Mesothelioma Bill [HL]

Lord Avebury Excerpts

Wednesday 5th June 2013 Grand Committee

Moved by

[Lord Avebury]

1: Clause 1, page 1, line 3, after “may” insert “by statutory instrument”

[Lord Avebury]

My Lords, I am glad that these things happen to other people as well as to me. The Deputy Chairman need not apologise because everyone, however careful they are with their diaries, makes these mistakes from time to time. I missed an appointment myself this morning and I am still smarting from it.

On Second Reading, the Minister said that the Bill would establish a payment scheme to make lump sum payments to eligible sufferers from mesothelioma and their eligible dependants but he later amended that and said that it was a means to create such a scheme. Clause 1 gives the Secretary of State power to create, amend, replace or abolish the scheme within the certain broad parameters referred to in Clauses 4, 5, 6 and 10. Parliament has no say in the details of the scheme or in any variations made to the scheme, although of course it does on the regulations that are made under the Bill.

My noble friend Lord German and I both commented on this at Second Reading but the Minister evidently did not consider it important enough to pick the matter up in his winding-up speech, nor is there any explanation of the drafting in the Explanatory Memorandum. We are merely told that the clause confers these wide-ranging powers on the Secretary of State without saying why Parliament is excluded from all these processes.

If the Government consider it necessary to make changes in the system of employer’s liability insurance under the 1969 Act, obviously they have to come before Parliament and seek approval, as they did for the Act itself. Under this Bill the amount of any payment is determined by regulations, but in Clause 4 there is provision for the payments to be made subject to conditions, or for the payments to be repaid in whole or in part in specified circumstances. Again, these decisions are the sole prerogative of the Secretary of State. Similarly under Clause 5, the procedure for the making and deciding of applications is part of the scheme issued by the Secretary of State without having to obtain parliamentary approval.

There are further provisions relating to the scheme in Clauses 6 and 10 which are left to the unfettered discretion of the Secretary of State. These may not be in the best interests of claimants—we simply do not know—and it would be helpful if my noble friend could say whether, before any of these decisions, drafts will be published for consultation with the stakeholders. In the period leading up to the publication of the Bill, the Minister told us at Second Reading, there were 15 meetings with the insurance industry and 11 with representatives of victims’ groups, lawyers and members of the APPG. If the Government had to come back to Parliament they would have some incentive to continue with these consultations on the scheme and on the amendments to it which may be made in the future.

I hope that my noble friend can assure us that there will be no private consultation with the insurance industry excluding organisations representing the victims of mesothelioma. According to the Guardian, firms with insurance interests have given the Tories nearly £5 million since Mr Cameron became leader of the party. I am sure that the Government would not like it to be suspected that the industry’s largesse entitled it to any special favours. Your Lordships will bear in mind that all firms providing employer’s liability insurance have a vested interest in ensuring that, as far as possible, the details of the scheme create as light a burden for them as they can achieve. If, however, the industry passes on the costs to customers, as the Data Monitor survey quoted in paragraph 97 of the 2013 impact assessment suggests, it might be more impartial if it is asked to comment on a draft before the scheme is published.

The Delegated Powers and Regulatory Reform Committee says that this scheme is comparable in structure and content with the one governing a discrete, targeted social security benefit. It concludes that,

“only a most compelling explanation could justify the establishment of a scheme that is to determine rights to statutory payments, yet is not to be subject to any form of Parliamentary scrutiny”.

That says it all. I beg to move.

[Lord Freud]

My Lords, before there are any other contributions on this topic, it might save time if I respond rapidly to the last point mentioned by the noble Lord, around Amendments 1, 2, 4 and 5, about establishing the scheme on a statutory basis. Clearly that is the recommendation of the Delegated Powers and Regulatory Reform Committee. We acknowledge the concerns behind it. In the time between the recess and the Committee stage it has not been possible to do more than consider the proposed changes to the Bill. I am sure that noble Lords understand exactly what I am saying. I understand their concerns about the means by which the scheme is established and we are giving the matter due attention. I hope that those remarks might save a little time today.

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[Lord McKenzie of Luton]

My Lords, we have added our Front Bench names to Amendments 1 and 4 and concur with the two amendments of my noble friend Lord Howarth. I think that the arguments have been fully and effectively made and I do not think that I need to add anything. I take the Minister’s reply to be, “Yes, but not quite yet”, and that is comforting. It is a good way to start our deliberations today.

