Mesothelioma Bill [HL]

Lord Howarth of Newport Excerpts

Wednesday 17th July 2013 Lords Chamber

[Lord Pannick]

My Lords, I have not wiggled my toes but I have added my name to the amendment of the noble Lord, Lord Alton. In his compelling speech, the noble Lord referred to the letter that the Minister sent on Monday. In it the Minister expressed his support for increased research, but he added that,

“unfortunately, the mechanism proposed is just not viable”.

The letter does not provide what we lawyers call further and better particulars as to why the Minister believes that the proposal is not viable; nor did the Minister throw any light whatever on this matter in Grand Committee. Indeed, in his opening remarks this afternoon the Minister very helpfully referred to a number of other matters, but he did not give any explanation in relation to this issue.

In Grand Committee, the Minister focused on a concern that research funding was the responsibility of the Department of Health, while this was a DWP-sponsored Bill. I hope that we will not hear that argument again today. As a matter of law, of course the Government are indivisible, and, as a matter of efficiency, government departments talk to each other. I am encouraged to see the noble Earl, Lord Howe, in his place today.

What other reasons, therefore, could there possibly be for the Minister to suggest that the proposal of the noble Lord, Lord Alton, is not viable? The Government must be satisfied that Clause 13 of their own Bill is viable in providing a levy. These amendments simply provide for a research supplement on this levy, which would be clear as to those who are obliged to pay, the amount and the purpose. Nor can it be that the Minister thinks that these amendments do not reach their target. As the noble Lord, Lord Alton, mentioned, the amendments have been drafted by Daniel Greenberg, a former parliamentary counsel of distinction, who is editor of the authoritative work Craies on Legislation.

Nor could it sensibly be suggested by the Minister that the amendments are not legally viable because they might be the subject of some legal challenge under the Human Rights Act or the European Convention on Human Rights. The Bill contains a levy and there are many other examples of statutory levies introduced by Parliament to advance good causes. The noble Lord, Lord Alton, has given a number of examples; I mentioned in Grand Committee the levy on bookmakers under the Betting, Gaming and Lotteries Act 1963 for the purpose of improving horse racing in this country. If, as Ministers must believe, the levy in Clause 13 is legally viable and those other levies are legally viable, I cannot understand why the amended levy of the noble Lord, Lord Alton, is not equally viable. Any legal action to challenge an amended clause—amended in the terms of the noble Lord, Lord Alton—would be a legal action, to coin a phrase, that is not legally viable.

There is a vital need for research and research funding to combat this awful disease. To include these amendments in the legislation would encourage research. I do not accept for a moment the concern expressed by the noble Lord, Lord Selsdon, that for us to do our job and improve the Bill would somehow hold it up. There is ample time for debate on such matters if—I hope it will not be the case—the other place disagrees with us. When it comes to a choice between liability on the insurers and the Minister’s concerns about viability, I am with the noble Lord, Lord Alton.

[Lord Howarth of Newport]

My Lords, I, like all noble Lords, want to see more research into mesothelioma, above all into ways to prevent people developing this terrible and lethal disease. Noble Lords may be aware that quite recently Russia, leading a group of another six countries —Kazakhstan, Ukraine, Kyrgyzstan, Zimbabwe, India and Vietnam—blocked a move to have white asbestos listed under the UN convention that requires member countries to decide whether or not they should risk importing that substance. I fear that asbestos-related diseases, including mesothelioma, will long remain with us; we will need research for the long term.

I am entirely sympathetic to the purposes of the noble Lord, Lord Alton, his co-signatories to the amendment and the larger number of co-signatories to the letter that they were kind enough to send to us. I congratulate the noble Lord on his dedication in this matter. However, I have some difficulties in accepting the precise proposition of the noble Lord. I have no problem about hypothecating part of the levy for the purpose of research; I accept that precedents are there in the Gambling Act, the Betting, Gaming and Lotteries Act and other measures. I would not presume to take issue with the noble Lord, Lord Pannick, on the question of viability as he has just expounded it. In Committee, I heard noble Lords who are eminent in the fields of medicine and academic research support the case made by the noble Lord, Lord Alton, and I applaud them for that.

