimant from his damages, subject of course to a limitation of up to 25 per cent. I agree with him—in fact I made the point earlier—that the probability is that solicitors involved in non-risk litigation will advertise, “No success fee payable here”. Those bigger firms that get involved in the riskier litigation will do a very determined assessment of what risks they are prepared to carry in advertising their own services subject to a success fee. I see that there is an advantage in that. I shall read and study what the Minister has said and, I hope, discuss the matter further with him and come back on specific issues at Report. At the moment, I beg leave to withdraw my amendment.
Lord Thomas of Gresford
My Lords, I must move this amendment, since it is in the names of the noble and learned Lord, Lord Mackay, of myself and of the noble Lord, Lord Bach. It is an alliance of all three parties.
Lord Thomas of Gresford
Yes, or the other place.
The noble Lord, Lord Bach, pointed out something that I think should not be overlooked: in the 1995 order that introduced CFAs, insolvency litigation was recognised specifically, along with personal injury litigation, as a category to which CFAs should apply. The one principle—perhaps it is not so much a principle as a rule—that underpins the Jackson report is that no cap fits all, whereas the Government’s approach seems to be that they have a package that applies to everything, regardless of what it is. That is not the approach of Lord Justice Jackson, who was very careful to distinguish between various areas in his report. Insolvency litigation is a category that should be considered because of the particular features that affect it.
What is insolvency litigation? Insolvency practitioners undertake litigation on behalf of creditors against company directors or third parties whose actions have caused serious harm to a business. This includes taking money out of the business for personal use, concealing assets and committing fraud. In some cases, these actions—of directors and third parties—have led to the business’s failure. The insolvency practitioner, who is brought in to deal with the disaster that has occurred, has a legal duty to maximise the returns to creditors. In cases where directors have acted improperly, this may involve undertaking litigation to return money rightfully owed to creditors, including the business community and Her Majesty’s Revenue and Customs. Without the use of litigation, directors could get away with dishonest practices and businesses would lose money.
In insolvency situations, a company by definition has no money. Consequently, there are no funds available to the insolvency practitioner, who is trying to clear up the mess, to pay the legal costs involved in pursuing litigation. The creditors’ only realistic hope of recouping money owed to them is for the insolvency practitioner to engage solicitors on a conditional fee arrangement. In addition to this, insolvency practitioners may be personally liable for costs incurred as a consequence of litigation and therefore require protection with “after the event” insurance. As the system currently exists, the success fees under a CFA and the ATE insurance premiums are recoverable from the defendant if a judge, on the merits of the case, considers them to be liable.
What are the impacts of this? First, let us consider the impacts on the business community. The current system is particularly helpful in insolvency litigation because it allows insolvency practitioners to maximise the assets available for distribution to creditors. If the success fee and ATE insurance premium were instead to be borne out by the insolvent estate, it would substantially reduce the amount of money returned to creditors. So the proposals here would mean that the defaulting directors or fraudulent third parties who caused the failure of the business would escape the burdens of success fees and insurance premiums, and that would reduce the funds available to pay the genuine creditors of the insolvent company. At a time when businesses are struggling, it would seem counterproductive to implement measures which would reduce their returns.
In addition to lost revenue, the business community would also suffer, as the Government’s proposals would discourage an insolvency practitioner from taking action against a delinquent director. Given the considerable risks involved in insolvency litigation, an insolvency practitioner will only commence litigation on advice and once satisfied that it is economically justifiable for the creditors. Generally speaking, these people are not carrying out risky litigation; insolvency practitioners are going after the people who owe money or who have defrauded the company for which they were acting. The trade body for insolvency professionals analysed a sample of 23 case studies where insolvency practitioners undertook litigation against a director or third party, using CFAs and ATE insurance. The trade body’s assessment was that, if the Government’s proposals were to go ahead, the total impact on creditors in the 23 cases analysed would be a loss of £3.6 million—a 47 per cent reduction in returns to creditors. That would be the effect on the business community.
Her Majesty’s Revenue and Customs is the largest unsecured creditor in formal insolvencies in England and Wales. It is the single largest beneficiary of the ability of an insolvency practitioner to avoid dilution of returns to creditors by the recovery of success fees and ATE premiums from unsuccessful and fraudulent directors in litigation. So it benefits the Revenue to keep the current system in place, and it is counterproductive to implement measures that will remove this revenue.
The present system is a real and tangible benefit to society and to the business community. Not only does it ensure that delinquent directors do not get away with sharp practice, it also increases the returns available to creditors, including the Revenue and business community.
Amendment 135, which is the main amendment that we have put down, seeks an exclusion from the general rule so that a cost order may include provision requiring the payment of fees payable under a conditional fee agreement, which provides for a success fee in proceedings by a company being wound up or entered into administration; proceedings brought by a person acting as liquidator or trustee of a bankrupt’s estate; and proceedings by a person acting as an administrator under the Insolvency Act. This is a benefit to the business community and to the Revenue, and I wait to hear why the Bill proposes to take away those advantages for no apparent gain. I beg to move.
Lord McNally
They are ongoing. I admit that sounds like that song “Reviewing the Situation” from “Oliver!” but I have no doubt that the good relations between the MoJ and Her Majesty's Revenue and Customs will produce a satisfactory result, which I will report to the House at the earliest possible moment. In the mean time, I request the noble Lord to withdraw his amendment.
Lord Thomas of Gresford
While I am most grateful to my noble friend for that reply, it would be helpful for these negotiations to complete before we have to vote on this matter on Report—as we undoubtedly will, along with the people who have signed it. Can I suggest to my noble friend that he talks to whoever he has to in order to get a move on? It seems a no-brainer to me that this amendment should be accepted and the quicker it is resolved, certainly before Report, the better.
Legal Aid, Sentencing and Punishment of Offenders Bill
Lord Thomas of Gresford Excerpts(12 years, 8 months ago)
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Lord Thomas of Gresford
My Lords, I am glad to follow the noble Lord, Lord Martin, in what he has just said because I am concerned about the relatives of the victims of this terrible disease. We were addressed here in one of the committee rooms in the House by the Greater Manchester Asbestos Victims Support Group. One of the people who came with that group was Mrs Marie Hughes, who comes from my home town of Wrexham in north Wales. Her husband had worked as a youth in the Brymbo steel works, which is close to the town, but had gone into teaching and died of this disease at the age of 57 when he was head teacher. It had afflicted him a great deal later. I am very familiar with the Brymbo steel works, as was, because I worked there briefly during vacations as a young man.
What she told us about the effect of the disease upon her husband was that while attempting to come to terms with his diagnosis and his bleak prognosis he underwent gruelling, unrelenting and debilitating courses of chemotherapy, intensive radiotherapy and invasive surgery in the form of an extrapleural pneumonectomy, which involved the removal of a complete lung, half the pericardium and half the diaphragm in a desperate effort to delay the cancer’s ultimate grasp. He lived in constant pain and it was a vain attempt to improve the quality and extend his life. By the final three months, tumours had also developed on his spine, resulting in paralysis from the chest down, and all this while fighting to breathe. That is the effect of this disease on an individual who suffers it, years after he had been exposed to asbestos. Of course, from diagnosis to death is quite a limited period with mesothelioma: it is only about nine months, leaving behind a widow and a family who have to live with what has happened to their loved one.
I am very much in support of the amendment that the noble Lord, Lord Alton, has moved with such great force, and the supporting speeches, because I have seen the effect on a widow of this terrible disease.
Lord Bach
My Lords, I am proud to have been allowed to put my name, as an opposition Front-Bencher, on this amendment, which has been moved so well by the noble Lord, Lord Alton, and spoken to so well by all the other noble Lords.
Industrial disease and exposure to toxic substances; employers acting negligently, in breach of their duty to employees, and often causing them great harm; and then outlawing and ensuring redress for these violations speak to what I consider the historic mission of the party I belong to and of the trade union movement. I know they are subjects that are of huge interest and concern to many people beyond that.
Health and safety in the workplace is something that we in these Houses of Parliament should be as proud of as we were of banning slavery. Instead, this year the Prime Minister chose for his first speech a comment that hoped that this was the year that killed off the health and safety culture forever. He cited a case where a teacher made children wear safety glasses to play conkers—a myth that the Health and Safety Executive cites as a prime example of the kind of mischief played by some to denigrate health and safety.
Health and safety in the workplace has nothing to do with conkers. Lack of health and safety has led to tens of thousands of avoidable deaths in the workplace. These amendments would ensure that in these cases—they have been described in detail and I am not going to go into that detail—employers pay their full redress and employees who have been harmed get their full restitution.
