Legal Aid, Sentencing and Punishment of Offenders Bill

Lord Beecham Excerpts

Wednesday 14th March 2012 Lords Chamber

Moved by

[Lord Beecham]

132A: Before Clause 43, insert the following new Clause—
“Qualified one-way cost-shifting and uplift in general damages
(1) Before making an order to commence sections 43, 45 or 46 the Lord Chancellor must—
(a) establish a one-way cost-shifting for civil litigation in accordance with this section; and(b) increase the quantum of general damages for pain suffering and loss of amenity by 10% above the levels awarded immediately before this Part comes into force.(2) A “one-way cost-shifting for civil litigation” means a regime that applies to a claimant regardless of means, where that person has entered into a funding arrangement by which he or she receives legal services to pursue proceedings against a defendant covered by insurance or self-insurance.
(3) Subject to subsection (4), the general rule that the court will order an unsuccessful claimant to pay the costs of a successful claimant shall not apply to a claimant within the regime.
(4) The court may apply the general rule where the court finds—
(a) the claim was fraudulent;(b) the claim was so unreasonable that it was or could have been struck out on the grounds that it was frivolous, vexatious or an abuse of process; or(c) in respect of a claim for damages, the cost consequences under Part 36 of the Civil Procedure Rules apply, save that the proportion of a defendant’s costs payable by a claimant within the regime, whether fixed or assessed, shall be limited to 10% of the damages awarded to the claimant.(5) In the event that a claimant within the regime discontinues his action, the general rule shall not apply, unless the court on application finds the action to have been fraudulent, frivolous or vexatious.
(6) In this section, a “funding arrangement” means an arrangement where the claimant has—
(a) entered into a conditional fee agreement or a collective conditional fee agreement which provides for a success fee within the meaning of section 58(2) of the Courts and Legal Services Act 1990; or(b) taken out an insurance policy to which section 58C of the Courts and Legal Services Act 1990 (recovery of insurance premiums by way of costs) applies.”

[Lord Beecham]

My Lords, once again I declare an interest as a non-paid consultant of a firm of solicitors in which I was a senior partner. Having slipped and fallen on my way to my office at Fielden House, I am tempted to declare an interest as a potential claimant against Westminster City Council. But even I would not have the effrontery to pursue such a claim. There may be no shortage of noble Lords who would proffer their services, although I am doubtful about that, but I may consult one of my clinical colleagues before the day is over.

Today we reach Part 2 of the Bill, a part that has received little scrutiny in either House or in the media. Yet it deals with matters of profound importance. The conditional fee agreements system, which replaced and supplemented some areas of legal aid, is as important in ensuring access to justice for people of moderate means and all people in certain areas of law not within the scope of legal aid as legal aid has been to the poorest. Without a robust and easily accessible civil justice system, victims of terrible wrongs—industrial disease, clinical negligence, privacy violation, such as that suffered by Bob and Sally Dowler, and even grotesque human rights abuses, as in the case of Trafigura about which we will hear more later this afternoon—will not get justice.

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[Lord Wallace of Tankerness]

I am grateful to my noble friend. Debate on his amendment might allow a better exploration of the important point raised by the noble Lord, Lord Ramsbotham.

[Lord Beecham]

My Lords, that exchange was quite useful because it illustrated the argument against what the noble and learned Lord seeks to persuade us to agree to; namely, the proposition that these are matters for the Rules Committee. The noble Lord, Lord Thomas, has tabled a sensible amendment that covers the situation raised by the noble Lord, Lord Ramsbotham. However, under the Bill these will not be matters for Parliament. The scope of access to justice will not be in the Bill and will not be the subject of legislation. The matter will be in the hands of the Rules Committee. That is a delegation of responsibility too far in a very significant area of public policy. Therefore, I cannot accept the arguments of the noble and learned Lord.

The noble Lord, Lord Thomas, has tabled amendments that we will debate later. I say in advance that I have sympathy with some of them, including the one to which he referred. Perhaps he will forgive the obvious pun: we understand that there are not many doubting Thomases on the government Benches. He will also understand that we do not necessarily share that perspective and that a degree of scepticism is more naturally to be found on this side.

