Civil Liability Bill [HL]

Debate between Viscount Ullswater and Lord Hodgson of Astley Abbotts

Report stage (Hansard - continued): House of Lords
Tuesday 12th June 2018 Lords Chamber

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, with this group of amendments we come to the procedure for timing the future reviews of the rate. They are in large measure parallel to some amendments I tabled in Committee but during that debate a number of important points were made by noble Lords, which I have reflected in changes in the drafting.

Our policy objective should be to establish a system that has three guiding principles. First, there should be a change in the rate only when the underlying investment climate—that is, the generally prevailing rate of return—has changed sufficiently significantly. We do not want frequent jerks on the tiller. Secondly, the timing of the change should be as unpredictable and quick as possible to minimise the chance of any people gaming the system. Thirdly and finally, we need to avoid the consequences of political inertia. The decisions to change the rate will always be controversial. As we heard from the noble Earl, Lord Kinnoull, the costs of these changes, one way or the other, can be very great indeed. Therefore, there will always be pressure on the Lord Chancellor to postpone any changes until the very end of any fixed-term period.

The way the Bill is currently drafted in large measure fails this test. First, having time-based reviews—for the reasons I have just explained, these are essentially time-based—fails to link to the fundamental reason for undertaking such a review; that is, the changing of the underlying rate of return on investments. Secondly, a system that requires the establishment of a new expert panel on each occasion—a decision that will undoubtedly leak—inevitably increases the chances of the system being gamed. Thirdly and finally, a system which places on the MoJ and the Lord Chancellor the whole responsibility of deciding both whether a review should take place and then whether the result of any review should be implemented is likely to lead to a preponderance of reviews taking place at the end of any fixed-term period.

The amendments I have tabled are designed to address the system and remedy these weaknesses. First, the decision on whether or not to implement a change remains with the Lord Chancellor because, as noble Lords have pointed out, this is at root a political decision. Secondly, the Lord Chancellor is relieved of the duty of monitoring changes in the available rates of return. This is undertaken by the expert panel, which will now become a permanent body. The expert panel, the proceedings of which will be confidential, will decide when to recommend to the Lord Chancellor that the rate should be changed and, if so, by how much. In this connection, to avoid frequent small changes, I have inserted “significantly” after “sufficiently” in the penultimate line of Amendment 53. All the above can be undertaken confidentially, away from the public glare, inevitably leading to a reduction in the amount of gaming. Indeed, if the Lord Chancellor chose not to accept the expert panel’s advice—which he or she would be perfectly entitled to do—no one need ever know it had taken place.

Finally, the other change from my Committee amendment is to remove the expert panel’s requirement to report to the Lord Chancellor at the end of every 12 months in which a review has not taken place, explaining why no review has taken place. My original intention was to improve transparency and clarity but it is clear from the remarks of noble Lords in Committee that it was a procedure that confused rather than enlightened and therefore I have struck it out. In the meantime, I beg to move.

[The Deputy Speaker (Viscount Ullswater) (Con)]

I must advise your Lordships that if this amendment is agreed to, I cannot call Amendment 54 because of pre-emption.

Civil Liability Bill [HL]

Debate between Viscount Ullswater and Lord Hodgson of Astley Abbotts

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

[Lord Hodgson of Astley Abbotts]

My Lords, I rise to move Amendment 61 and speak to Amendments 65, 69, 86, 90 and 91, which are consequential.

These are probing amendments, designed to tease out the Government’s thinking on the methodology for carrying out reviews of the discount rate. As I understand it, the Government intend that each review of the rate must commence within three years of the last review, irrespective of whether there have been changes in the underlying investment climate that would affect the varying rates of return on the sums awarded. I would suggest that time is not the right metric by which to settle a requirement for carrying out reviews. I agree with my noble friend Lord Faulks, who has an amendment in this group, that three years is too short in any case. I would respectfully suggest that a five-year period suffers the same strategic defects. Fixed or maximum periods will inevitably lead to an increase in attempts to game the system. My noble and learned friend the Minister will, I am sure, point out that three years is a maximum and reviews can take place more frequently.