These are serious cases. There is no compensation culture here. Whereas motor claims increased by 43 per cent between 2007 and 2011 to nearly 800,000—which is why we on this side back my right honourable friend Jack Straw’s campaign—employer liability claims were down by 6.6 per cent to one-tenth of that. No one is faking mesothelioma, or coal lung. This is as far from the problems of undiagnosable whiplash as we can possibly get.
Industrial disease provides the most emotive and powerful examples of how health and safety is something we have had—and still have—to fight for. Despite the fact that we know so much about the clinical aspects and the impact on individuals, communities, and families, asbestosis is still being fought over in the courts. Insurers, sometimes not to their credit, are still fighting liabilities. Why is there this difference between these highly contested, difficult-to-prove cases that we have been debating tonight, for which people have been fighting year after year and, on the other side, clinical negligence? Why is there no sympathy from the Government for what are pretty analogous cases?
Do they not deserve a deeper consideration of the economics of bringing these cases? If the argument is proportionality, of course there are problems with proportionality when you are fighting some of the entrenched vested interests, such as the insurance lobby, and companies for which it is difficult to prove ownership and liability years after the event. We are at risk of abandoning these cases and these victims, not because they cannot bring the cases any more, but because they will not find lawyers to bring them. These are families and widows of workers who were exposed through no fault of their own.
I have in front of me the comments of a lady, Mrs King, whose husband died of mesothelioma. She says, “My husband died of mesothelioma as a consequence of asbestos exposure during the course of his employment. David and I received considerable assistance from the Derbyshire asbestos support group”. She arranged to see her constituency Member of Parliament. She received letters from her Member of Parliament, and wrote to him as well. I have to say that that Member of Parliament showed real concern in those letters about the tragedy that she had undergone. I pay tribute to him for the sympathy which he genuinely showed.
However, the exchange of correspondence, in Mrs King’s view, raised a number of points. The first was that the Member of Parliament seemed to accept that, in certain aspects, we are going to an American-style system. Mrs King’s view is that is not a good thing. That relates to a successful claimant having to pay some of their damages in costs. Secondly, the Member of Parliament, according to Mrs King, said that if a claimant loses the claim he will pay no legal costs at all. She points out that that is wrong: the losing claimant would pay disbursements. Thirdly, the Member of Parliament says it is not about whether claims will be brought, but about what lawyers get paid, and who pays those costs. Mrs King’s comment is that there must surely be genuine borderline cases today that will not be brought tomorrow because lawyers will not take the risk of not being paid.
Fourthly, Mrs King comments that the Member of Parliament says that defendants with a very strong defence pay out because of the costs they may incur if they lose. Mrs King does not understand that. She asks why they would settle in a case where they have a strong defence: if they have a strong defence, they will not lose. Lastly, the MP says that he may be cynical, but lawyers will not bring cases because they will not be paid as much as they are now. Mrs King thinks that that misses the point, the point being that lawyers will not bring cases at all if they run the risk in difficult, but genuine, cases that, if they lose, they will not get paid at all.
The Member of Parliament is in fact the right honourable gentleman the Lord Chancellor. As I say, he showed great sympathy for Mrs King and her predicament, but those were his responses and I suggest, respectfully, to him and to the Minister, that they are out of touch and do not meet the seriousness of the situation that has been described in Committee tonight.
Mrs King finishes by saying, “The chances of people like me or my husband being able to get justice would all change under the Government’s proposals. Even if my case has reasonable chances of success, I will struggle to find a lawyer to take it on unless it is virtually certain to succeed. The lawyers think the risk of losing is too great for the amount they will get paid for taking that risk. They simply will not take the case on”. That is the nub of this particular argument: people who have suffered a great deal will find that they will not be able to have their cases argued because of changes that are made. What I think that everyone who has spoken in this debate so far wants to see from the Government is a bit of flexibility, because these cases really stand out on their own.
Lord McNally
This is not only about public funds, but it is about how you create—to use this term again—an architecture for this type of litigation that squeezes out from the system the inflation that went to the lawyers. That was identified by the Master of the Rolls, by the Lord Chief Justice and by Lord Justice Jackson. In trying to respond to that problem, I am fully aware of the hard cases, and I have spent most of the afternoon dealing with them. Of course hard cases are difficult to argue, but that is the central issue that we are trying to address. To succeed, we will have to stand firm against some of these hard cases, I am afraid.
Lord Thomas of Gresford
The issue really is this: should all cases be treated alike? Well, Lord Justice Jackson did not treat all types of litigation alike. For example, he specifically recommended that clinical negligence should stay within legal aid, for various reasons that we have gone through that I do not need to repeat. Nor did he suggest that all his proposals should be limited to personal injury cases; he thought that they should be broader but they could vary, depending on the particular circumstances.
The reason for that is that risk varies. For road traffic accidents, nine out of 10 cases will be won because it is fairly easy to determine in a road traffic accident who is at fault, to what degree and so on, and the quantum follows thereafter. In clinical negligence cases, three out of four cases will be lost, so the risk is very different. That is why Lord Justice Jackson decided that clinical negligence should remain within the scope of legal aid. We are not involving government money or public money here; what we are trying to discuss is what constitutes a fair balance in a particular category of case, which can vary from case to case. I do not think that we should approach this on the basis that there is an architecture that should apply to every particular type of claim that is ever brought.
In mesothelioma cases, for example, we are not so much concerned with the fact that the person has the disease; what we are concerned with, as the noble Lord will appreciate from the very moving story that he told about his own family, is causation. That is the issue in this type of case. You can easily show that someone has died as a result of this disease, but what caused it, when, how and whether the case has been brought within a reasonable period of time are at issue. Very often, that requires not the sort of expenditure on medical reports that you get in clinical negligence cases; it often depends on expert reports on where the asbestos was, how it was dealt with and whether there was a likelihood, which passes the threshold of more likely than not, that that particular presence of asbestos in the workplace at a particular time caused the disease from which, as in the case that I cited, many years later the particular individual dies. We can therefore see that in some cases it is a medical issue, while in some cases it is causation, but they differ—and it is quite legitimate for the Committee to consider the different type of case, as we have in our discussion of judicial review, for example. In our debate on the next set of amendments, I shall come on to the question of environmental law, where very different issues arise compared with other types of litigation. We are not looking for an architecture to involve everything; we are looking for what is right in a particular category of cases. I propose in a moment, when this amendment will I hope be withdrawn, to enlighten your Lordships a little about environmental law.
Lord Alton of Liverpool
My Lords, in his peroration the Minister relied on the phrase “squeezing inflationary costs out of the system”—a point to which the noble Lord, Lord Thomas, referred. The only people who will be squeezed as a result of this are those who suffered previously and who have fatal diseases. I cannot see the argument that the Minister put before the Committee this evening in the terms in which he has expressed it. As he implied at the end of his remarks, this is not about legal aid or public money; on the point about causation that the noble Lord referred to a moment ago, this is about people’s right to have access to the justice system, and not then to have to hand over any damages that they win. This is about people who have demonstrated successfully in the courts that they have become victims and who then have to hand over a quarter of the damages that they receive to pay for the action that they have been able to bring successfully.
The Minister showed enormous sensitivity to this issue as he described his own family circumstances to the Committee. When he reads the debate further overnight, he may want to reflect on some of the points that have been made. He was accused earlier of not showing flexibility. I understand the pressures placed on any Minister having to oversee a Bill of this kind, but we are only in Committee. I hope that he will share with his right honourable friend the Lord Chancellor the debate tonight and will look particularly at the questions raised earlier on by me and others about the costs involved to the public purse in not accepting these amendments. The reverse arithmetic and accounting to that which he has advanced at the Dispatch Box this evening would seem to apply, and in his refutation of the argument he did not deal with that point.
The Minister also implied that all lawyers would somehow be winners—that they would be the ones putting the inflationary pressures into the system. I remind him of the case that I cited today and at Second Reading of Norman Jones, the president of the Liverpool Law Society. This is a lawyer who is not part of a huge legal practice; he made it clear that under this dispensation it would be impossible for him to have fought the case that he successfully brought with CFAs through all the courts, right up to the Supreme Court. He would not have been able to bring that case. It is because of cases of that kind and the adverse effects on the victims as well that the Minister should reflect on this matter before Report.
During the debate, we have heard invoked the names of victims. Mrs King was mentioned by the noble Lord, Lord Bach, Marie Hughes by the noble Lord, Lord Thomas, and the Minister mentioned Betty, a member of his family. We have heard also of good lawyers; the noble Lord, Lord Martin, mentioned Frank McGuire, and vividly described his own experiences on the factory floor. We have heard about campaigners. The noble Lord, Lord Avebury, who has battled on this subject since the 1970s, and the noble Lord, Lord Wigley, both referred to Nancy Tait.
