Legal Aid, Sentencing and Punishment of Offenders Bill

Andy Slaughter Excerpts

Tuesday 1st November 2011 Commons Chamber

[Mr Djanogly]

Alternative business structures will be set up by the Solicitors Regulation Authority, probably before or just after the end of this year, so the hon. Lady makes an important point. At that stage, claims management companies will be able to purchase solicitors, and vice versa, which means that it would indeed be possible, as we discussed in the Transport Committee, for a claims management company to own a solicitor and effectively act as the advertising arm of a firm of solicitors. However, the important difference is that the claims management companies will then be regulated by the SRA, which will give consumers a significant amount of comfort.

Referral fees are one of the symptoms of the compensation culture in this country. The Government are determined to put an end to them while at the same time addressing the underlying cause of recoverability of no win, no fee success fees.

[Mr Andy Slaughter (Hammersmith) (Lab)]

Following what my right hon. Friend the shadow Secretary of State for Justice said earlier this afternoon, I rise to discuss proposals that have not been given due scrutiny in Parliament. We are all aware that the Government were bounced into taking action on referral fees only by the sustained campaigning by my right hon. Friend the Member for Blackburn (Mr Straw). In their haste to cover up their inaction and disregard of the abuses of the insurance industry, they have failed to consult on their proposals, which are incompetent, ineffective and will lead to problems further down the line. Indeed, it was reported this week that a judicial review has already been launched citing that lack of consultation.

Referral fees are paid by one party to another in exchange for what are essentially sale leads. They are analogous to brokers’ fees, commission for salespeople, marketing agreements or, in the most basic sense, advertising, because each of these represents part of the cost of sales. Every non-monopolistic industry has a cost of sales. Let me take the example of the insurance industry, an industry with which the Minister has more than a passing familiarity. Admiral is the UK’s leading specialist motor insurance company. Last year it received net insurance premium revenue of £288 million, but its total net revenue was £639 million, part of which was made with referral fees. It spent £151 million on the acquisition of insurance contracts and other marketing costs, including brokers’ costs, paying insurance websites and expensive advertising. Those costs drive up premium costs and the desire to make profit also drives up premium prices—Admiral made £283 million in profit last year on its net revenue of £639 million. That is how it works in the insurance industry.

It works in a similar way when law firms pay independent brokers, some of which are known as claims management companies, another area with which the Minister has more than a passing familiarity. They will pay referral fees in order to get leads for their practice. The lawyers often do this because, frankly, they are not very good at sales, marketing or advertising. However, the problems arise in the behaviour that that encourages. Although there are reputable and decent claims management companies out there that bring together those who want help with those who can provide it, there are also many claims farmers, often based overseas, that abuse the system, send unsolicited spam to people’s e-mail accounts and mobile phones and abuse their data.

It is right to deal with people who act in such a way, but the claims management regulator, which until a few weeks ago was the Minister, but which I understand is now the Secretary of State, has proven singularly unable to do so. An internal review of claims management regulation from the Ministry of Justice, dated 25 October 2011—just last week—states:

“It is evident that many of the more objectionable practices of Claims Management Companies such as cold calling in person, unauthorised marketing in hospitals and using exaggerated marketing claims have been reined in as a result of action taken under CMR.”

Nothing could make clearer what delusions have set in with claims management regulated by the Minister, because we all know from personal experience that the opposite is true and that such abuse is still out there at large and, if anything, is increasing. Our constituents are harassed by claims farmers, and their objectionable messages, but the Department that he has mismanaged for the past year and a half believes it is doing an excellent job. That is why we must take corrective action.

[Mr Kevan Jones (North Durham) (Lab)]

I note what my hon. Friend is saying about the claims regulatory authority, but my experience at the tail end of the miners compensation scheme was that it was effective in driving out of the industry some of the more unscrupulous claims management companies, which were often just front companies that wound up as soon as they had passed the claims on. I caution my hon. Friend not to be too harsh on it.