We are all grateful that we have now seen a draft of the scheme. It arrived this morning at 11.55 am, according to my machine. I wish to make the point that should there arise, after we have had a chance to study it, issues that we might otherwise have parsed today as these amendments go through, we could perhaps use our next opportunity to revisit them. This is not to slow up the overall process but to ensure that we make best use of the draft that we have.

We have also added our names to Amendment 6, about the annual report to Parliament. I concur with my noble friend’s list of issues to be covered. I would add that later in our deliberations we will consider our broader amendment which refers to the possibility of an oversight committee to oversee very much the same type of issues as my noble friend raised, in particular to deal with the issue that the noble Lord, Lord Avebury, raised. One of the concerns that we have throughout the Bill is the extensive engagement and powers that the insurance industry has—the administrator, the technical committee, ELTO setting up the portal. The oversight committee would be one way of at least addressing that scope in the interests of the sufferers. I think that that is for debate on Monday.

My noble friend’s Amendment 3 requires the Secretary of State to publish proposals and make a Statement to Parliament before establishing the scheme. Clause 1(3) currently requires the Secretary of State to,

“publish the scheme as amended from time to time”.

Does the Minister take this requirement as covering my noble friend’s aspiration in Amendment 3? If so, will he put that on the record?

[Lord Avebury]

My Lords—

[Lord Freud]

Is the noble Lord—

[Lord Avebury]

I was going to withdraw.

[Lord Freud]

Ah, I might say a few words. I hope that in my earlier intervention in the interests of saving a little time I effectively dealt with our approach on Amendments 1, 2, 4 and 5. I will turn to Amendments 3 and 6 in the name of the noble Lord, Lord Howarth.

Amendment 3 requires that before the scheme is established,

“the Secretary of State shall publish his proposals and make a statement to Parliament about them”.

This falls into the area of the recommendations from the Delegated Powers and Regulatory Reform Committee to make the scheme rules subject to negative resolution. The result of those considerations may serve to enhance in practice the level of parliamentary scrutiny, which would make this amendment unnecessary.

One or two questions were raised. I apologise for the late arrival of the scheme rules—everything seems to be just in time today—but I was keen to get them to Committee Members before we started. Of course, we will have another day of Committee, and further stages. They are a draft at this stage and a work in progress and we will be continuing to refine them during the passage of the Bill and indeed afterwards.

I ought to deal with the question from my noble friend Lord Avebury on the meeting with the insurance industry. Bluntly, this was a negotiation with the insurance industry and you have to meet people to negotiate with them. To get a working scheme going, that was an essential job. I would have liked to have done it with rather fewer meetings, but that is what it took.

Amendment 6 requires that:

“The Secretary of State must report annually to Parliament on the performance and progress of the scheme”.

I argue that it is not necessary to include this in the Bill. Scrutiny and reviews are already planned for the scheme without the need to include those in legislation. Indeed, we cannot know at this stage whether it is necessary or appropriate to report annually. We are aiming to determine the details of the reviews at a later stage. I am happy to commit to making a Statement to the House on the scheme’s performance. We will keep this under review as, over time, we expect the volume of scheme cases to reduce and for further information on the schemes to be readily available. The kind of information that the noble Lord, Lord Howarth, was talking about may become transparent effectively on a daily basis. I urge the noble Lord, Lord Avebury, to withdraw his amendment.

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[Lord Freud]

My Lords, the difficulty in doing such a negotiation is that this was pretty price-sensitive stuff in the marketplace. We had to keep it tight. I did, however, explore the angles without being specific or laying it out by saying, “Here is the architecture”. I explored the elements of what we were aiming to do with, as I say, not just the victims’ groups but the lawyers and the APPG. Keeping a balance between a commercially complicated deal and ensuring that the other side is well informed is always difficult, but that is the balance that I tried to strike.

[Lord Avebury]

My Lords, I certainly was not objecting to the meetings that were held with the insurance industry in the lead-up to the Bill. I mentioned that at Second Reading the Minister told us how many meetings there had been not just with the victims support group but with various other stakeholders, such as the lawyers representing the victims. I had hoped that those consultations would have been extended into the period when the details of the scheme are being formulated. We would hope that there would be equality of arms between the insurance industry and the representatives of the victims in designing the details of the scheme and in looking at any amendments that may be necessary later on. However, we have to be content with what the Minister has said this afternoon and hope that, at least by Report, we will be looking at something a little more concrete than the Minister was able to say to us. In the meanwhile, I withdraw the amendment.