The noble Lord, Lord Bach, said to us that employers should have to make full redress and employees full restitution. He said that no one is faking mesothelioma. He also reminded us of the canards of the so-called health and safety culture, and of the compensation culture. The noble Lord, Lord Wigley, said that access to justice should not be the preserve of a few.
It is worth remembering that the mesothelioma death rate in this country is the highest in the world. That is why I do not think that the noble Lord, Lord Avebury, was overstating the case when he said that what we are doing is intolerable. He said that it is unconscionable, mean-spirited, callous and immoral. Although it is my intention now to withdraw this amendment, I give notice that it is also my intention to return with these amendments on Report if we are unable to make progress on this issue. With the leave of the Committee, I beg leave to withdraw the amendment.
Legal Aid, Sentencing and Punishment of Offenders Bill
Lord Thomas of Gresford Excerpts(12 years, 8 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
“Funding
(1) The Lord Chancellor may make funding available for the obtaining of civil legal services on matters not included in Schedule 1 where it appears to the Lord Chancellor that the provision of such services would promote efficiency, the saving of costs or the attainment of justice.
(2) The Lord Chancellor may make arrangements for such purposes by—
(a) funding public bodies, law centres, citizens advice bureaux and not-for-profit advice and support agencies to facilitate the provision of such services; and (b) supporting the delivery of such services through the provision of grant in aid to providers of civil legal services, including any consortia or partnership arrangements with public bodies, into which they may choose to enter.”
Lord Thomas of Gresford
My Lords, this is an extremely important amendment, which I hope that the Government will accept. The other side of the coin when legal aid is taken away, particularly in the area of social welfare law, is that there must be some provision for advice to people who require it in that field—in others as well, but certainly for those concerned with welfare benefits and the like.
In this country, a huge amount of work is done, a lot on a voluntary basis, by citizens advice bureaux, law centres and other not-for-profit advice and support agencies. I want an assurance from the Minister that those organisations will fill the gap, that they will be properly funded and put on a secure footing for the foreseeable future to provide the advice that is clearly needed in those areas. Consequently, my Amendment 99 is to give the Lord Chancellor power to,
“make funding available for the obtaining of civil legal services on matters not included in Schedule 1 where it appears to the Lord Chancellor that the provision of such services would promote efficiency, the saving of costs or the attainment of justice”.
What I have specifically in mind is the funding of law centres, citizens advice bureaux and not-for-profit advice and support agencies.
I know that the Government have committed some £20 million for the support of Citizens Advice, but I understand that to be on a one-off basis. At the same time, we receive information that the Cabinet Office is working on schemes to provide some permanent support in this area. Citizens Advice has two sides: a side dealing with general matters, normally done by volunteers, and a side dealing with specialist matters. The specialist advice in Citizens Advice comes from generally qualified lawyers who are funded precisely by the legal aid that is about to be withdrawn if Schedule 1 to the Bill finally goes through. That is the focus. What will happen? Will people be left to stumble around in this incredibly complex area of social welfare law? Will they have any guidance and help when it comes to the new provisions that are being introduced under the Welfare Reform Bill, or what? That is what I want to hear from the Minister tonight. I beg to move.
Baroness Mallalieu
My Lords, I support this amendment as far as it goes. We are all worried about who will fund organisations such as law centres, which at present are largely reliant on legal aid. Clearly, many of them will go under if there is not some alternative form of funding. What troubles me about the amendment in its present form is that there is absolutely no break on the way in which this Lord Chancellor—or a future Lord Chancellor—may choose to hand out the money. I should like some requirement on him to consult and some way of knowing that a distant Lord Chancellor—of course, not the present one—could not operate for reasons of political expediency, or simply on a whim to withdraw funding from an organisation which, for example, might be involved in action against the Government. Although I welcome the amendment in its present form, I think that it needs more added to it.
Lord McNally
Throughout the Bill, we have tried to restructure legal aid so as to deal with the most vulnerable in our society in a way which we think is fair. My noble friend Lord Phillips referred to the squeeze being put on CABs by local authorities. There have been squeezes on local authorities and on the Ministry of Justice. The country is having to readjust to a considerable degree to what is available for many good causes, and that is why this debate is reoccurring in Committee.
As I say, I recognise the general concern about the future of such funding. I hope I can reassure the House by making it clear that the Government value the services provided by the not-for-profit sector and are committed to ensuring that people continue to have access to good-quality free advice in their communities. That is why the Government have launched the advice services fund and a review of free advice services. The Government have set aside £20 million to support the not-for-profit sector. That is about the seventh time of announcement but, to provide clarity for the noble Lord, Lord Beecham, I say that it is still the same £20 million. This fund will provide immediate support for the not-for-profit advice service providers to deliver essential services in debt, welfare benefit, employment and housing advice. An announcement on the fund and review was made on 21 November by my honourable friend Nick Hurd MP, Minister for Civil Society, in the other place.
It is important to recognise that legal aid is only one of several funding streams that not-for-profit organisations receive and that the future sustainability of the sector is a cross-government issue which this Bill cannot be expected to solve on its own. Accordingly, alongside the advice services fund, the Cabinet Office is conducting a review into local advice provision, looking at the funding environment for these services, likely levels of demand and how government can play a positive role. The Cabinet Office will work with other departments that either fund advice services or whose activities have an impact on advice services, such as my department, the Department for Business, Innovation and Skills, the Department for Work and Pensions, the Department for Communities and Local Government, and the Treasury.
The House may also be reassured to know that both the Prime Minister and the Deputy Prime Minister are taking a keen interest in these reviews. Stakeholder events with representatives from the sector, to gain their input into the review, have already been held by the Cabinet Office. I urge the House to await the conclusions of that review, which is expected in the spring. My officials are working closely with colleagues across government to support this important work. I hope this will reassure the Committee that I and my colleagues in government are united in our efforts to support the not-for-profit sector while it adapts to difficult changes in the funding landscape. I therefore urge the noble Lord to withdraw his amendment.
Lord Thomas of Gresford
My Lords, I am grateful to all noble Lords who have spoken in the debate and I accept all the criticisms that have been made as no doubt very well founded. In his reply, my noble and learned friend—
Lord Thomas of Gresford
No—but you will be by the time I have finished.
In his reply my noble friend said that we must await the conclusions of the group that is looking into this matter, which has already taken advice, as I understand it, and carried out various consultation processes. I want to know when it is going to report. I have discovered that in government departments the spring can turn quickly into the summer. The Bill will be through this House by the middle of March and we would all be much happier if we were assured by that time that the future of the CABs, the law centres and so on is secured to give precisely the advice for which the grant was announced in November—for welfare, for employment and so on—as the noble Lord said.
I am anxious that the group should get a move on and that we should receive these reassurances so that we can be confident that the gap that will arise through the withdrawal of legal aid will, to a degree, be filled. I understand the position of the noble Lord, Lord Bach. He does not want anything to interfere with the general thrust that everything in social welfare law should go back under Part 1. Indeed, voices on my Benches have made exactly the same comments, including me. However, if that is not to happen we must be sure that there is a source of advice in these very important areas which will be available to the citizens of this country. At the moment, I ask leave to withdraw the amendment.
“( ) For the purposes of subsection (1), “financial resources” shall include all the realisable property of the individual subject to a restraint order under section 41 of the Proceeds of Crime Act 2002 (restraint orders) and subsections (4) and (5) of that section are hereby repealed.”
Lord Thomas of Gresford
My Lords, when we were dealing with the previous amendment concerning the voir dire, as it used to be known, my mind went to happier days in Hong Kong, where the voir dire was brought to its artistic zenith. Voir dires could go on for six weeks or months. We have avoided all that in this country ever since. I was also reminded that in those days in Hong Kong to take legal aid was, as far as criminals were concerned, rather infra dig. Normally, they were funded from the resources that were available to them. That is the real purpose of the amendment.
Clause 20 is concerned with determinations about an individual’s financial resources. A determination that a person qualifies for legal services cannot be made unless it is thought that the individual is eligible for the services. All that I am concerned to do is add in to those financial resources all the realisable property of the individual. However, as happens these days in this country, the realisable property of the individual is frequently subject to an order of the court that freezes those assets where they are.
Consequently, we have what I regard to be an absurd situation whereby legal aid is granted to people of huge means because their assets are frozen. They can be unfrozen by an application to the court so that school fees can be paid. They can also be unfrozen for the purposes of civil cases but not of criminal cases. I was discussing this with the noble and learned Baroness, Lady Butler-Sloss, yesterday, and she said, “I made orders all the time on applications in the Family Division for assets to be unfrozen so that legal fees could be repaid”. She was amazed to discover that that was impossible in criminal cases.