In the world of practical politics, things will not work out like that. Changing the discount rate is a significant and potentially controversial decision. We only have to look at the immediate history, with the discount rate remaining unchanged for over 15 years during one of the biggest financial booms and busts that the world has ever seen. I believe that Lord Chancellors will be reluctant to implement the changes until forced to do so, so there will be a bunching of claims as the fixed period nears its end—whether it is three or five years—as defendants and claimants reflect on whether the upcoming review is likely to be to their advantage.

Perversely, a fixed-term system requires a review where there is no obvious reason to undertake one. If the Bill is planned to achieve fairness, a key objective must surely be to ensure that rate changes are made to reflect changes in the underlying available rates of return on investments as quickly and efficiently as possible. This group of amendments suggests a different approach, making the expert panel established under paragraph 5 of proposed Schedule A1 a permanent feature. At present, it is not: it is dissolved after each review under paragraph 5(3), which is deleted by my Amendment 90.

Amendment 61 imposes a new advisory duty on the panel to,

“advise the Lord Chancellor to undertake a review of the rate of return when it considers that the nature of return on investment has changed sufficiently to justify such a review”.

The decision to initiate the review remains with the Lord Chancellor, but he or she is given the comfort of a third party advising that a review is advisable. To ensure that paralysis does not overtake the panel, the second part of Amendment 61 requires that,

“where a review under this paragraph has not taken place for a period of 12 months, the expert panel must report to the Lord Chancellor as to why it considers that no review is necessary”.

How the expert panel would make that judgment is up to it. Bearing in mind that in the new world, investment should be assumed to be in lower-risk categories, there are multiple indices: gilts—not index-linked gilts, I hasten to add—or prime corporate bonds, which together can provide indication of changes in the likely available rates of return. All the other amendments in my name in the group are consequential.

To conclude, these probing amendments seek to move the undertaking of reviews of the discount rate from an arbitrary, time-based system to one that reflects events in the relevant real world—namely, changes in the available rate of return on investments. I beg to move.

[The Deputy Chairman of Committees]

I must advise your Lordships that if the amendment is agreed to, I cannot call Amendment 62 for reasons of pre-emption.

Justice and Security Bill [HL]

Debate between Viscount Ullswater and Lord Hodgson of Astley Abbotts

Tuesday 17th July 2012 Lords Chamber

[Lord Hodgson of Astley Abbotts]

My Lords, I am afraid that I have another group of amendments. In moving Amendment 57, I will also speak to Amendments 60, 61 and 68. Other amendments in this group, Amendments 58 and 59, will be spoken to by noble Lords more experienced in the law than I am. Again I await with some relief the arrival of the heavy artillery.

The purpose of this group of amendments is to encourage the use of gisting as a means of ensuring equality of justice. I accept that the amendments are quite challenging in the form that they have been put down, but I ask my noble and learned friend to see that they are balanced by the duty of confidentiality that was imposed on special advocates in my Amendment 67, which was in the group that we were just discussing.

Simply put, Amendment 57 omits Clause 7(1)(c), which imposes a duty on the court not to allow gisting. That strikes at the root of what this group of amendments is trying to achieve.

Amendment 60 takes Clause 7(1)(d) and replaces the words “consider requiring” with the word “require”, so that,

“if permission is given by the court not to disclose material, it must consider requiring the relevant person to provide a summary”,

would read,

“it must require the relevant person to provide a summary”.

As I said, the aim is to widen the use of gisting. Amendment 61 would omit Clause 7(1)(e) because it is again dependent on the national security definition and has in part been covered, as I said in my introductory remarks, by the duty of non-disclosure imposed by Amendment 67.

Finally, Amendment 68 would omit Clause 10(1) because I am not quite clear what it means. It seems to repeat Clause 7(1)(c) and I would be grateful if my noble and learned friend could explain why we need it.

In Committee, all our debates have had a pre-eminent underlying theme: how to balance the liberty of the subject with the need for national security and the judicial process. Gisting is one way to help that balance. I beg to move.

[The Deputy Chairman of Committees (Viscount Ullswater)]

My Lords, I must advise your Lordships that if this amendment is agreed to, I will not be able to call Amendments 58 and 59 because of pre-emption.