However, there is a problem. The insurance industry has told us that it is a willing funder on the basis that the Government will fund the major part of the costs of research. The employer’s liability insurers see themselves as very much the junior partner in that partnership with the state. It was probably not the case with the gambling legislation and the other measures that have been referred to that the Government were expected to more than match the funding that the relevant industry should supply.

These amendments omit to state the implication for government funding of what they would impose on the insurance industry. I wonder why that is so. I can imagine that there are good reasons why the amendments do not require the state to commit itself to fund mesothelioma research specifically.

At one time I was Minister for Higher Education and Science; that experience confirmed me in my very strong belief in the arm’s-length system. If we were to abandon that, it would be only a few steps to the relationship between Stalin and Lysenko. The arm’s-length principle is essential for the maintenance of academic freedom and for research quality. Of course, it is legitimate for the Government to take a strategic view and, indeed, for the Department of Health and the National Institute of Health Research to set priorities and make broad allocations. As the noble Lord, Lord Walton of Detchant, told us, when he was a member of the Medical Research Council, the council identified broad priority areas, although it did not think it appropriate to identify individual diseases for which it was determined to fund research. That was because the criterion for making specific awards must be, above all, that of quality. Peer review, not Parliament or the Government, should determine who receives publicly provided funding for research. It follows from that that funding from the state cannot be guaranteed in perpetuity in any particular field of research.

Ample funding has already been provided by the state for which mesothelioma researchers are eligible to bid. The employer’s liability insurers have already provided funds for research and have indicated that they are willing to continue to do so. Therefore, the problem of finding money for research into mesothelioma is not a lack of money on the part of the state or a lack of money forthcoming from the insurers. The problem must be that there has been a lack of high-quality proposals for research in this field. There may have been some quite good proposals; I think that some 80% of bids to the National Institute of Health Research are unsuccessful. Such is the competition for funding from that source that only the very best receive it, so it is not only people who care very strongly about mesothelioma who are disappointed about the lack of funding in any particular field.

Are we to legislate simply to compel the employer’s liability insurers to do what they are already doing and have stated that they are willing to do? If, for good reason, we are not specifying an obligation on the Government, is the Minister none the less proposing to legislate thorough these amendments to place a moral, if not a legal, obligation on the state to fund mesothelioma uniquely, notwithstanding how weak academically particular proposals might be, and notwithstanding the needs that there are for research funding in other fields?

I am left feeling that these amendments, although I completely sympathise with their intention, do not yet articulate a satisfactory position. I think that in a moment the Minister will report to us on his conversations with the noble Earl, Lord Howe, who it is very good to see here listening to this debate, but I suspect that the noble Lord, Lord Alton, ought primarily to be addressing himself to the scientists rather than to the Government.

--- Later in debate ---

[Lord Howarth of Newport]

My Lords, the common theme of the amendments in this group is that they increase eligibility with a view to increasing justice. I add my personal thanks to the noble Lord, Lord Freud, for all his personal commitment to achieving just outcomes through the legislation, and I hope that he will be willing to contemplate the amendments that I have added to this group.

First, I entirely support my noble friends Lord McKenzie of Luton and Lady Sherlock in their amendments which would bring forward the start date for eligibility to 10 February 2010. Amendment 5 in my name would extend eligibility to a person diagnosed with diffuse mesothelioma who was self-employed at the time of exposure to asbestos. Amendment 6 would extend eligibility to a person who is a member of the same household as a person exposed to asbestos in the course of their work.

The employers’ liability insurers have bluntly and, I feel, rather brutally, expressed their view that the self- employed should not be eligible. As they have explained to us:

“As employers’ liability insurers will be funding the untraced scheme, payments from the scheme will only be made to those who would have been covered by employers’ liability insurance”.