About 50 per cent of the criminal legal aid budget goes on 1 per cent of the cases, and it is in those 1 per cent where assets have been frozen. That is a great resource. As I understand it, the policy behind the refusal to permit those assets to be unfrozen is twofold. First, the Treasury thinks that it will get its hands on the assets at the end of the day, and therefore for them to be unfrozen to pay legal fees seems an unnecessary waste of what it will get in the end. Of course, it does not consider that it is funding the Ministry of Justice, which has to pay out the legal aid. My other thought is that that provides a route for the laundering of money by dishonest solicitors.
As to the first, the objection taken is quite unfounded. On the second issue, the question of—I have forgotten my train of thought for the moment.
Lord Thomas of Gresford
Solicitors. It is perfectly possible for a solicitor to apply to the court, as happens in civil cases, with a cost schedule which indicates how much his costs will be and what reasonable rates he will charge, and for the judge to make an order to control the whole process to permit the release of funds to fund the criminal defence. To my mind, this is an area which the Government should seize on as reducing the burden of criminal legal aid. It is unlikely that all the assets of the individual will be recovered in an application under the Proceeds of Crime Act. Accordingly, the sooner that the Ministry of Justice gets its hands on the money—in the sense that it does not have to pay out legal aid—the better.
I hope that my noble friend will take the issue seriously and address my proposals. I beg to move.
Lord Carlile of Berriew
My Lords, I shall start by making a few comments about my professional experience and then look at the broader picture. In recent years, the bulk of the publicly funded work I have done at the Bar has been in very high-cost cases, as they are called—very large fraud cases. I have seen a procession of those cases in which substantial funds have been restrained and not used for the costs of the case. Confiscation proceedings have followed in those cases where there have been convictions. In some cases, they have been long drawn-out. The funds have rarely been confiscated in full.
In one case I can think of, the confiscation proceedings lasted two or three years and, in the end, the defendant was returned £30 million, I believe, because the wrong procedures had been used by the prosecution. In another case from my experience in recent years, a defendant who was later sentenced to nine and a half years’ imprisonment and made the subject of a confiscation order in excess of £130 million remained, throughout the period leading up to and during the trial and for a considerable time after—as far as his family was concerned—living in one of the finest apartments in central London, worth many millions of pounds. Nobody was able to lay a hand on any of it. By the time the confiscation proceedings were over, such a miasma of transactions existed that that substantial property was immune from any confiscation. There are current cases, about which colleagues have told me—and without referring to any of my own current cases—in which a similar picture may emerge. This is an issue on which the Bar Council, of which I am an elected member, as I said in an earlier sitting, has given a great deal of attention. I should say that on this subject at least it might be worth listening to the Bar Council. Senior members of the Bar act for the prosecution and defence in every one of these cases, bar a very few.
The intention of the Bar Council in proposing amendments, believe it or not, was to save legal aid funding and to create a situation in which people’s own money, subject, of course, to proper controls, was used to pay for their own defences. It would create a situation in which a defendant, who at present may be able to relax while public money is expended on abuse of process hearings, dismissal hearings, disclosure hearings, and all kinds of satellite proceedings, costing him nothing, may have to control the spending on his defence. It seems a very sound principle that the defendant who has resources should have some control over the spending on his or her defence.
Furthermore, restraint orders are on the increase, as the General Council of the Bar has pointed out to the Government. In 2009-10 the CPS made 1,549 restraint orders. That had increased to 1,641 by 2010-11. The estimated value of assets under restraint in 2010-11 was as much as £744 million, every penny of it being money available to be spent on criminal defence but not so spent. Any legal advice and representation in those cases is charged to the legal aid fund. These are cases which, on the latest available figures—from 2005—caused the expenditure of more than 50 per cent of Crown Court legal aid, although the cases amounted to only 1 per cent of the cases. The average cost per case for those cases in 2003-04 was £2.6 million, with the average trial lasting 67 working days. These are very big cases, which are being unnecessarily funded from public funds.
A defendant accused of serious fraud may, for example, have £1 million on deposit in a bank account, frozen under a restraint order. An order may be made for the funds to be unfrozen to pay his children’s private school fees. I was involved in a case recently in which exactly that happened. The defendant was unable to fund his own defence but he was able to fund his son’s school fees at one of the best public schools. My noble friend Lord Thomas of Gresford has contrasted the criminal situation with the civil courts. He described the reaction of the noble and learned Baroness, Lady Butler-Sloss, to what he had told her and she certainly represented the civil court position correctly.
The Government’s response to the Bar Council’s proposal, and that of some of your Lordships, has been to argue, at least so far, that the sums restrained need to be preserved in the hope that, at some point further down the line, a confiscation order may be obtained on conviction. In November 2011 several national newspapers ran stories on revelations that at the end of March 2011, the sum of money outstanding in purported confiscation orders was £1.26—wait for it—billion. That made the front page of the Sun. I suggest to my noble friend that the hope that some money might be recovered is no substitute for meeting the up-front costs of the defence via the legal aid bill.
When confiscation orders are made, they are not used to fund legal aid but are channelled to other government departments; they go into the general Exchequer pot. This does not reflect the strain placed on the legal aid budget by high-cost fraud cases. Therefore, this seems to be—if I may be forgiven a vernacular phrase—a complete no-brainer. It is a way of saving the legal aid fund—to use another such phrase—shedloads of money. I say to my noble friend: let us wake up and do it.
Lord McNally
As I said, we are in confessional mood tonight. The Government are currently considering a related proposition under which the value of restrained assets might be taken into consideration in the Crown Court means test. Until that proposition has been considered fully, we believe it premature to suggest an amendment to the Proceeds of Crime Act.
This has been an interesting debate. We have heard what the noble Lord, Lord Bach, said in apology for previous omissions by his own Government. As I say, we are looking at the value of restrained assets in the Crown Court, but at the moment we believe it premature to suggest an amendment to the Proceeds of Crime Act and I therefore ask my noble friend to withdraw his amendment.
Lord Thomas of Gresford
The problem is that my noble friend the Minister has not explained why people are allowed recklessly to dissipate criminal assets in civil cases. Why do you have one rule for civil cases, when you can use what are described as criminal assets although they are not necessarily so, and another rule in criminal cases? What is happening at the moment is that defendants are recklessly dissipating legal aid. That is the point and that is why legal aid is so high in criminal cases—it is being recklessly dissipated. My noble friend Lord Carlile explained how it can be done: you can have application after application; you can have little trials within trials; you can have satellite litigation; and the case can run on and on for months.
In the old Stafford Assize Court, which possibly the noble Lord, Lord Bach, has visited—
Lord Thomas of Gresford
Good. I have appeared there on a number of occasions too—not against the noble Lord, Lord Bach, I have to say. There is a plaque on the wall that commemorated what was then the longest jury trial in Britain. It was 23 days and they put a plaque up because it had lasted so long. Now 23 days is peanuts as far as any serious case is concerned. They go on for months and months: application after application; disclosure of this, disclosure of that, and so on; recklessly dissipating legal aid funding that could be available for social welfare law or for all the other things that have been excluded—
Lord Carlile of Berriew
In his closing remarks, perhaps my noble friend would like to reflect upon what the noble Baroness, Lady Buscombe, said. In the last group of amendments there was some discussion of post-legislative scrutiny. It is now something like nine years since the Proceeds of Crime Act was passed and I am not aware of any post-legislative scrutiny on this issue. Might this not be the occasion for some creative post-legislative scrutiny?
Lord Thomas of Gresford
I should hate to say who should be there in sackcloth and ashes, but clearly things went wrong and the reasons that were given by the Government of the day proved to be without foundation. The situation is simply a disgrace. The quicker the Government move to carry out this review that they are having in the Crown Court, the better.
I shall withdraw this amendment, but I can assure my noble friend the Minister that I shall be pounding on his door about it while this Bill is going through and, if nothing happens, thereafter.
Lord Beecham
My Lords, the Bill provides for regulations to enable the Lord Chancellor to require a person who qualifies for legal aid to pay an amount exceeding the costs of the civil legal aid services provided. I confess to bewilderment, frankly, at the notion that, in these circumstances, a legally aided person should be obliged to pay an amount greater than the cost of the services—it is almost turning that aspect of legal aid into a profit-making concern. There is no rationale in the Bill for why that should be the case. Litigants do not ordinarily pay more than the assessed costs of a case unless they have incurred some kind of penalty in so doing. The only analogy, when we come to Part 2 of the Bill, is of a success fee having to be paid, effectively, by a litigant. However, in this clause it is not limited to a successful litigant; it simply allows for a prescribed amount in excess of the assessed costs of the civil legal aid services. I simply do not understand whence this derives.