In respect of one or two other matters, the Heil v Rankin decision is based on a particular level of damages. It is not a binding provision, applicable across the piece, as is suggested in terms of the 10 per cent uplift. It seems to us, and not only to us, that it is imperative, given that we are now dealing with the matter of principle of access to justice via this particular method, that the legislation should encompass the range of issues that arise. It can do so in the form of a starting position and provide for additional regulations to be approved by Parliament later. That would have been an option. I would like to think it might still be an option but I am not getting much encouragement from the noble and learned Lord. I cannot accept that the Government’s position is satisfactory. I am grateful up to a point for an indication that one object of these amendments will take place—that is to say that change will be synchronised. I wish that the noble and learned Lord and I had not synchronised our stumbles today. But in terms of legislation, that is a welcome assurance. Nevertheless, there are significant points of principle here and in the circumstances I wish to test the opinion of the House.

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[Lord Beecham]

My Lords, I thought the party of the noble Lord, Lord Thomas, was a party of conscience and reform. Conscience appears to have taken a back seat. I have a good deal of sympathy with most of the amendments to which he has spoken and I shall briefly comment on them.

Although we would prefer that the success fee were not deducted at all from a successful claimant, the noble Lord’s proposal is clearly better than the Government’s proposal. So, to the extent that the Government might be disposed to listen to him on this, we would support that in lieu of what we regard as an even better position.

The other amendments to which the noble Lord spoke largely depend on matters being determined by rules of the court, which would appear to have a discretion to make the necessary changes, for example, under Amendments 142B, 142BA and 142BB, with the Lord Chancellor, in the case of Amendment 142B, identifying the proceedings but not necessarily requiring the change to be made.

I entirely share the noble Lord’s view about environmental claims, and a subsequent amendment in my name covers much the same territory. In Committee, I quoted at some length the legal opinions to which the noble Lord referred at that time and dealt with the point about the Aarhus amendment and the points made by his noble friend Lord Lester, which, I agree, misstate the position in respect of protective costs orders. The noble Lord, Lord Thomas, is absolutely right to say, as I said on that occasion, that they do not offer a sufficient defence, as it were, to those in that position.

I similarly agree in relation to the civil liberties claims and, again, we have tabled an amendment in somewhat similar terms, with the exception that under the opposition amendments the Lord Chancellor would effectively take the decision which would change the nature of the position in relation to those claims. As that would have to be, as the noble Lord implied at one point, through secondary legislation or affirmative resolution, it is a more accountable way of dealing with matters than simply leaving it to the courts to determine.

In these circumstances I apprehend that the Government will not be disposed to accept these amendments. Perhaps the Minister will be willing to undertake further discussions with his noble friend, if not with anybody else. If not, as the matter clearly will not be put to the vote tonight, I can only record our unfortunate disagreement with the position in which we will end up because it will not be satisfactory. I do not accept that it is undesirable and wrong to look at particular instances which might fall outside the general rules. The Government have acknowledged to some degree that this should be the case in relation to recoverability under clinical negligence. If they can do that in respect of clinical negligence, then they can equally extend a similar principle elsewhere. Having said that, we await the noble and learned Lord’s response.

[Lord Wallace of Tankerness]

My Lords, I thank my noble friend for his amendments. It will come as no surprise to the House if I yet again echo what has been said on numerous occasions on Report: the architecture, as my noble friend Lord McNally referred to it, of this part of the Bill seeks to ensure that there is fundamental proportionality and fairness across the board in these claims, and that is why we have adopted the proposals of Lord Justice Jackson.

The cumulative effects of Amendments 132B, 132C, 132E, 133B, 133E, 139D, 140A, 141ZA, 141ZB and 142B would be, as my noble friend said, a refinement on what has been proposed. When the noble Lord, Lord Beecham, talks about my party and my noble friend’s party as being a party of conscience, it is because we feel that some of the fees that have been charged have been unconscionable under the existing scheme. That is why we wish to address the issue.

My noble friend wishes to introduce staged success fees. I am very grateful to him for his complex set of amendments; he has set out what the fees would be at different stages, on the multi-track approach. His proposals would introduce staged success fees in ATE insurance premiums, the cost of which would be split between the losing defendant and the successful claimant. Some recoverability of success fees in ATE insurance premiums would therefore remain.