[Mr Slaughter]

I am grateful for my hon. Friend’s intervention. I am sure that some companies have been driven out of business, but the everyday experience of hon. Members, and certainly of our constituents, is that the industry is not properly regulated, which is why corrective action must be taken. However, the proposals in the Government’s new clauses are, I fear, insufficient. They are riddled with inconsistencies and loopholes, which is another symptom of the haste with which they were prepared.

I will deal with the point that the Minister dealt with. New clause 19(8) states that a payment is

“to be treated as a referral fee unless”

it can be shown

“that the payment was made…as consideration for the provision of services, or…for another reason”.

The Minister’s impact assessment explains what that means. Claims management companies may adapt their business models so that they are not reliant on referral fees paid by lawyers, or they may move into alternative types of business such as marketing or advertising. That is staggering to those of us who recognise that it is precisely that marketing and advertising, whether on daytime TV adverts or via spam messages, that lead to perceptions of a compensation culture.

What is the point of the new clauses? The truth is that they are an afterthought to a package of changes in the Bill, some of which we will debate tomorrow, that have far more bite but a different purpose. The changes to conditional fee agreements mean that losing defendants—wrongdoers—and their insurers will benefit at the expense of winning claimants—victims—and that is the real objective of the Government’s legislation. Tomorrow, we will seek to overturn those provisions.

As Bob and Sally Dowler have told us; as the lawyers that brought Trafigura to justice have told us; as victims of asbestosis, who have been fighting insurers that simply do not want to pay out to hard-working and long-suffering people; as those who have been unfairly dismissed or subject to harassment in the workplace have told us; and as Christopher Jeffries, who was persecuted by the media last Christmas, as he wrote in The Guardian this very day, has told us, the changes are unacceptable. The Government’s proposed changes, which they had thought about and on which they had taken instructions from the insurance industry, are in the Bill, but very little thought has gone into the new clauses before us today, and none would have gone into them had it not been for my right hon. Friend the Member for Blackburn.

In summary, we believe that there is merit in a ban on referral fees as part of a package to stop the abuses that I have talked about. That is why I tabled amendments not just to clamp down on those fees, but to make the payment and solicitation of referral fees in road traffic accident personal injury cases a criminal offence. My right hon. Friend has tabled amendments to new clause 18, and I hope that he will press them to a vote. If he does so, I hope that hon. Members on both sides of the House will join him in the Lobby if the Government still refuse to accept the criminalisation of referral fees.

We sought to make unsolicited text messages and phone calls regarding personal injuries a criminal offence. We would have strengthened the rules against the sale of personal data. We would have restricted whiplash claims by placing a lower limit on the speed at which a vehicle must be travelling before damages may be paid. We would have outlawed third-party capture, another dirty secret of the insurance industry. I freely acknowledge that we plagiarised some of that from my right hon. Friend’s private Member’s Bill.

If the Government had had the courage of the conviction in the Minister’s speeches earlier in the year, we would have got to the heart of the perception of a compensation culture. In doing so, we would have done what the Government are now failing to do. The new clause alone will have little effect. We believe that it deserves further scrutiny, and we hope that amendments in another place will toughen it up, if that does not happen tonight. We also hope that amendments to make these practices criminal offences will be accepted. We therefore have no intention of voting against the new clauses; we simply regard them as not going far enough.

The Minister’s incompetence in getting to grips with claims farmers who engage in unscrupulous practices and his Department’s failure even to recognise the scale of their failure to regulate effectively have got us here. These are symptoms not of a litigation culture, as he would have us believe, and of the rhetoric that goes along with the cuts in legal aid to the poorest, as well the neutering of no win, no fee agreements which will affect almost everyone except the super-rich and will prevent access to justice, but of regulatory incompetence by the Minister’s Department. Indeed, he has now surrendered responsibility for that regulation.

I commend my right hon. Friend’s amendments to the House. We accept the new clauses as far as they go, but it is about time the Government stopped using their rhetoric as a mask for preventing victims from obtaining justice and used it to ensure that the abuses that we all put up with day to day from fraudulent and criminal practices are stamped out.