The noble Lord, Lord Thomas, has tabled an amendment which questions the principle and provides for an element of discretion in these matters. However, the Minister has to explain, with respect, why it is that recipients of legal aid should be expected to pay more than the costs that they have incurred. I beg to move.
Lord Thomas of Gresford
I thought there was a printer’s error here: that is why I inserted “not”. It is not a matter of principle; I could not imagine that the Government would require someone’s contribution to exceed the costs and put money into the hands of the Lord Chancellor. I do not see any reason for that and I await the explanation with interest.
Lord McNally
This had better be good. Amendments 112 and 113 would prevent anyone in receipt of civil legal aid being required to pay an amount for that legal aid which exceeds the amount of the legal aid itself. We intend to use the powers in subsection (3) to establish a supplementary legal aid scheme which will provide an additional source of funding to supplement the legal aid fund. As indicated in our response to the consultation on legal aid reform, under this scheme 25 per cent of damages obtained by successful legal-aided parties, other than damages for future care and loss, will be recovered by the legal aid fund. The supplementary legal aid scheme will apply to successful damages cases where the successful party is legal aided, including any out-of-scope cases which are funded through the exceptional funding scheme.
The provision at subsection (3) is not new. There is already an equivalent provision in Section 10(2)(c) of the Access to Justice Act 1999, which allows for the establishment of a supplementary legal aid scheme whereby a legal-aided person makes a payment exceeding the cost of the services received. The power has not been exercised to date but, as we have made clear, we intend to do so in the future, so it is important that the Bill retains the provision to enable this.
At a time when the public purse is constrained, the funds recouped by the supplementary legal aid scheme will help to put legal aid on a sustainable footing and therefore help support the funding of civil legal aid cases. Besides creating a valuable additional source of funding for legal aid, in setting up the supplementary legal aid scheme we are addressing the interrelationship between legal aid and the proposal for reform to the cost of civil litigation put forward by Lord Justice Jackson and reflected in Part 2.
We want to ensure that, so far as it is possible to do so, the recovery level of damages by the supplementary legal aid scheme is consistent with the Jackson reforms to ensure that conditional fee agreements are no less attractive than legal aid. We have therefore selected a recovery level of 25 per cent of all damages, other than those for future care and loss. This mirrors the maximum level of damages that a solicitor will be able to claim from a successful client under a conditional fee agreement in a personal injury case. Under the Jackson proposals, there will also be an increase of 10 per cent in non-pecuniary general damages such as damages for pain and suffering and loss of amenity in tort cases for all claimants. This will help claimants to pay their CFA success fee or supplementary legal aid scheme contribution.
With that explanation, I hope the noble Lord will agree to withdraw his amendment.
Lord Thomas of Gresford
I will read what my noble friend said with great care. For 12 years, this power that he said was in the 1999 Act—introduced by a previous Government but never mind—was never used. My mind immediately flicked back to a case that I once had. I use legal language that lawyers will understand: I once had a case in which a young girl lost the skin from her leg in a motorcycle accident. All the skin was stripped off. Now the Government want her to pay for somebody else. She presumably gets general damages of £30,000. The Government would take a fair portion of that because she had the temerity to apply for whatever it is—legal aid. They then want to keep the extra for somebody else. That seems quite wrong in principle. I am not surprised that it is in the 1999 Act, though with the coalition Government in power I would expect an entirely different approach.
Freedom of Information Act 2000
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Lord Thomas of Gresford
My Lords, “Transparency”, said Sir Humphrey Appleby cynically,
“afflicts all incoming administrations. It used to be called ‘open government’, and reflects the frustrations they felt when they were in opposition and could not find out what was going on, combined with an eagerness to discover and publicise the deception, distortions and disasters of their predecessors … But it does not last beyond the first few months. As time passes they realise they have more to lose than to gain from public knowledge of what they are up to. Each month increases their tally of catastrophic misjudgments, pathetic deceptions, humiliating retreats and squalid compromises. They very soon come to understand that sound and effective government is only possible if people do not know what you are doing”.
I am grateful to the noble Lord, Lord Hennessy, for introducing this debate. It is to the credit of this Government that they have maintained the commitment in the coalition agreement to build on the Freedom of Information Act and to,
“extend transparency to every area of public life”.
The Act has been in full operation for upwards of seven years. When it was introduced, local authorities recorded information in a more traditional way. The right to data now being introduced will ensure that public authorities make electronically stored data readily available in a reusable form. I spent 10 minutes this afternoon looking at complaints about the potholes in the road outside my home in Gresford, which are published on the local open website and was happy to realise that, in the past six months, my very good local Lib Dem councillor had managed to resurface the whole of that area.
The Act has been extended, as the noble Lord, Lord Hennessy, said, and proposals in the Protection of Freedoms Bill will extend it to companies owned by a number of authorities. There are real social and economic benefits, apart from for the writing of history, to be gained by enabling businesses, non-profit organisations, volunteers and others to use freely the datasets held by public authorities for social and commercial purposes.
For my own part, I would extend the provisions of the Act to private companies carrying out public work paid for by the taxpayer. I agree with the Public Accounts Committee which said recently in its 44th report published last July:
“Transparency on the full costs and benefits of PFI projects to both the public and private sectors has been obscured … commercial confidentiality should not restrict the ability of the public, Parliament and decision makers to access information”.
I hope that the Minister will be able to comment upon that view; I am sure that Sir Humphrey would not agree.
Legal Aid, Sentencing and Punishment of Offenders Bill
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Baroness Mallalieu
My Lords, I wonder what on earth could, in fact, be a valid reason for objecting to the spirit of the amendments in this group, in particular the one proposed by the noble Lord, Lord Faulks. If, as I fear, some parts of the Bill remain unchanged by amendment and legal aid is withdrawn from some areas, it is almost certain that it will be shown in due course that legal of aid was essential for the smooth running of our benefits systems, our legal system and our society. I suspect that there will be a public sense of unfairness when the extent of the proposed cuts is more widely known. I suspect that at that stage there may need to be, as others have already said, some rapid amendment to the existing system.
Who knows whether our economy may once again prosper? Further money may be available to spend, not just on more lavish opening ceremonies for the Olympics, royal yachts or high-speed railways but on the needs of people who are poor and disadvantaged. It is surely not beyond the bounds of possibility, as history has often shown, that a new field of law will develop rapidly and that legal aid will need to be extended to a different category that has not been anticipated to require it. Flexibility, as others have said, so that further primary legislation, which is costly and time consuming and inevitably involves considerable delay, can be avoided, ought surely to be embraced by the Minister with enthusiasm. I look forward to seeing it in a moment.
Lord Thomas of Gresford
My Lords, the problem for many lawyers is that we so often look into the past. Common lawyers in particular try to piece together what has happened before. Consequently, we tend always to look for evidence to support our interpretation of events. I certainly share that problem, but I have also had some experience of running an independent local radio company. During that time I realised the great difference between businesspeople and lawyers. Businesspeople have to take decisions about the future, and they can do that only on limited information.
In this instance, the Government have had to take a decision; it has been forced upon them. To adopt a phrase first used by the noble Lord, Lord Elystan-Morgan, 50 years ago, “The Visigoths were at the gates”. It was therefore necessary to decide how best we can cut the deficit and how, in this instance, legal aid should share that burden. This is an issue which I think I raised with Ministers before the Bill came here—I certainly referred to it in my Second Reading speech—and I have had further discussions since. When taking decisions about the future, one has to have flexibility when the future happens. One has to be able to adopt what was decided at one moment in accordance with experience.
This is an instance of that. Some of the prognostications that we have heard from the lawyers around this place—and there have been a lot of “mays” and “what is likely to happen” and so on from lawyers—might happen in the future, in which case the provision of legal aid will have to change. The changes might be positive and legal aid granted more widely. It is therefore essential that the Lord Chancellor has the power to add back into the scope of legal aid matters that prove not to be profitable in the way that the Bill envisages. There are not the alternatives that the Minister speaks of for dealing with various legal issues and the very important question of access to justice. That is why I am speaking to Amendment 25 in my name. This is a very positive way in which the Minister can demonstrate that the Government will be flexible in this area, will listen to the concerns that are voiced in the Chamber and will adapt the Bill accordingly.