I assure my noble friend and the House that we have given the amendments careful consideration, even at this late stage. They are proposed as a compromise and are supported by some but not all personal injury claimant representatives. It is fair to recall that these proposals are not entirely new. In his report, Lord Justice Jackson made primary recommendations that have essentially been adopted by the Government in Part 2. He also made an alternative set of recommendations which, while not identical, bear some considerable similarity to the proposals put forward by my noble friend.

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It is getting late in the evening. I have referred to cases, particularly that of the lady councillor who was on disability benefit. The no-win no-fee arrangement would have taken a great worry away from her, as it certainly did in the case of the soldier. I have declared an interest; the salary that I was earning as a Speaker was on public record, but there is still a worry if you are going to court and you have to engage barristers and lawyers, and take witness statements. You say to yourself, “Am I at risk? Will my mortgage and finances be at risk?”. I urge the Minister to think again. I know what he said about the Jackson report, but in this House and the other place you do not take a High Court judge’s report—no disrespect to High Court judges—fling it on the table and say, “There you are; it is a good report. We’ll all agree to it and go home”. That is not what democracy is about. It has to be tried and tested; and if it needs changing, then we change it. I beg to move.

[Lord Beecham]

My Lords, in fairness to the Government, they did not do what the noble Lord, Lord Martin, suggested. They did not put the whole report on the table and say, “We will have it”, but chose which bits suited them and left out the part of the report that dealt with legal aid, which we have debated at some length, among other matters. However, that is a little beside the point.

I support the noble Lord’s amendment, if only because subsection (4), which it seeks to delete, effectively locks and bolts the door to any subsequent change to the provisions on success fees without primary legislation. That is a formidable obstacle. The subsection is unnecessary and the Government could have dealt with the matter in a way that would have allowed them or a subsequent Government to review the situation without primary legislation. The way that the Bill is drafted does not allow that, and for that reason, if no other, I support the noble Lord’s amendment.

[Lord McNally]

Did the noble Lord, Lord Martin, say “crabby”? My goodness; I have always been thought of as a little ray of sunshine. Of course we have not accepted the Jackson report lock, stock and barrel. We have honed and polished it, and brought it to the House. We have of course accepted the proper role of this House, which is to revise and advise. I listened with a good deal of sympathy to the experience of the noble Lord, Lord Martin, although I have to say that I am not a lawyer, and I would have taken up the case of Christopher Jefferies, never mind anyone else. I think it was the Daily Mirror that accused him of being a Liberal Democrat, which would have been—I had better not say it.

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Moved by

[Lord Beecham]

133CA: Clause 43, page 30, line 25, after “proceedings” insert “, other than proceedings of a type listed in section 58(6A),”

[Lord Beecham]

My Lords, this amendment effectively deals with the position in which public authorities are the defendants to claims. In cases where the state is in fact the defendant—in other words, the converse of the previous situation that we discussed—the amendment would allow for success fees to be paid when a CFA is in place. To give a brief indication of the kinds of cases that might be involved, they would cover claims for assault, battery, false imprisonment, malicious prosecution, trespass to goods or land, and misfeasance in a public office, or claims in a judicial review or under the Data Protection Act and the Equality Act, negligence where there is a wider public interest in the claim being brought—a sort of localised Trafigura situation, one might imagine—or damages in respect of an act or omission by a public authority that involved a breach of convention rights.

Those are all potentially serious matters in which the state is, in one capacity or another, in the position of defendant. In those circumstances, it seems appropriate that the success fee position should not be that advocated for the rest of the legislation—although we have our differences about that too—but that the state should pay the success fee and not expect it to come out of whatever damages might be awarded to a successful complainant concerning acts that the state should never have committed. I beg to move.

[Lord McNally]

My Lords, I hope that my reply to the previous debate has shown our gritty determination to keep to the central architecture of the Bill. As I have explained, abolishing the recoverability of success fees and insurance premiums from the losing side is a key government reform which will reduce the substantial additional costs paid by defendants under the current regime. The reforms are intended to apply across all areas of civil litigation, and the Government do not believe that any exemptions are necessary, fair or desirable. If the amendments were accepted, claimants in these types of cases would have no incentive to control their lawyers’ costs. That cannot be right. Proposals to control legal costs should apply across the board. I urge the noble Lord to withdraw his amendment.

[Lord Beecham]

I decline the request to agree with the Minister. There is little incentive for the Government as a defendant to settle cases when they do not have the additional incentive of a success fee being awarded against them when they lose. However, in the circumstances I beg leave to withdraw the amendment.