[Tom Brake (Carshalton and Wallington) (LD)]

I shall be brief. I welcome the Government’s action to address referral fees. There is no doubt that consumers have paid a significant price. I hope that we can clamp down heavily on other things, such as unsolicited text messages and spam, which we have all experienced, through other measures such as those on data protection.

I would like the Minister to deal with just one point. The industry has been pressing for these changes, and consumers in particular want to understand what guarantees, if any, they will have that when the changes have taken effect they will see a difference in the prices they pay for services.

--- Later in debate ---

[Bob Blackman]

The other problem is that if solicitors did not believe that they would get paid for the work, they might hang on to the case and take it to conclusion, despite not being an expert. That presents a huge risk to the individual, who possibly has a case.

[Mr Slaughter]

I agree entirely with my right hon. Friend the Member for Blackburn (Mr Straw). To put it slightly differently, the hon. Gentleman is quite right that firms might want to hang on to work even after it goes beyond their expertise, so an inducement to pass it on might work. I am not saying that in favour of referral fees, but it does happen, and we have to be aware of it.

He is absolutely right about the definition of referral fees. When the Minister announced, rather hastily, in response to my right hon. Friend, that the Government were banning them, he admitted that he could not define “referral fee”. The hon. Gentleman is absolutely right, therefore, that a number of problems still need to be resolved, but those are questions that he should be putting to his Front Bench team. He should be asking why they have not sorted out these matters, including on his point about text messages.

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[Mr Blunt]

If my hon. Friend will forgive me, I need to conclude my remarks and allow the Opposition to respond.

The second change these clauses propose is to give the Secretary of State a power to increase the current maximum fine amounts for levels 1 to 4 on the standard scale of fines for summary offences. These amounts are currently £200, £500, £1,000 and £2,500. The new power would be to increase these so as to keep them in the same ratio to one another as at present. There is already a similar power to change them in line with changes in the value of money, so the new power would be an extension of that. We intend to consult on the right level at which to set these new maxima.

That should form part of a wider review of sentences served in the community, so I want to use this debate to notify the House that we are entering a review process, which we intend will in due course lead to a formal public consultation on community sentences. For too long, community sentences have failed to punish offenders properly for their actions, and the Government are committed to changing that. We are already taking action, including through this Bill, to strengthen community orders, but we want to go much further and deliver a step change in the way sentences operate. They must, of course, address the problems that have caused the offending behaviour in the first place—the drug abuse, the alcoholism, the mental health problems—but they must also punish properly and send a clear message to society that wrongdoing will not be tolerated. We want to see a clear punitive element in every sentence handed out by the courts.

We will consult on further reforms to ensure that community sentences effectively punish and rehabilitate offenders. That should include consulting on what constitutes effective delivery of the principles of sentencing, punishment and rehabilitation, as I have mentioned, but also on protection of the public, restoration and how the whole package can produce the most effective deterrent to crime. A part of this consultation will be on the new maxima at levels 1 to 4 in the magistrates courts.

The Government want offenders to be in no doubt that the courts have the powers they need to punish their crimes. Once the victim’s compensation has been addressed—and if an offence presents no wider issues of reparation or public protection—if a court believes that a fine would be the best way of punishing an offender and deterring future offending, then we want to ensure that there are no barriers to courts setting the fine at the appropriate level.

To sum up, these new clauses would remove the £5,000 cap on fines that magistrates can impose, so that they are able to use their discretion and set fines that are proportionate to the offences before them. That will also improve the efficiency of the court system, by removing the need for magistrates to send cases to the Crown court when they feel the current maximum fine is not a severe enough punishment for the offenders before them. For offences with caps set at less than £5,000, we propose to retain the current structure of differential maxima, with a power to increase them as necessary.

I urge Members to support the measures.

[Mr Slaughter]

I thank the Minister for his clear account of the effects of these proposals, but I wonder why they are being introduced at this stage. He may wish to explain that. They are not controversial. We do not intend to oppose them as we think their measures are sensible, and we are glad that the Government are, for once, in favour of judicial discretion. They made certain concessions in Committee, one of which was not withdrawing magistrates’ powers to impose longer custodial sentences. We believe the magistrates system serves this country extremely well—this year marks its 650th anniversary. However, although these are sensible changes to current magistrates powers, we are concerned about the fact that, once again, they are part of a package of new measures.