Lord Scott of Foscote
My Lords, I support strongly the amendment proposed by the noble Lord, Lord Faulks, and the other amendments in the same spirit. It is important in considering the merits of the amendments that we bear in mind the purpose of a civil justice system. I suggest that a country is not entitled to regard itself as civilised unless it has a proper, workable system for the administration and attainment of civil justice. I spent my professional life working in the civil justice system. Of course, the criminal justice system has its own imperatives, but a civil justice system whereby individuals can obtain remedies or resist attempts to obtain remedies against them is of critical importance if our country is to retain the status that it has earned over many years of being a civilised country in which it is a pleasure to live.
Lord Howarth of Newport
I am second to none in my admiration, indeed my gratitude, for AVMA, which helped me and my family at a very difficult stage of our lives. I am deeply appreciative of them. If the list of expert witnesses was to be maintained both by the NHSLA and by AVMA, rationally speaking that is a list that should command confidence. None the less, in the emotionally fraught circumstances of a dispute, particularly where a baby has been damaged at birth or where some other catastrophic injury has taken place, it is asking a lot to expect people to trust witnesses and reports that are to be commissioned—the noble Lord’s amendment would require that—by the NHSLA.
Lord Thomas of Gresford
My Lords, I hope the Government do not think that this debate is special pleading, as the noble Baroness, Lady Mallalieu, feared. There are a number of reasons for that. First, clinical negligence—at the moment, exceptionally in personal injury cases—already attracts legal aid. It is currently within scope. Secondly, there are considerable difficulties in proving clinical negligence. When a car accident happens, almost anyone, given proper evidence, can determine who is responsible. Clinical negligence is a very different field. It is very difficult to prove causation. If you can prove causation—that the condition of the claimant has been caused by the clinician concerned—you then have a further hurdle to surmount: whether that clinician has exercised the proper standards of care as known at the time.
I vividly remember a case in which I was involved where it was established that the arachnoiditis was caused by an injection into the spinal cord by a clinician. Arachnoiditis affects the limbs of a person and causes considerable paralysis. We could establish causation, but by the standards of the time it could not be shown that the injection was negligent.
The third matter that I draw to the Committee’s attention was referred to by the noble Baroness, Lady Finlay—that there is currently quality control in the provision of legal aid in clinical negligence cases. There are panels provided by the Law Society or Action for Victims of Medical Accidents, and it is only to solicitors who are on those panels that legal aid certificates will be granted. That ensures that there is a proper approach to the issues that arise in clinical negligence cases, and a proper conduct of those cases. For all those reasons, this is not special pleading; clinical negligence deserves consideration quite separately from all the other matters that we are raising under the first schedule.
I would like the Government to consider at what level legal aid can be granted. The noble Lord, Lord Faulks, and my noble friend Lord Carlile referred to the possibility that legal aid should be granted in serious cases that have an impact upon the lives of people. For example, if a case is worth only £4,500, which has been referred to, that may not be one in which public money should be involved—certainly not to the extent of £95,000. However, if, as so often happens, the lives of people and members of their families are altered for good, surely a humane society should provide legal aid to cover the cost of litigation in those circumstances?
Lord Beecham
My Lords, this has been a very thoughtful debate, and that owes much to the fact that so many of those who have participated have experience, either legal or medical, of cases of this kind. They are certainly among the most difficult that either clinicians or lawyers have to deal with. The noble Lord, Lord Wigley, referred to the rather alarming statistic that 10 per cent of National Health Service patients in any year suffer from clinical negligence. That ought to concern all of us, especially those with responsibility for the health service.
However, it is also right to point out that this does not give rise to a spate of litigation. In view of the numbers of people who must suffer from clinical negligence, the fact that only around 10,000 or 11,000 cases a year receive legal advice, and of those only about 3,500 proceed to receive legal aid for representation, completely contradicts the assumption that there is a compensation culture—certainly in this area of law and, many of us would argue, generally. There is no compensation culture. However, it is a measure of the scale of the need for representation that of the successful legal aid cases—some 1,500 cases adjudicated in, I think, 2009-10—the average period during which these cases were pursued was as long as 55 months. That might partly be a reflection of the complexity of the evidence, or partly of the fact that you cannot really settle a case until the prognosis becomes clearer, until a client’s needs are defined, particularly in the case of children who suffer perinatal injuries or other forms of clinical negligence. Obviously their future lives cannot be predicted with any certainty at too early a stage. However, it also owes something, as the noble Lord, Lord Thomas, pointed out, to the reluctance of authorities—the NHS bodies and, I suppose, private bodies—to admit liability.
Lord Wallace of Tankerness
My Lords, I think the position is that if they lose they do not pay it. That is what we are retaining in cases of clinical negligence. In short, poor people will not have to pay up-front for the necessary expert reports in clinical negligence cases.
Lord Thomas of Gresford
The problem is that you cannot get a conditional fee agreement unless you have a case, and you cannot get insurance unless you can show that there is a case. In clinical negligence, you do not have a case unless you have the medical reports. That is the problem. The Government’s solution, as put forward in Clause 45, does not solve the problem at all.
Lord Wallace of Tankerness
My Lords, we certainly believe that going down this road will mean that poor people do not have to pay up-front for their necessary expert reports. Indeed, that is why we draw a distinction between our reforms as they affect clinical negligence and the reforms that affect claims for damages in other areas.
We are working closely with the NHSLA and other stakeholders to discuss how the commissioning of these reports can be improved so that joint expert reports can be commissioned wherever possible. That would involve the NHSLA commissioning and sharing expert reports on liability with claimants at an early stage. There is a lot of agreement that that is what we should be doing—trying to get it at such an early stage. That, in turn, will help to encourage the early notification of claims.
My noble friend Lord Faulks and the noble Lord, Lord Wigley, expressed some concern about whether there would be a market for ATE insurance if it was not recoverable in other areas. We certainly recognise that these concerns about the funding of medical expert reports have been expressed, but the reality is that claimants usually take out ATE insurance. We expect the ATE market to adapt to the new arrangements. As my noble friend Lord Faulks accepted—although he queried whether it should have been done earlier, rather than during the passage of legislation—a working party has been set up to consider the recoverability of ATE and to ensure that premiums for expert reports reflect the risks involved. ATE insurance brokers have been asked to contribute to this working group. It is a concern to which we are alert and one that we seek to address.
Furthermore, we wish to reassure the Committee that we will be introducing qualified one-way cost shifting, which will be available in personal injury claims and, therefore, will by definition apply in clinical negligence claims. Qualified one-way costs shifting will mean that, in the majority of cases where damages for clinical negligence are sought, the claimant is not at risk of having to pay a winning defendant’s costs. We have therefore protected the claimant’s interests to ensure that they are not denied access to justice for fear of having to pay the defendant’s costs if they were to lose.
One of the main areas of concern in respect of expert reports is those cases concerning babies who suffer obstetric brain injury. This has been reflected in a number of contributions. While we consider that in most clinical negligence cases funding will be available through a combination of conditional fee agreements and ATE insurance, we have always recognised that there may be obstetric injury cases with high disbursement costs, which are currently funded by legal aid but for which it may be difficult to secure conditional fee agreements.
My noble friend Lord Faulks expressed concern as to whether the provisions in Clause 9 with regard to these exceptional payments, which we will debate later, would be fit for purpose and meet the task which we wish them to achieve. It is because of this that we have sought to make funding available. The safety net would be in the form of an exceptional funding scheme, which will ensure the protection of an individual’s rights to legal aid under the European Convention on Human Rights as well as those rights to legal aid that are directly enforceable under European Union law. In considering whether exceptional funding should be granted in cases engaging Article 6 of the European Convention on Human Rights, the director will take into account general jurisprudence set out by the European Court of Human Rights on Article 6. The jurisprudence takes into account the following relevant factors: the ability of the client to present his or her own case; the complexity of the matter; the importance of the issues at stake; and all other relevant circumstances. It is important to put this into context. Our impact assessment estimates that we will continue to spend £6 million of the £16 million we currently spend on clinical negligence cases on exceptional funding cases. We estimate that the vast majority of this £6 million—
Lord Wallace of Tankerness
We do not wish to inflict the scenario which my noble friend indicates. The scale at which we believe the exceptional funding will be used is indicative of our expectation that exceptional funding will be available to assist these very profound cases. No one is disputing the seriousness of this. However, the amount of money that is being made available is not insignificant by any stretch of the imagination—£6 million out of the £16 million that is sought to be saved overall—which indicates that this measure is not just incidental but tries to address very directly the proper and sensitive concerns that have been raised.