Amendment 1 withdrawn.

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[Lord Freud]

My Lords, there is a deep and difficult history to this of which, I suspect, everyone in this room is aware. We are trying to ensure that we can get money to that group who have missed out. I am as dismayed as many of your Lordships that that has not happened earlier, but we are where we are. We are doing it now in a way to ensure that we can get those payments flowing rapidly. I apologise if I seem to be making a Second Reading speech. The problem is that this is such an emotive issue—the disease is so horrible—that it is very hard not to do so.

We have to come back to what is a specific deliverable. It is awful to sound so legally defensive, as I know that I am sounding here, but I am trying to get a deliverable, to get as much money as possible to people. I shall answer the specific questions. I know that I will not have the noble Lord, Lord Howarth, resounding with pleasure, as he wanted to be, but that is the underlying reason. My motivation is to get as much money as I possibly can safely, without risk—legal risk, in particular—to people.

[Lord Avebury]

I am sorry to interrupt my noble friend, but was it always clear whether a person was covered by the employer’s liability insurance? In the industries which have been mentioned, such as the construction industry, where the boundaries between the employed and the self-employed were not always clear, and a person comes forward and claims that he worked for such and such a firm and was employed at the time, but the employer’s liability insurance has been lost, how can the scheme be satisfied that he was qualified within the terms of the Bill?

[Lord Freud]

That is a very important point. As the noble Lord, Lord McKenzie, was querying, some people will appear to be self-employed where the reality is that that was an artificial, tax-driven construct. In that case, if they can demonstrate that in practice they were acting like an employee, they would be eligible for a payment under the scheme. That is specifically allowed for.

The noble Lord, Lord Howarth, asked about estimates of exposure to people who have been washing laundry—secondary exposure in the household. We do not have those data, I fear. We have data on general environmental exposure, which would include that, and I can give that information to the noble Lord. Clearly, people who catch asbestos outside the employer liability framework can get payments under the 2008 Act. Various noble Lords thought that they were inadequate, but they are state payments established since then.

My noble friend Lord James asked about the MoD and the Admiralty in particular. The state does not have employer’s liability—

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[Baroness Masham of Ilton]

My Lords, I, too, put my name to the letter and I, too, support my noble friend’s amendment—at least, the spirit of it. Mesothelioma is an awful condition, as has been so well explained by my noble friend Lord Walton. It needs research. Many more people will be developing this terrible disease. Research is advancing in many ways. One only has to think of stem cells and transplants. One never knows what will happen. However, this condition needs continuing expert research to find a way of alleviating the suffering, as well as a cure to stop this condition developing. I am sure there will be a way to stop it developing. It is there in the body but it needs the experts. Research means hope for these unfortunate people. Surely the Minister can find a way of accepting this amendment.

[Lord Avebury]

My Lords, I, too, was one of the signatories of the letter that was drafted by the noble Lord, Lord Alton. I join in the congratulations that have been expressed to him on his assiduous work over very many years on behalf of the sufferers of mesothelioma. I am delighted to support him in this amendment, particularly now that the arguments that might have been advanced against a statutory levy have been so comprehensively demolished by none other than the noble Lord, Lord Pannick, and several other noble Lords who have spoken.

If we get this amendment into the Bill, it may not be perfect but, as several of your Lordships have said, it will act as a stimulus to the provision of more funding from a number of different sources, which we may not all have known. The noble Lord, Lord Howarth of Newport, mentioned the DWP. We should look beyond the boundaries of the United Kingdom. Surely we are not concerned only with what has been called the national research effort. Mesothelioma is not confined within the boundaries of the United Kingdom. We might also look to the EU’s International Rare Diseases Research Consortium, which has a responsibility for looking at the 6,000 rare diseases that account for a surprisingly high proportion of the deaths and serious morbidity from cancerous diseases. I do not know whether mesothelioma is already on the consortium’s list but, if not, it certainly should be.

I wholeheartedly support the spirit of the amendment of the noble Lord, Lord Alton, and I hope that the department might consider widening the scope of the research that is conducted on the disease by looking to Europe, particularly this rare diseases research consortium.