I will not take up any more of the House’s time as we shall shortly come on to discuss two very important and significant new provisions in the criminal law, of which we have had very little notice as they have been introduced at a very late stage. I therefore simply ask again why we have had to wait until Report stage for the measures currently under discussion to be introduced. We do not oppose the proposals, however, as we consider them to be sensible and uncontentious.

[Sir Alan Beith]

How nice it is to hear the hon. Member for Hammersmith (Mr Slaughter) in conciliatory mood. The Minister has made a perfectly good case for increasing the level of fines available in magistrates courts. He gave several reasons for doing so, and I would add to them the giving of further encouragement to magistrates to deal with cases themselves wherever that is possible, rather than referring them upwards to the Crown court. This is part of a general increased empowerment of magistrates to deal with cases.

The Minister has mentioned the wider issue of community penalties and non-custodial sentences, and the review and consultation that will address them. I hope that proves to be a fruitful process. There is a danger that he is giving two signals at once, however. He is hoping to give the necessary signal to the public that many offenders consider community sentences to be more demanding and rigorous, and much less congenial, than very short terms of imprisonment. Some offenders who have appeared before the Justice Committee have said they committed further offences because it was easier to spend the time in prison than to continue with a community sentence. The Government must also give a signal to the judiciary that it should make the maximum use of the available range of penalties, on the basis of what is most likely to reduce reoffending. If a rigorous, well-supervised and policed community sentence is more likely to reduce reoffending, the judiciary should be encouraged to choose that option. I hope people do not find the signals too confusing, that we end up with a well-supported system of community penalties, and that people have confidence that for many offenders such penalties reduce reoffending more effectively than prison does.

--- Later in debate ---

[Mr Slaughter]

It is pleasure to have the Under-Secretary of State for Justice, the hon. Member for Reigate (Mr Blunt), at the Government Dispatch Box this evening. It is a shame that the Lord Chancellor is not here, but of course he was also absent when the provision was announced by the Prime Minister at the famous press conference on 21 June, when most of today’s business first saw the light of day, including the clause we have just debated. At times it appears that there is a parallel Bill: the agenda that the Government wish to present to the media, or which the media dictate to the Government.

Sadly, the consequence for the House is that we do not have the opportunity to scrutinise the legislation properly. I do not know whether that is because the Government have no confidence in or commitment to their own legislation and are simply going through the motions, as we saw a little while ago, but the process of formulating the policy has been absurdly rushed, even by their standards. It is wholly inappropriate to introduce major changes to criminal law on Report. For that reason, among others, I suspect that the provisions will have a rather more torrid time in the other place than they will have here tonight.

Squatters are a nightmare for homeowners and tenants alike. The Criminal Law Act 1977, which the Minister mentioned, makes it a criminal offence for any person not to leave premises when required to do so by “a displaced residential occupier” or “protected intending occupier” of the premises. Furthermore, parts 55(1) and 55(3) of the Civil Procedure Rules allow owners to evict someone from a residence they do not occupy. An interim possession order, backed up by powers in section 76 of the Criminal Justice and Public Order Act 1994, mean that a criminal offence is committed if an individual does not leave within 24 hours of such an expedited order being granted.

As the Minister confirmed in his opening remarks, new clause 26 seeks to deal with squatting in vacant properties for which there is no imminent plan for residency. The clause, as drafted, applies only to residential properties and will not apply where there has been a previous landlord and tenant relationship between the occupier and the owner. Those are not the cases that typically attract the media’s attention. For example, the case of Dr Cockerell and his wife, who was pregnant at the time, was widely reported this September, in the Evening Standard and other newspapers. In that case the police wrongly said that the case was a civil issue and not one for them. As I understand the facts as reported, Dr Cockerell and his wife would have been protected intending occupiers and the police should have intervened. I fear that their failure to do so is not atypical. I remarked in Committee that if we had a pound for every time the police said that something was a civil matter when someone goes to them, we would probably be able to build affordable housing in the country, unlike what the Government are doing. I worry that the Government are trying to introduce new legislation without implementing the legislation that already exists, which is clearly the case in the examples I have given so far.