Lord Thomas of Gresford
My noble and learned friend referred to Clause 9 and to exceptional cases. He will be aware that a specific category of special exceptional cases is delineated in that clause: namely,
“advocacy in proceedings at an inquest under the Coroners Act 1988”,
where there is a “wider public interest determination”. Are the Government prepared to consider whether in this very sensitive type of case there could be a subsection inserted into Clause 9 which deals with the very difficult issue of clinical negligence instead of leaving it under the broad wording of subsection (2)?
Lord Bach
I am grateful to the noble Lord as he is absolutely right about the social and financial costs of abolishing this sort of legal aid. It is impossible to say what they will be, but they will be huge, which I should have thought was fairly obvious.
The outcomes that we have talked about in this debate are not beyond the realms of probability, nor can anyone say that they would be unexpected. It is up to us in this Committee, and in the House perhaps on a future date, to decide whether the outcomes that have been described would cross the basic line of British decency that it is our obligation to defend. As part of that decision-making, we must look at whether these particular cuts are economic in the first place. Would they achieve even the Executive’s highly limited narrow goals of saving money?
The ministry plans to remove entirely funding for welfare benefits from scope. It claims that that will save £25 million a year. That sum normally goes to dealing with 135,000 cases per year. The advice is delivered, not altogether but pretty much through third-sector not-for-profit agencies such as Citizens Advice, law centres and many other advice centres. Advice goes to those seeking reconsiderations of decisions by the DWP and related agencies and to those appealing decisions before the First-tier Tribunals and then the Upper Tribunals. We have heard who receives the advice. Women are disproportionately users of this advice, as are ethnic minorities. As the noble Baroness indicated, 69 per cent—a very high percentage indeed—of those receiving advice are ill or disabled in some way.
As for who gets more complex advice—that relating to grounds for appeal—the published data for First-tier Tribunals show that of the 50,000 or so benefits-related cases heard a year, 90 per cent relate to disability-related benefits. That is hardly a surprise. For all its sins, jobseeker’s allowance is a simple entitlement for which to calculate eligibility. When there is a degree of subjectivity in deciding on the impairment caused by disability, agencies are more likely to make mistakes and thus require decisions to be appealed.
What does the advice funded by legal aid deliver? Colleagues in another place tabled a series of Parliamentary Questions to establish the percentage of people who win their appeals before tribunal with and without advice. The figures provided by the ministry show that in 2009-10 in welfare benefits-related cases, people were 78 per cent more likely to win if they had advice than if they did not have advice. For ESA the figure was even higher. People appealing employment support allowance decisions were more than twice as likely to win with advice than if they did not have advice. I point out what is obvious: those winning appellants are all legitimate claimants. They are not scroungers; they are not feckless—for the main part they have probably suffered some form of disability. They have been denied their rights by an emanation of the state, by the Executive, and they are legitimately challenging that decision.
Lord Thomas of Gresford
It is just habit. Would the noble Lord agree that his statistics suggest that where there is advice, meritorious claims are brought forward and money and time are not wasted by tribunals in hearing litigants in person?
Lord Bach
I agree absolutely. It seems to follow because the people who practise this kind of law—and we know that they are not particularly well-paid lawyers—are very careful, on the whole, to give advice on the position in law and not necessarily what the claimant wants to hear. It is right that people with hopeless claims do not go forward and those with meritorious claims do go forward—as they should do.
These are legal problems—let us make no mistake about that. The truth is that the welfare benefits field, as we have heard all round the House from great experts, is very complex in many cases and people need help with these matters before they can decide the right thing to do.
Judge Robert Martin, the head of the Social Entitlement Chamber of the First-tier Tribunal, gave evidence to the Justice Committee inquiry some time last year. The 7,500 pages I referred to in an intervention are the reference material that was issued to the tribunals and which is now spread over six volumes. He made that point to the Justice Committee. He was asked by the chair, the right honourable gentleman Sir Alan Beith:
“Will it bring more people into the tribunal because they have not been advised that their case has no chance of success in the tribunal”?,
which I think is the question the noble Lord, Lord Thomas of Gresford, asked me. Judge Robert Martin said:
“Yes, because a general public awareness of tribunals is very low. Very little is put into public education of the law and how to seek redress for grievances. There is this risk that we will see many people who have been drawn to the tribunal believing it is the most appropriate forum to solve things, whereas it may be just a mistaken conception about the tribunal”.
He continued:
“Legal help is so important in that triage function of sifting out cases which can be redressed but not through the tribunal or the court, and assisting those cases where the tribunal or the court can assist to have the case prepared in a way that maximises the chance of success”.
That gives the answer from someone who is, as it were, at the coal face. He went on to say:
“With the removal of legal help, we will have to spend a lot more time explaining simply what the tribunal is about rather than getting to the heart of the matter”.
This Bill is at its worst in this particular part. I argued at Second Reading—and I argue again today—that it is unconstitutional in that it removes access to justice for a large number of citizens, it is immoral because the state should not try to save a fairly small amount of money by targeting the poor and the disabled by removing their legal rights, and it is financially crazy because the savings will be non-existent. As benefits mistakes are not remedied, the problems will grow and the cost to the state will explode.
We are very proud of our legal system in this country and we encourage, quite rightly, foreign citizens to litigate their cases in British courts. They do so because of the extreme fairness and expertise of the British legal system from top to bottom. It is ironic, is it not, that we should be asking foreigners to litigate their serious cases in our courts because of the greatness of our system, while at the same time we seek to reduce some basic rights in law for our own citizens who are the least able to look after themselves?
Legal Aid, Sentencing and Punishment of Offenders Bill
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Baroness Howe of Idlicote
My Lords, as another non-lawyer, perhaps I may join in very briefly. I have listened to everything that has been said on this point, and what the noble Lord, Lord Phillips, said is particularly important. The Lord Chancellor has a different role. He might not have all the legal discipline of a lawyer, if he is not a lawyer.
I should like to make another point on the importance of independence that people are unfolding at this time. It illustrates the extent to which, if we cram everything into such a short space of time and so many Bills overlap—I am thinking about the Welfare Reform Bill and this Bill—it tends to leave us all wondering just how many amendments should be grouped together and whether they are being given the proper consideration that they should have. I very much support the intentions behind this group of amendments.
Lord Thomas of Gresford
The issue that concerns me in Clause 4 is subsection (3). Under subsection (4):
“The Lord Chancellor may not give directions or guidance about the carrying out of … functions in relation to individual cases”.
That is fair enough, but he must,
“comply with directions given by the Lord Chancellor about the carrying out of”,
his “functions”, and he must,
“have regard to guidance given by the Lord Chancellor about the carrying out of”,
his “functions”.
What does that mean? Does it mean, for example, that the Lord Chancellor can phone the director or call him into his office and say, “Now, look here, you’ve got far too many of these judicial reviews going through in relation to government business. I am not telling you about any particular case, so I am complying with subsection (4). But when it comes to subsection (3), would you please bear in mind that my guidance is that we have got too many of these cases? The judges are complaining. The lists are full.”? What exactly is intended by Clause 4(3)?
Lord Bach
My Lords, we have heard short but very impressive speeches on this very important group. Clause 4 is particularly important and it is absolutely vital that the Government get this right. We want to help them get it right all across the House. I hope that the Minister will have some freedom of manoeuvre on this matter, which is, in the end, a matter of some principle.
Perhaps I may start by commending the Government for bringing the Legal Services Commission inside the Ministry of Justice. When we were in power, we set up the Magee committee to produce a report on whether that would be an appropriate thing to do. It seemed to us at the time, and clearly to this Government, that there were a number of very good reasons why it is not satisfactory for the Legal Services Commission not to be an agency of government. In our view, it is appropriate that it should be and we commend the Government for doing that.
The problem always—it would have been as much a problem for us as it is for the present Government—is with the words “independence” and “perception of independence”. The Minister will know, as all of us know, that many interested people outside this House are very concerned about the drafting of Clause 4 and whether it meets what the Government clearly intend. No one is accusing them of bad faith here. Clause 4(4) shows that they clearly intend that this should be a system that works fairly and well. As the noble Lord, Lord Thomas of Gresford, pointed out, the wording is extraordinarily ambivalent and ambiguous, certainly as regards the relationship between subsections (3) and (4). The Government need to look at it again, and, I would argue, it probably needs to be redrafted.
I do not know whether noble Lords have had the opportunity to see an interesting, short note from Justice on this topic. Mr Roger Smith, who I think is well known to a large number of people who are interested in this issue and who has huge experience in this field, makes a very good point as to why this present drafting is not satisfactory. He says on what I think is an important part of the argument that:
“The provision will be most objectionable where the Director makes a decision to refuse legal aid for judicial review against his own minister. However justified that might be on the individual facts, it would be argued that the Lord Chancellor is being a judge in his own cause. Indeed, it may well be”—
this is the clever point—
“that interest groups are motivated to make exactly that accusation, regardless of the substantive worth of their application, precisely to obtain more publicity for their cause”.