[Lord Empey]

My Lords, I hope that the Minister did not think that I was being flippant in my earlier intervention when I said that I hoped we could finish off all the related issues. I understand what the Minister is confronted with. It is a serious business. He has put a lot of work into it and there is no doubt that there is advancement here. With so many people here supporting this amendment and talking in favour of it, he might also feel that it is not necessarily for him alone, in that there are other departmental interests to be taken into account. Perhaps between now and Report he could consult with some of his colleagues, because the contributions that have been made by people who really know what they are talking about have been very impressive.

It is amazing that as a nation we have not taken this issue sufficiently seriously, but at least we have an opportunity to spark a change. The noble Lord, Lord Alton, with his track record on this, has been trying to achieve this for a long time. Perhaps we have a confluence of events here that might actually bring this about. The levy issue is not an issue. It can be dealt with. I am unclear whether this is the right mechanism, or even the right Bill, but there is something here to be achieved and I think it can be done without a huge drain on public resources. I accept that the Minister is trying hard. Perhaps this is not the moment for him to respond to us, but perhaps he will discuss it with his colleagues in the Government.

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[Lord Howarth of Newport]

My Lords, my Amendment 18 is grouped with Amendment 15, just moved by my noble friend Lord McKenzie, and it drives at very much the same purpose. Both of us seek to ensure that the scheme payments will match the average of court awards for people in comparable circumstances, thereby lifting the figure from 70% of the tariff to 100%.

I have not been able to discern any principled basis for this figure of 70%. I think that it was the best deal that the Minister could secure. I do not underestimate his achievement in securing that deal against an insurance industry that for decades fought a rearguard action to try to escape from its proper liabilities. At Second Reading, the Minister told the House of the press investigations into the mesothelioma scandal in its various dimensions from 1965 onwards. As time went by, we understand that policies went missing wholesale. As the Minister also told us at Second Reading, it was not until 1999 that the industry created a code of practice for the better tracing of employer’s liability policies.

As I said in an earlier debate, I do not think that Parliament needs to feel that it is bound by the deal that the Minister has secured with the industry. We respect the Minister’s efforts in securing that deal but it is our duty to take a view on where the public interest lies, and I do not believe that it lies in palpable injustice or in the convenience of the insurance industry at the expense of mesothelioma victims. It is surely unacceptable that mesothelioma victims should be penalised because, through no fault of theirs, documents have gone missing, and it is unacceptable that the insurers, whose duty it was to keep proper files, should benefit to the tune of 30% in precisely those cases where they failed in their responsibilities.

The Minister will argue to us again, I think, that there needs to be a discount in order to incentivise claimants to go to the courts first. However, I am not persuaded by that argument because it seems to me that the procedures of the scheme—the portal and the remit of the technical committee—will all ensure that they do go to the courts first if they can and that they pursue that avenue until they find that they cannot proceed satisfactorily or successfully along it. Be that as it may, in any case a 30% discount is simply too large. The Financial Services Compensation Scheme provides cover for 90% of the liabilities of insolvent insurers where insurance is compulsory. That 90% should be the very minimum and 100% would be right.

[Lord Avebury]

My Lords, I certainly agree with the noble Lord, Lord Howarth, about the incentive argument. I thought that that was comprehensively demolished at Second Reading and I hope that we are not going to hear it again from the Minister this afternoon.

I also think that my noble friend should pay attention to the fact that this was one of the subjects on which all the speakers at Second Reading were unanimous in saying that 70% was simply unacceptable. Whether it should be 100%, 90% or some other figure much higher than 70% could be a matter of argument between us. However, there are certainly very strong reasons for saying that the 30% deduction is totally unfair and unacceptable to the majority of your Lordships.

My noble friend said at Second Reading that he was keen to avoid the insurers passing all, or virtually all, of the levy on to existing insurers. As the noble Lord, Lord McKenzie, said, this would not require a very large increase in the premiums to be imposed. It is logical to assume that insurers would also be constrained by the effects of competition. Some might be inclined to pass the whole burden on to other insurers, but would be constrained from doing so by the thought that if others did not then they would obtain all the business. The threat of the insurers passing on the burden is a very slight one.

If there were an increase from 70% to some higher figure, that would not happen suddenly. Presumably, a proportion of the insurers might pass on some of the burden as we approach 100%. I do not think that the Minister has any objective evidence to show to what extent this would happen. I would be very glad to hear from him if he thinks that there is evidence of something that must be hypothetical and cannot intrinsically be tested without actually trying it.