The ABI has, however, made one small, decent concession, saying that under the untraced scheme, if someone has been negligently exposed during employment and self-employment but is unable to find an employer or insurer to claim against, they will be able to receive a payment from the untraced scheme without a deduction for the period they were self-employed.

In Committee, my noble friends Lord Browne, Lord Wigley and Lord McKenzie explained that on the kind of industrial and construction sites where people were negligently exposed to mesothelioma, there was frequently no real distinction between employed and self-employed status. In many cases, it may have suited employers to classify people as self-employed who were, to all intents and purposes, employed. Indeed, in Committee the noble Lord, Lord Freud, himself accepted that,

“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.”.—[Official Report, 5/6/13; col. GC 220-221.]

I am very grateful for what the noble Lord said then, but we need to go a bit further. We need to ensure that everyone, whether they were nominally, technically or otherwise self-employed, is covered and is eligible to receive payments from the scheme.

What is the position of those who were genuinely self-employed, did insure, but whose documentation has gone missing? Should they not be included? The ABI itself admits:

“There will only be a very small category of people who have been solely self-employed and therefore not eligible for a payment from the untraced scheme”.

The Minister undertook to ask the ABI for its figures, but unfortunately, he then had to write to us to say that it did not have any reliable figures. What is clear, by the ABI’s own admittance, is that the numbers are very small.

The suffering of self-employed people who contracted diffuse mesothelioma, and the suffering of their dependants, is no less than the suffering of people who were employed in the technical sense. I believe that it would be wrong for us to abandon them, and I believe that it would cost very little by way of an addition to the levy, to embrace them in the scheme.

In Committee there was extensive concern expressed by noble Lords on all sides about the predicament of members of the household of someone who had been exposed to asbestos in the workplace, who were diagnosed with mesothelioma, when the person who was actually employed had not been diagnosed. Indeed, a household member might have predeceased an employee who has not, or not yet, been diagnosed. The noble Lord, Lord Alton, reminded us of one particular instance, movingly described to us in our proceedings on other legislation, of the sister of the noble Lord, Lord McNally. Other noble Lords in Committee were aware of individual cases where this had happened. In particular, the most frequent instances were when a wife, or perhaps a daughter, was regularly doing the laundry and washing the contaminated overalls.

In writing to us, the noble Lord, Lord Freud, gave us an estimate that an average of 214 cases of mesothelioma would be caused by environmental exposure in the years 2014-24. I take it that that is a wider category that would include household members; indeed, the friend of the noble Lord, Lord Walton of Detchant, the consultant neurologist who died, might have been included. We are talking of a significant, though not a huge, group of people. Is it right to abandon them on the technicality that they were not themselves employees?

The term “secondary exposure” was used in Committee, but I think we are really talking about the direct effect of employers’ negligence. It is the same lethal fibres in the same workplace that will have caused the disease to hit a person, whether self-employed or a household member in the circumstances I have described. Surely it was through employers’ negligence that employees were allowed to come home wearing their contaminated workwear; they should not have done so. On this, the ABI has been silent. Perhaps even it cannot contrive presentable reasons as to why it should not pay out of a scheme which, after all, is not based on precise legal liability.

This scheme deals with the situation of claimants who, by definition, cannot avail themselves of their legal rights. I do not think that the employers’ liability insurers ought to hide behind legal technicalities. If, however, the employers’ liability insurers are adamant, and if the Minister remains reluctant to compel them, then I hope that he will consider levying the public liability insurers. He was as good as his word; he discussed the question of public liability insurance in this context with the Association of Personal Injury Lawyers and with the ABI. He wrote to us following that discussion to say that, in the main, it would be the public liability policy that would apply when the affected person was not directly employed by the liable employer. In many cases, I think it is the same insurer.