[Jeremy Corbyn]

My hon. Friend is old enough to recall the lengthy consultation that took place before the 1977 Act was introduced. It specifically distinguished between an occupied property and a property that had been left empty for a very long time. The issue at the time, particularly in London, was that vast numbers of empty properties were being squatted. That law was a product of consultation. There has been no consultation on this—[Interruption.] Well, there has been very limited consultation, but certainly not in the House, about criminalising people who are actually extremely desperate for all the reasons pointed out by my friend the hon. Member for Brighton, Pavilion (Caroline Lucas).

[Mr Slaughter]

I think I was doing my politics A-level at the time, so I might have studied the Act as part of that. My hon. Friend makes an important point about housing need that the Minister, to be fair to him, also addressed, and I will move on to that in a moment. I will not say what grade I got in my politics A-level—[Interruption.] Let us just say that it probably would not impress the Education Secretary.

We share the anger of people whose properties are damaged or vandalised by squatters. That is always wrong, and it is right to decry such behaviour. It is also right to say that there are, for want of a better term, lifestyle squatters—people who are part of the something-for-nothing society. We disagree with that, and we support the criminalisation of their activities. However, many squatters are homeless, and often have severe mental health or addiction problems.

It may be a sign of the Government’s topsy-turvy logic that in one part of the Bill, which we support, they seek to divert those with mental health and drug problems from the criminal justice system, but this part may criminalise those very people. At the same time, we are seeing some of the most swingeing benefit cuts in history. Housing benefit has been mentioned. In constituencies like mine, thousands of families will be forced to move because of the cuts in housing benefit, or may lose their properties. Incompetence by the Department for Work and Pensions and its private sector agents, such as Atos Healthcare, is causing a rise in poverty and homelessness. We are seeing a massive increase in appeals on welfare benefits, and 170 extra staff have been hired by first-tier tribunals to deal with those appeals, many of which are successful. That is one reason why we oppose the Government’s proposals on social welfare legal aid.

I wish that yesterday we had had the luxury that we have today—a timetabled programme with knives to grandstand some of the Government’s proposals. The House is thinly attended and the debate is frankly low key, whereas yesterday the Government engaged in talking out important measures on which many hon. Members wanted to speak. I noted what the Secretary of State, or it may have been the Under-Secretary of State for Justice, the hon. Member for Huntingdon (Mr Djanogly), said about our debates tomorrow. I hope that we will have the debates that we want tomorrow, including those on part 2, and that Government Whips will not employ their tawdry tactics again.

Some 40% of homeless people have squatted, as my hon. Friend the Member for Islington North (Jeremy Corbyn) said, and 6% of homeless people are squatting at any one time. There is a significant prevalence of mental health problems, learning difficulties and substance addiction in those who are homeless.

This afternoon, I opened a new project for homeless people in my constituency. Very experienced people from organisations for the homeless—they were not trying to be party political in any way—asked me a question that I could not answer. They said that the Work and Pensions Secretary talks about an underclass, or a feral class as the Justice Secretary also said, and says that the Government want to take action to help problem families and to relieve poverty at the bottom of society, so why do they wish to take measures that could criminalise those same people?

The Government are clearly being tough on squatting, and we have no objection to that, but they are being incredibly weak, contrary to what the Minister said, on the causes of squatting. In fact, their impact assessment gives a hint of who the people are who often end up squatting. It says:

“Local authorities and homelessness…charities may face increased pressure on their services if more squatters are arrested/convicted and/or deterred from squatting. Local authorities may be required to provide alternative accommodation for these individuals and could also face costs related to increases in rough sleeping in their areas. An increase in demand for charities’ services (food/shelter etc.) may negatively impact current charity service users…There may also be a cost to society if this option is perceived to”

be

“unfair and/or leads to increases in rough sleeping.”

The pièce de résistance is:

“It has not been possible to quantify these costs.”