Amendment 133CA withdrawn.

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Moved by

[Lord Beecham]

136A: Clause 43, page 30, line 32, at end insert—
“( ) The amendments made by subsections (2) and (4) do not apply in relation to proceedings that include a claim for judicial review of a decision, or of a failure to decide, by a public body.”

[Lord Beecham]

My Lords, Amendment 136A is in another group of amendments that seek to modify the Government’s stance and I anticipate something short of a welcome from the Minister when he replies. Nevertheless, I want to raise these matters. The effect of Amendment 136A would be to permit the recoverability of ATE insurance in judicial review cases funded by a CFA. This is particularly relevant since at the moment there is no proposal to introduce QOCS for these cases. In addition, in any event claimants would have to fund their own disbursements via an ATE policy as well. Particularly in the absence of QOCS, recoverability remains an important issue in those cases.

Amendment 136B would effectively disapply the Bill’s provisions for breach of an employer’s duty leading to physical or psychological injuries—in effect, personal injury claims. I do not propose to repeat what was said in Committee or at Second Reading about the desirability of including personal injury cases within this proposal. The noble Lord will disagree but it strikes me as axiomatic.

Amendment 136C maintains the same approach in respect of professional negligence cases which can take a variety of forms, as we have said before, affecting members of the legal and other professions. The noble Lord will repeat the mantra that we should not be seeking to add to cases where the general principle is disapplied, but this is potentially important. In particular, the loss of money by professional negligence will be compounded by having to pay, potentially, a significant success fee out of damages, which does not seem at all reasonable.

Amendment 136D would give a complete exemption for clinical negligence cases as opposed to the partial exemption which is currently proposed. Amendment 139C would require the Lord Chancellor to make regulations to provide for cost orders to require payment where the applicant has taken out an insurance policy against the risk of liability to pay their own costs within a pre-action protocol period or 42 days in the absence of such a period. This is a potential stumbling block. In an earlier debate I referred to the potential scale of the cost of premiums to cover the cost of disbursements—leaving aside road traffic cases where it will be fairly nominal—ranging from £900 through to a very high claim of around £11,000 in respect of clinical negligence.

I am not anticipating a favourable response at this hour. It is a matter which will have be returned to if not at Third Reading then in future as we see an accumulation of cases in which claimants are put at a disadvantage or alternatively in which many people are deterred from taking proceedings in the first place by the potential cost of organising their own “after the event” insurance to cover disbursements—estimated by the Access to Justice Action Group to be something like 25 per cent of cases, following an extensive trawl through some 69,000 cases. That would represent a significant reduction in the number of claimants actually able to bring their cases before a tribunal. I beg to move.

[Lord Pannick]

My Lords, I am sure the Minister will tell us again that the general regime for success fees and “after the event” insurance must apply to all cases and one cannot have exemption for this type of case. But have the Government given any thought to whether it might be desirable to include in Part 2 a provision similar to Clause 8(2) of Part 1, giving some form of discretion to the Lord Chancellor to exclude from the scope of Part 2, in the light of experience of how Part 2 operates, any categories of case in respect of which it becomes apparent after this Bill comes into effect that the system is not working very well and is causing practical problems about access to justice? It might then be more sensible to go back, in relation to particular categories of case, to the old system under which the unsuccessful defendant would have to pay the success fee. Will the Minister give some thought to whether a general power for the Lord Chancellor to that effect might not be a good idea? Things might look rather different in a year or two from how they look now.

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[Lord McNally]

Amendment 139C, in the name of the noble Lord, Lord Beecham, seeks to amend Clause 45 to require the Lord Chancellor to make regulations to allow the recovery of ATE insurance premiums taken out to cover the risk of paying one’s own disbursements within the relevant pre-action protocol period. As I have already made clear, the Government’s position on ATE insurance is that it should no longer be recoverable from the losing party. Amendment 139C goes against the Government’s reform and we will strongly resist it.

In the same vein, I cannot accept Amendments 136A to 136D, which would retain recoverability of success fees for judicial review, employers’ liability claims, professional negligence and clinical negligence. I have touched on some of these issues before and I do not intend to detain noble Lords further by going into the details of each particular area or trying to assess which litigants should be classed as more deserving than others. As I have said, it would be invidious and unfair to set out exceptions for some claimants and not for others, and we do not intend to do so.