I have not tabled an amendment relating to public liability insurance because, as I take it, this is already covered by Clause 13(1), which states:

“The Secretary of State must make regulations requiring active insurers to pay a levy”.

It does not specify active employers’ liability insurers, and in Clause 13(7) I do not see that the definition of the term “active insurer” excludes the public liability insurers. I would be grateful if the Minister would confirm that the legislation as drafted does give him the power to levy the public liability insurers. If that is not the case, I am sure that there will be no difficulty in tabling an amendment for Third Reading.

The Government’s 2008 scheme does not worry about who in particular was responsible for cover; it simply compensates people who have contracted mesothelioma. This new scheme should do the same, and in particular, should embrace mesothelioma victims who are self-employed or household members. The scheme is intended belatedly to make amends, and it should do so fully and generously. If the employers’ liability insurers would accept that, then that would be gracious on their part. I beg to move.

[Lord Wigley]

My Lords, I support these amendments and I will pick up the important points made by the noble Lord, Lord Howarth of Newport. I entirely support his emphasis on the need to ensure that those who suffered at second hand—whether it was the wives, daughters, or sometimes mothers of people in the industry who have been infected by the particles from washing clothes—should most certainly be covered if they have suffered a loss of health as a result.

The implication is that the insurance policies that were provided for the employees in case of negligence by the employer only relate to the employee in a very narrow sense. That needs to be explored in depth because there is a category of people who have undoubtedly suffered ill health and some who have died, and there may well be many more that come through from that avenue.

However, I return to the generality of these amendments. It has been noted in this debate that the scheme proposed by the Bill has its roots in the consultation announced by the previous Labour Government in February 2010, which is the date in these amendments. However, the scope of the assistance proposed in that consultation was, of course, significantly wider than what we have ended up with in the Bill.

--- Later in debate ---

[Lord Wills]

My Lords, I, too, support these amendments and endorse everything that has been said. On Amendment 4, as my noble friend on the Front Bench has said, little credence should be attached to arguments that insurers could not reasonably have expected in February 2010 that a scheme such as this could not have been brought forward in the foreseeable future. Indeed, it is highly likely that the only reason for the selection of that date is that it reduces costs. That is not a negligible consideration, but, as we have heard, those costs are likely to be relatively small. We have heard that they represent a considerable percentage increase, but with all respect that is not the concern here. The issue is the absolute sums that are involved, which are relatively small. They ought to be easily affordable by insurers, particularly in light of the long period in which insurers have got away without paying sums that they should have been paying. In my view, those costs are unlikely to have to be passed on to employers.

[Lord Howarth of Newport]

My noble friend was making the point that for many years insurers got away with not paying compensation. I believe that the figure is that some 6,000 mesothelioma sufferers died uncompensated in the years since 1968. That would have saved the employer’s liability insurers £1 billion. They are very well able to do a little more for mesothelioma sufferers now.

--- Later in debate ---

[Lord Freud]

My Lords, I thank noble Lords for these amendments, which all share the same broad aim: to widen the scope of the scheme to get more people into it. I will take the amendments in turn and address first those tabled by the noble Lord, Lord McKenzie, and the noble Baroness, Lady Sherlock, regarding the start date for eligibility. I will then address the amendments tabled by the noble Lord, Lord Howarth, on the self-employed and household members.

We discussed the start date of the scheme at some length in Grand Committee. Clearly, it has received a lot of focus and continues to do so today. Under Amendments 4 and 8, once the scheme comes into force all living people who were diagnosed with diffuse mesothelioma on or after 10 February 2010 would be eligible for a payment from the scheme. They would also provide that any living dependant of a person with diffuse mesothelioma who had died on or after 10 February 2010 would be eligible for that payment.