As an example, among many others that could be referred to, he has shown where the Government have to tread extraordinarily carefully to make sure that independence is real and is perceived to be real. I therefore ask the Minister to be sympathetic and to look very carefully indeed at how this clause is currently drafted.
Lord Thomas of Gresford
I wish to add further concerns, having heard the Minister’s reply. I understand that the director would have to follow directions and guidance given on matters of merits and eligibility. Standards would have to be set as to what has to be satisfied, and eligibility in relation to finance is something that the Lord Chancellor would be concerned with. But I have some concerns about the emphasis on individual cases as opposed to a category of cases.
We sought in Amendment 16 to take one category of case—namely, cases against the Government or government agencies, or whatever. The Lord Chancellor ought not to be able to interfere in any category of case that is within the scope of Part 1 of the Bill. He should not be able to say that there are too many of these cases and we have to cut down, and the wording leaves that open.
Another matter that concerns me is exactly what is intended. The Minister used once the expression “an executive agency”. What is that? Is it a body within the Ministry of Justice or is it to be set up separately? Is it to be staffed only by civil servants or is it to be able to recruit its own people to it? What is the relationship of the executive agency headed by the director to the Ministry of Justice? We are very familiar with the concept of the Director of Public Prosecutions and the sometimes rather fraught relationship between the DPP and the Attorney-General, who is responsible for the director’s decisions in a parliamentary sense but not necessarily able to give him directions or control him in any way. So the independence of the DPP is a very interesting model which I would have thought the director of legal aid casework ought to follow. That means having an executive agency recruiting its own people and a constructive tension between the director and the Lord Chancellor, or whoever the Minister of Justice happens to be at the time. I would like to probe the concept a little further at this stage. What is this executive agency? How will it be staffed? What is the relationship between its director and the Minister of Justice? It may be that I am posing these questions at the wrong stage in this debate. If my noble friend is not able to answer these questions at the moment, I am sure he will explain them to me at a later stage.
Lord McNally
I can do no more than suggest that the noble Lord reads the Bill, because it sets out the structure for carrying out this function within an agency which is within the Ministry of Justice and staffed by civil servants appointed on the criteria which have stood us in good stead for the past 130 years. Again, as with the other contributions to this debate, I will take those matters back and see whether there are areas that can be better clarified to give my noble friend the assurances that he requires.
Lord Bach
My Lords, I hope that I am correct in saying that our intention is that there should be a process whereby written applications can be made, but always with the provision that there can be an oral hearing in certain circumstances. The noble Lord makes a good point. I beg to move.
Lord Thomas of Gresford
My Lords, I wish to speak to Amendment 96 in my name. We take the view that the appeal to the First-tier Tribunal against a refusal of legal aid is a little excessive. However, we take the point that was made by the noble Lord, Lord Bach, a moment ago that the European convention requires that there should be an appeal process. We note that in Clause 11, headed “Determinations”, there is a provision in subsection (5) that regulations,
“must make provision establishing procedures for the review of determinations … and of the withdrawal of such determinations”.
That is fine, but we do not think that the review should be carried out by someone else within that executive agency about which I was talking a moment ago. We believe that an appeal should be made to an independent panel.
Your Lordships will recall that on Second Reading or on the first day of Committee I was involved in a clash over who had the longest involvement in legal aid. I recall that legal aid applications and appeals were very well dealt with by an independent panel of local solicitors within the area. It was all devolved. You did not have to come to London or attend a First-tier Tribunal in whatever building that tribunal sat. The matter was dealt with locally by people who understood the locality and probably knew the solicitor who was appearing before them to make an appeal, and had some idea how far they could trust that individual and how experienced he was.
Lord Woolf
As someone who was a member of such a committee, I should say that it also included members of the Bar. In view of what is happening to legal aid, members of the Bar may well be interested in performing this function.
Lord Thomas of Gresford
These events occurred long ago when I was in my solicitor phase. I was called “Mr” in those days. It was only when I became a barrister that I became “Esquire”, and later I became “learned”. These are the progressions one makes within the profession. Looking back to my early days, I think that the noble and learned Lord, Lord Woolf, is quite right: barristers were members of the panel that considered these applications. It was a perfectly satisfactory method of appeal, which was independent of the Government who were providing the funds. I envisage an independent panel to review the director’s decision, not an in-house person but people who could be referred to more cheaply than the First-tier Tribunal to which the noble Lord, Lord Bach, referred. I commend that process as opposed to the one put forward by Her Majesty’s Opposition.
Lord Carlile of Berriew
My Lords, having inherited a number of returns from my noble friend Lord Thomas of Gresford when we were both barristers outside London many years ago, I share the memory of the effectiveness of those committees, including the gloss placed on it by the noble and learned Lord, Lord Woolf.
I would like to point out a parallel that exists today. Those of us who from time to time undertake very high-cost criminal cases have to apply for permission to the Legal Services Commission to do certain aspects of preparation. If the commission refuses permission, for example to obtain an expert witness’s report or to make photocopies of original documents—believe it or not, it can descend to that—there is a committee made up of practising lawyers who determine whether that permission should be granted, and it works very well. If the committee decides against the applicant, he or she has the opportunity to apply for permission to apply for judicial review. That involves a paper process, initially before a judge. If permission is refused, it is open to the applicant to have an application heard before the full court, but it is far from universal that that is done.
We therefore have in the existing provisions for very high-cost cases something very similar to that described by my noble friend Lord Thomas of Gresford. I suggest to the Minister that this would be a practical way of dealing with this appeal problem that would cover the concerns of the noble Lord, Lord Bach, those who have signed his amendment and those of us who have signed my noble friend’s amendment.
Lord Thomas of Gresford
We come to Clause 7, “Civil legal services”. These services,
“include, in particular, advice and assistance in the form of … representation, and … mediation and other forms of dispute resolution”.
My amendment simply inserts “collaborative law” after “mediation”. Noble Lords may ask what it is. I am very grateful to the organisation Resolution for drawing it to my attention, and I am very keen on it.
It is perhaps inevitable in the House of Lords that one goes back over the years. Getting divorced these days is no problem; it is all done on paper. There is no Queen’s Proctor, confession of adultery or anything like that; one just signs a piece of paper. It is the children, the house and the funds that create the difficulty. Collaborative law is different from mediation. In mediation, the parties go in front of a mediator who listens to what they have to say. They may not be represented and may shout at each other. Statistics show that something like 60 per cent of attempts at mediation fail. People who are at each other's throats and ready to kill each other should not be put in proximity to argue in front of a mediator; it is not easy for the mediator or for everybody else.
The collaborative family law process is a relatively new way of dealing with family disputes. Each party appoints their own lawyer. However, instead of the lawyers conducting negotiations by letter or phone, they meet to work things out face to face. Therefore, each antagonist has a lawyer at their side throughout the process and receives legal advice as they go. The aim of collaborative law meets the Government's aim of resolving family disputes without going to court. Both parties meet their respective lawyers, discuss the different options and processes available and decide to attempt the collaborative process. Then a four-way meeting is set up—the two parties plus their lawyers—and at the first four-way meeting the lawyers make sure that both parties understand that they are making a commitment to work out an agreement without going to court. They all sign an agreement to that effect.
Lord Thomas of Gresford
My Lords, I have to confess that I am disappointed with my noble friend’s response and I shall certainly return to this issue on Report. The Government have to appreciate that they are taking family law out of scope, which means that there are going to be couples who are at each other’s throats. There are various ways in which they can resolve their problems. They can say, “He hit me on one occasion. It is domestic abuse, so I want legal aid”. All the fears that have been expressed by the Government of people pushing domestic abuse up the agenda in order to get legal aid and thus making it more difficult to settle will become prevalent.
Here is a system where, on a fixed fee, issues of finance, housing and children can be settled, which is exactly what we as solicitors used to do. We would pick up the phone and talk to the opposing solicitor in order to sort things out without having to go to court. If you do not have a system like this to resolve issues, inevitably it is going to cost more. As I say, there will not necessarily be made-up allegations of abuse, but the little disputes that have occurred in a marriage may perhaps be tarted up just enough to make it possible for legal aid to be involved. You are then into an expensive system. I will therefore return to the matter on Report and I shall continue to advocate this very excellent system. I am pleased to see that the noble and learned Baroness, Lady Butler-Sloss, is involved. So far as I am concerned, the process has been given the seal of approval. For the moment, however, I beg leave to withdraw the amendment.