I urge the noble Lord not to press the amendments.

[Lord Beecham]

With my customary reluctance, I beg leave to withdraw the amendment.

Amendment 136A withdrawn.

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[Lord Beecham]

My Lords, I strongly support the noble and learned Lord’s amendment, which makes every conceivable sense from the financial to the legal and logical. I have to say that I do not at all blame the noble Lord, Lord McNally, or the noble and learned Lord, Lord Wallace, but it is a matter of some concern that those responsible were not courteous enough to ensure that the noble and learned Lord, Lord Lloyd, who, after all, is one of the most distinguished Members of your Lordships’ House, should have been supplied with a copy of the document lodged in the Library. Indeed, had I not chanced across it myself today and given him a copy, he might not even at this stage have known of its existence. That is not good enough and I hope that Ministers will have a word with the appropriate members of their staff.

More significantly, the noble and learned Lord makes an unanswerable case for this amendment and I hope that the Minister will be able to say that the Government will respond sensibly. It would assist justice and assist the finances. It seems to me that it would be absurd for the Minister not to accept this amendment.

[Lord McNally]

My Lords, if there has been any discourtesy to the noble and learned Lord, Lord Lloyd, I absolutely apologise and take responsibility for it. I should like to put that on the record. The noble and learned Lord has described our proposal in the past as expensive and inefficient, and has made much of the difference between his and the Government’s figures. As he knows, we have now put our calculations in the Library of the House and I can assure your Lordships that we have given careful consideration to the calculations that the noble and learned Lord has provided. In addition, I have met with the noble and learned Lord, as have my officials, and we have swapped calculations. We have explained that we believe that he is omitting some vital costs from his calculations.

The method we have used is open and transparent. Taking costs to legal aid and to public sector defendants, we believe that the costs to the public purse of the proposals from the noble and learned Lord, Lord Lloyd, to fund expert reports by legal aid is about £17.5 million a year, whereas the cost to the public purse of our proposal for recoverable insurance premiums is between £18.5 million and £19.5 million. The result is likely to be an additional cost of about £1 million to £2 million.

I understand that the noble and learned Lord does not accept our calculations, but we do not accept his. This is a matter on which we have to take a judgment. These additional costs, as he has said, will enable more people to gain access to justice than under his proposals, which are limited to those who are financially eligible for legal aid. For this reason, and for reasons that are set out in more detail in the paper in the Library, we believe that the powers in Clause 45 are the best way to support victims of clinical negligence in a relatively inexpensive and fair way. I realise that this is a clash of figures and a clash of judgments, but I am making my judgment and we are willing to defend it in this House. At this hour, I would urge the noble and learned Lord to withdraw his amendment.

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Moved by

[Lord Beecham]

139: Clause 45, page 31, line 39, at end insert “, (2A) or (2B)”

[Lord Beecham]

My Lords, we return briefly to the question of environmental cases which we also discussed under the amendments tabled by the noble Lord, Lord Thomas. The distinction between these amendments and the previous amendments are that, in this case, the amendments provide the Lord Chancellor with the opportunity to provide by regulation for the changes that are sought; namely, that in respect of Amendments 139 and 140, disbursements related to ATE insurance would be recoverable and, under Amendment 142BC, that qualified one-way costs-shifting would apply, as it should, to these cases. That was recommended by Lord Justice Jackson and I cannot see why the Government would differ from his view. Therefore, for environmental claims and judicial reviews connected with them, QOCS would apply, as indeed they should. This is an important area of policy and potential litigation. As the noble Lord, Lord Thomas, pointed out fully, it needs to be addressed. As I have said, we prefer this iteration of the remedy, but in one way or another the Government should be seen to move in the direction of facilitating these claims under the conditional fee arrangement scheme. I beg to move.

[Lord McNally]

My Lords, Amendments 139 and 140 seek to allow the continued recoverability of ATE insurance premiums in environmental claims to cover the costs of expert reports. Environmental claims will generally involve a number of claimants who could contribute towards the costs of any reports. Alternatively, the reports could be funded under a “before the event” insurance policy should claimants have one, or under an “after the event” insurance policy should claimants wish to purchase one. Further, the claimant’s solicitors might agree to fund disbursements in exchange, perhaps, for an increased success fee. A variety of means of funding disbursements are available in environmental cases without the need for an exception for recoverable insurance premiums.