Although it hurts to do this, I have to reject these amendments and ask that the noble Lord and the noble Baroness do not press them. I say that in the knowledge of the strength of feeling among all of us in this Chamber that the Bill should go as far as possible to help as many people as possible. The core issue is that this Bill was the subject of intensive negotiation. On top of that, it has been shaped by what I have felt to be innumerable obstacles that we have had to work around, and I need to restate why we cannot move the date as the amendments propose.

The start date of 25 July 2012 has been criticised for being arbitrary, but it is the date on which we announced that a scheme would be set up and it is the most legitimate date on which to commence eligibility. It is from that date that eligible people and insurers alike could expect that the scheme would be set up.

The proposed date of 10 February 2010 relates to the date when the previous Government published their consultation paper, Accessing Compensation: Supporting People Who Need to Trace Employers’ Liability Insurance. If noble Lords will allow me to correct myself, in Committee I said that that was published on 11 February, but other noble Lords were correct and it was in fact published on the 10th of that month. This was a consultation, not a decision in any particular direction, and did not create any expectation that people would be likely to get any sort of payment over and above what the Government provide for people with diffuse mesothelioma. I therefore cannot see that it is an appropriate start date for eligibility, and I fear that, were we to use it as such, it could be more reasonably criticised for being arbitrary than the existing start date.

We touched on the reasons why it took so long from the consultation being published to the scheme being announced to Parliament, so I will revisit them only briefly. I would have liked to have announced the scheme much sooner than 25 July 2012, but the issues involved were complex. We worked closely with stakeholders, including the insurance industry, claimant groups and solicitors, and all in all the process took longer to deal with than I had hoped. In addition to creating an expectation among people with mesothelioma, the announcement gave insurers notice that we intended to bring forward the scheme. From that date, those insurers will have had to factor the cost of the levy into their financial forecasts and plans.

There is one more point to mention that supports using the date of the announcement. Given that the insurers who are paying the levy to fund the scheme are not necessarily the same ones who took the premiums that paid for the historical insurance policies, we have to be able to demonstrate that the costs to them are fair and proportionate. Simply put, the earlier the start date, the higher the costs. If the scheme started on 10 February 2010, the extra costs, as I said earlier in response to the question from my noble friend Lord Avebury, would be £75 million.

Again, I need to take noble Lords from the figure of £119 million that I used in Committee. That figure was based on paying 100% of average civil damages to all claims, regardless of age. The £75 million figure that I am providing now is based on a tariff of 75% of average civil damages, which I have already talked about today, and takes the age of those making a claim into account. I think I owe noble Lords an apology to the extent that I have created any confusion.

I have spoken before about the risk that we take in raising the costs of the scheme. A litigious industry such as the insurance industry could easily delay the scheme with legal challenge if the costs were perceived as unfair. The other risk is that higher costs would be passed on to employers. I know that noble Lords would like us to do more, and indeed the Government would like to do more, but we cannot ignore these risks.

[Lord Howarth of Newport]

The Minister is worried that the employer’s liability insurers will default to the position of litigious opposition to the scheme if we attempt to improve it in these modest ways. Given that insurers have accepted the principle that they should fund a scheme, surely they would have no strong legal case to make in objection. Should he not simply say, “See you in court”?

[Lord Freud]

I have tried desperately hard not to end up in that position, because the “See you in court” line would just end up by tying us up for years with uncertain outcomes and would stop us getting payment to the people who need it from next July, which is when I want the payments to go out. I want this scheme up and running and working in April next year so that we can start making the first payments. I have tried in every way to ensure that we do not run into that kind of problem. The noble Lord may accuse me of not being robust enough, but I assure him that even to get to where we are it could be said that we have had to be as robust as possible.

The real problem is the technical difficulty with the four-year smoothing period that we have to use. We are going to have much higher costs in the first year as it in effect bundles up two years already and one year of running costs, so we are going to have substantially elevated costs in the first year that we have to find a way of smoothing, and we are doing that over a four-year period. If we extended that smoothing back even further to work in another two years’ worth of money—that £75 million—into the scheme, that would open up the whole agreement not just with the insurers but within the Government. On our assumptions, that would in effect push the levy rate up to approximately 4% in that period. That in itself would undermine what we are trying to achieve, which is to ensure as much as we can that these costs are not just passed on to British industry through higher current employer liability rates. That is the core reason. This is always about how much money you can get safely to people, and the adjustment in the amendment would undermine that.