The Government accept that there will be pressure on services, but say that they cannot quantify the cost. Why? They do not know how many people squat. I believe—the Minister will no doubt correct me if I am wrong—that the civil servants have used figures from squatters’ organisations to estimate how many squatters there may be. The Government’s estimate is that there are between 340 and 4,200 criminal squatting cases across England and Wales, and that the Crown Prosecution Service will charge between 850 and 10,600 offenders.

The Government accept in their response to the consultation that

“as with any criminal offence there would be an operational discretion as to whether a person should be charged with an offence.”

I think that goes without saying, but they say it in particular with respect to hikers who take refuge in a house to take shelter from the elements. [Interruption.] I am glad that the Government Whip, the hon. Member for Lichfield (Michael Fabricant), is interested, and I will say a bit more about that. It is a problem that the Government see as a possible unintended consequence of the new legislation. They state:

“The Government accepts that hikers who occupy a residential building in these circumstances might be committing an offence as a result of its proposals. In practice, however, it seems unlikely that the property owner would make a complaint”,

so that is all right. They continue:

“Even if a complaint were made, as with any criminal offence there would be an operational discretion as to whether a person should be charged with an offence. The Government considered creating a ‘reasonable excuse’ defence to allow for this type of situation, but was concerned that such a defence would be open to abuse and might render the new offence toothless.”

I have seen some pretty shoddily justified legislation in my time, but that really is an “on the one hand, on the other hand” explanation.

I hope that at the very least the Minister will tell us whether his intention is to apply the discretion that he wishes to see applied to hikers, an important category of citizen, to those who occupy empty properties out of desperation—the people the Government’s own impact assessment states would now have to resort to sleeping rough. They could include people with mental health or addiction problems whom it may be more appropriate to treat than to detain in jail. I have heard the Minister make that argument in another context in Committee. I note that this farrago and confusion would not have happened had the appropriate parliamentary process been followed.

It is common practice in a Second Reading debate—this increasingly feels like Second Reading, when we see measures for the first time and pass general comments on them—for a proposal that has some merit but needs refinement to be allowed through. That is what we intend to do today. We support the idea that there may be categories of squatters who need to be criminalised, although we say that the current criminal law is not being properly used in that respect.

I hope that the Minister will not think that our decision to allow matters to proceed is an unthinking endorsement of his position. Those who think squatting an acceptable lifestyle choice should be under no illusion about the fact that we disagree, and we support the criminalisation of what is, frankly, arrogant behaviour. For that reason, we believe it is right to allow the matter to be scrutinised in another place. However, there remain issues to consider and more thought and deliberation to be done before the new clause reaches the statute book.

I hope that the Government will at the very least consider the issues that I have raised today, and those that other hon. Members will no doubt raise, and keep them in mind when they feel the endorphin rush of a few cheap tabloid headlines again. I hope that they will think seriously about all the implications of the new clause and come up with something a little clearer, better defined and less vague.

The Minister will no doubt say that I am giving less than wholehearted support. Not true. We support the Government’s intention, but we believe that because they have once again rushed matters towards the statute book, they have not given them proper and clear consideration thus far. Once again, they leave it to another place to do that.

[Mike Weatherley (Hove) (Con)]

Today is a good day for the law-abiding citizens of this country and a bad day for those wanting something for nothing. Since my election nearly 18 months ago, I have been campaigning to criminalise squatting, including in an excellent Westminster Hall debate with the Minister about a year ago. I congratulate the Government on tabling the new clause.

I wish to dispel once and for all the myth that squatters and homeless people are one and the same. My Hove and Portslade area contains both wealth and deprivation. It is a Mecca for every character imaginable, and that is what makes it such a wonderfully diverse place to live. Homelessness is an issue, and we have a fantastic support network of local charities, including Emmaus, Brighton Housing Trust, the YMCA and Off the Fence, which looks after a great number of vulnerable people through Project Antifreeze—indeed, I will visit Off the Fence again this Friday. It is our duty to look after homeless people. I fully support all the excellent work being done and the Government’s commitment to do even more.