So far as the other side’s costs are concerned, the Government’s view, as I explained in Committee, is that a protective costs order ought to provide sufficient costs protection in respect of the other side’s costs in environmental judicial review cases, as we set out in our recent consultation. Under a PCO, it will be clear from the outset what costs the claimant will have to pay if the claim is unsuccessful. The order will also ensure that some contribution is made towards the costs of public bodies that have successfully defended the claim. As I said earlier, environmental claims will generally involve a number of claimants and it is right that they should contribute together to costs, at least to some extent. The Government remain convinced that this is the right approach in these cases. We will shortly set out the details of the way forward in the light of our consultation. I hope, therefore, that the noble Lord will withdraw his amendment.

[Lord Beecham]

I beg leave to withdraw the amendment.

Amendment 139 withdrawn.

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Moved by

[Lord Beecham]

142E: Clause 54, page 39, line 24, at end insert—
“( ) A regulated person is not in breach of this section if the body to which the payment is made for the prescribed legal business is a not-for-profit organisation and the payment is in the nature of a service that was provided before 27 July 1999.”

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[Lord Beecham]

My Lords, this amendment deals with referral fees. The Bill provides rules against referral fees and defines the nature of regulated persons, who are effectively prohibited from receiving a payment for referring prescribed legal business to another person. Under Clause 54(4), the legal services in question relate to,

“a claim or potential claim for damages for personal injury or death”,

or where,

“the business is of a description specified in regulations made by the Lord Chancellor”.

I do not know quite what is envisaged by the latter provision, but it is clear that the aim is to inhibit the referral of personal injury claims in return for payment. The regulated person, who for these purposes would presumably be acting on behalf of an injured person, would also be in breach of the subsection if he arranged for another person to provide services to the injured party and was paid or had been paid for making the arrangement.

A number of issues arise from this. The first is that the payment need not necessarily be financial; it could also involve, for example, the provision of another service. It might fall within the scope of the clause—I am not sure whether this was intended—if an organisation referred a client to a solicitor and, as part of their service, the solicitor prepared a will for that client or gave legal advice on another matter that was not related to the personal injury or other category that the Lord Chancellor might specify.

The purpose of Amendment 142E is to make it clear that a person would not be in breach of this subsection if the body to which the payment is made—that is, the person referring the client—is a not-for-profit organisation. There are of course organisations, such as charities and the like, which refer their members or others to solicitors and perhaps other professionals, and receive payment in return. In particular, I understand that a number of medical charities do this. I suppose that at one time organisations such as the Automobile Association, or other motoring organisations that are no longer membership organisations in the traditional sense, might have done likewise. Since they are not-for-profit organisations, it does not seem appropriate that this bar should be in place.

The situation is not analogous to that which the noble Lord, Lord Thomas, dealt with in terms of third-party funding, about which he is absolutely right to be exercised. Therefore, it should not be caught within the prohibition that is envisaged here. It could certainly do considerable harm to organisations and, for that matter, limit the benefit to clients of being referred. As I said, they might be referred on the basis of free advice or advice at a reduced cost, which would presumably appeal to the Government—quite rightly since they are talking about reductions in cost.

Therefore, I hope that the noble Lord will look again at this situation, perhaps with a view to coming back to it at Third Reading if he cannot accede to this measure tonight. There are other amendments before us in this group and there is to be a further amendment which will be taken next Tuesday, so we are not quite in the position of closing the door yet—not before Third Reading in any event. In these circumstances, I beg to move Amendment 142E.

[Lord Hunt of Wirral]

My Lords, in speaking to Amendments 146A and 148A, I wish to say how strongly I support in principle the Government’s proposal to ban referral fees. I declare my interest as a partner in DAC Beachcroft, the international commercial law firm. My amendments are intended simply to clear up some possible loopholes. Having just heard the comments of the noble Lord, Lord Beecham, I caution how important it is to have a blanket ban because any ban that is implemented has to work. However watertight the ban is—my amendments are intended to help the Government achieve that objective—it is critical that we also remove the incentive for referral and profit share by removing the excessive legal costs from the system. There are many vested interests here and a lot of money is at stake—too much money in my view.