Of course, any start date that we choose will exclude some people. The best possible way forward is to pin eligibility to the date when people with diffuse mesothelioma had a reasonable expectation of a payment and insurers knew that they would need to start factoring in the cost of the levy as an additional business cost.

I need to remind noble Lords again that the existing provision for sufferers of mesothelioma will remain in place for those who are not eligible to come to the scheme. I thank the noble Lord and the noble Baroness again for these amendments. I understand the reason behind them, but I have given the reasons why I would like them not to press them.

I turn to the amendments tabled by the noble Lord, Lord Howarth. These seek to be helpful to a wider group of sufferers, but we cannot extend the legislation to people who are self-employed or who were secondary-exposure cases. The Bill addresses a specific failure of insurers and employers to retain adequate records of employer’s liability insurance, and would provide payments to those affected by this failure who cannot trace a liable employer or employer’s liability insurer against which to bring a civil claim.

Following our discussion in Grand Committee, we talked with the Association of Personal Injury Lawyers, which advised us that an employer would have had to have specifically added elements to their employer liability policy to cover families of their employees. The association was not able to identify any specific cases where this has happened, which leads me to suggest that this is not a common occurrence. Family members who contract mesothelioma through coming into contact with asbestos as a result of someone working with it may have recourse to civil damages through public liability insurance, but our scheme is funded by the companies currently selling employer’s liability insurance and not by insurers more widely.

--- Later in debate ---

[Lord Howarth of Newport]

My Lords, Amendment 16 is in my name. Again, the common theme is that the amendments in this group seek to maximise the amount that will be paid to mesothelioma victims and their dependants. I will come in a moment to my own amendment but I would like to say a few words in strong support of the amendments in the names of my noble friends Lord McKenzie of Luton and Lady Sherlock. It was certainly not the fault of the claimants that the documentation went missing and it is very hard to see why they should bear the burden. The Minister has spoken of the dangers of a disproportionate burden on the employer’s liability insurers, but is it not a disproportionate burden on the mesothelioma victims?

The ABI has put forward various arguments as to why payments under the scheme should not be at the same level as the average of court awards. The first is that an incentive must be provided for claimants to go to court. If they could just as easily get 100% by going to the scheme, why would they bother to go to court? With respect to the ABI, this argument is nonsense. This will not be a matter of choice for the claimants. The Minister’s letter to us of 4 July made it clear that the scheme is designed as a,

“last resort where all routes to civil action against the relevant employer or insurer are closed to the individual”.

The procedures under the scheme will make that a compelling reality. There will be the single portal and the identical search for documentation. Whether someone is on their way to having their case heard in court or considered by the administrators of the scheme, they will have recourse to the scheme only if they are unable to have recourse to the court, so the incentive argument is nonsense.

The ABI has also said that it is important to ensure that the overall cost to insurers is sustainable in the long term. I believe that the overall cost of a somewhat improved scheme—we have been debating today a variety of ways in which that scheme might be improved —would indeed be affordable. Apart from the fact that the insurers did very well for decades in being able to invest the premiums of mesothelioma sufferers whose documentation could not be found and who therefore could not bring a case, we have to remember in addition that between 1979 and 2008 the employer’s liability insurers were effectively subsidised by the taxpayer to the tune of hundreds of millions of pounds, as they were allowed to keep the amounts paid out under the Government’s pneumoconiosis scheme to offset against the cost of the liabilities of the insurers.