At present, solicitors acting for claimants can still afford to pay out more than half of their fees to a third party whose only role is to buy and sell on the details of an injured person. That cannot be right. Amendment 146A would make a minor change to Clause 54(4) by inserting,

“which consist of or include damages”.

I raised in Committee the spectre of the current wording permitting the payment of a referral fee for some non-injury element of an injury claim, completely bypassing the Government’s intentions. I look forward to hearing my noble friend the Minister’s comments on that.

Amendment 148A would insert,

“whether received by the person referring prescribed legal business or not”,

into Clause 54(8). I highlighted in Committee this gap in the drafting which could be exploited simply by the way in which payment is routed. Again, I await my noble friend the Minister’s answer.

Finally, I would also be very interested to hear whether my noble friend can give this House a commitment about just how much of the excess cost can now be taken out of the system altogether, which is, frankly, a more effective remedy than tightening up the drafting.

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[Lord McNally]

My Lords, I think that there is broad agreement across the House about the need to ban referral fees in personal injury cases, as we propose in Clauses 54 to 58. However, there is some disagreement about how it should be done, as this debate has shown.

It may be helpful if, in reply, I deal separately with those amendments with which we have some sympathy and those with which we do not. The Government agree with the intention behind Amendments 146A and 148A in the name of my noble friend Lord Hunt of Wirral. I give the House a commitment that we will bring back amendments at Third Reading to address the issues raised by those amendments. However, the Government cannot agree with Amendments 142E and 146. We believe that it is not in the public interest for payments in receipt of referral fees to be allowed in any personal injury cases, regardless of whether the recipient is a solicitor, a charity, a trade union or some other party. If the provision applies to solicitors who pay referral fees, it must also apply to the not-for-profit organisations which deal with them.

The Government intend to ban the payment and receipt of referral fees in all personal injury cases, and we are not persuaded that there should be special treatment for not-for-profit organisations, or for solicitors dealing with trade unions, to exempt them from the ban. However, trade unions will of course still be able to refer cases, without payment, to those best able to pursue them. Nothing in the clauses prevents lawyers providing services free of charge to registered charities.

A number of points were made in the debate. The noble Baroness, Lady Deech, made a powerful case in favour of what we are trying to do on referral fees. She referred to a case, which we all remember, which shows how the best of intentions can be misused when trying to deal with a problem. I say to the noble Lord, Lord Martin, that I certainly advocate the value of trade union membership, but that there is a danger of trade unions, charities and others having a sweetheart relationship with a firm of solicitors based on referral fees.

My noble friend Lord Hunt of Wirral asked me how much of the excess litigation costs can be taken out of the system. My right honourable friend the Prime Minister has announced that we will be extending the road traffic accident scheme to cover claims up to £25,000, and to cover employer and public liability cases. As part of that process, the Government intend to make an objective assessment of the existing costs involved in RTA schemes, and we expect fixed recoverable costs of £1,200 to be reduced significantly as a result. The new fees will come in when the Jackson reforms in Part 2 of the Bill and the ban on referral fees are implemented in April 2013. Although I cannot give a precise figure, the aim, as in other parts of the Bill, is to squeeze out of the system excessive costs, which are undoubtedly there.

I hope that, in the light of those responses, the noble Lord will withdraw the amendment.

[Lord Beecham]

My Lords, I will be withdrawing my amendment. I must disabuse the noble Baroness, Lady Deech, with whom I shared a law course at Oxford, on the question of the political aspect of union funding. Union funds for political purposes, of course, derive from their political funds and not from general income. The noble Lord, who has a long memory of these things, is acknowledging that, for which I am grateful. It is not just a question, however, of fees, as I have indicated. Other services offered to members, whether they be of trade unions or other organisations, would be caught, apparently, by the Bill as it currently stands. I cannot believe that that is really part of the Government’s intention. Not all unions have an arrangement of this kind, where a referral fee is paid, but unions do have extensive and expensive legal departments which have to be supported. It does not seem unreasonable that those organisations—and, indeed, other organisations; charitable organisations—should have a scheme. I agree that the noble Baroness has identified a particularly abusive situation which, of course, has been rightly dealt with, but that is very much the exception. Having said that, we will, up to a point, be returning to this matter on the next day of Report in a slightly different context. I beg leave, therefore, to withdraw the amendment.

Amendment 142E withdrawn.