Even now, because the Minister declined in Committee to incorporate in the Bill the possibility of creating parallel and comparable schemes for other diseases such as asbestosis, asbestos-related lung cancer or pleural disease, only some 50% of sufferers from asbestos-related diseases stand a possibility of being compensated under this scheme. Those other 50% will in effect be subsidising the insurers. Those are a handful of reasons why I take with deep scepticism the proposition that the insurers could not afford to improve the scheme. We know, indeed, that their case load will fall, so even if it was a little pricey for them in the early years it would rapidly become more affordable. The Government are also going to smooth the way over the early years.

It is unlikely that the cost of these improvements would cause the cost of the scheme to creep above the 3% of gross written premiums. I prefer the DWP’s calculations on this to the ABI’s. However, if that were to happen it would not be a disaster and is not terribly relevant, because it is other factors that move premiums. The Minister’s fear that any improvements to the scheme would lead to the point at which additional burdens were placed, by way of higher premiums, on employers and industry is misplaced. The premiums that are charged in this market are the product of multiple factors and paying the beneficiaries-to-be somewhat more generously would not have an effect on the premiums. I do not believe that the percentage of gross written premiums has any bearing on what premiums are sought in the marketplace. The employer’s liability insurers pitch their premiums at the maximum that competitive market conditions allow. They will always do that, so the Minister’s fear is misplaced and he should call their bluff on that.

Finally, the third reason that the ABI gives is to stop people getting more than the courts would award. In its briefing, it said to us:

“As the payments will be made … on a straightforward tariff, some people will receive more compensation under the scheme than they would have received in civil compensation, and the aim is to set the tariff at a level that means this will only happen in a small number of cases”.

Elsewhere, it told us that the intention is for the tariff to be set “a little below” the average of awards made in civil cases. A little below? The proposition is that 30% should be docked from the average of court awards in the payments provided under the scheme. Seventy per cent was not enough and while we are very grateful to the Minister for easing the level of payments up to 75% of the average of court awards, that is still not enough. Nor would 80%, as in the amendment of my noble friend Lord Browne and the noble Lord, Lord Wigley, be sufficient in my view. Ninety per cent is the very minimum with which we could be satisfied. As the Association of Personal Injury Lawyers has pointed out, the Financial Services Compensation Scheme, which provides compensation where insurers have become insolvent, pays at the 90% level.

I turn for a moment to my own Amendment 16, which would prevent what I regard as excessive demands for repayment by the DWP through its agency, the Compensation Recovery Unit. The rationale for the figure of £110,000 is that if we expect the average of payments over the next 10 years to be £87,000—it may be fractionally more, now that the Minister has moved it up to 75%—and if, as the Minister has advised us, the average recovery required from claimants will be £20,480, add those two figures and you get to £107,500. Round that up a little and you get to £110,000. That is appropriate because payments under the scheme, unamended, will be meagre. At the same time, the DWP —and no doubt the Treasury, lurking behind it— aggressively intends to reclaim 100% in recovery of benefits and lump-sum payments from people who will have received only 70% of what they might have received in court.

Moreover, the department intends no abatement in its reclaiming to take account of pain and suffering, which they would do in the case of an award by the courts. So we risk the £87,000 typical award by the scheme being reduced by around a further £20,000 as a result of the DWP’s reclaims. According to the Association of Personal Injury Lawyers, the best estimate of what mesothelioma victims and their dependants will receive from the scheme will, therefore, be only 60% of what the courts might have awarded. It cannot be right that these people should receive only 60% of their legal entitlement when they have suffered a double negligence: negligence on the part of their employer and negligence on the part of their insurer.

The Minister has said that his intention, in this legislation, is to remedy a market failure. To be frank, that is a euphemism. We are talking about a gross and scandalous dereliction of their proper responsibility on the part of a number of insurers, affecting a significant number of people who should have had cover. This has been a great evil and we should make amends as fully and generously as we possibly can. Is that double negligence on the part of employers and insurers, from which they have already suffered, to be compounded by a double meanness on the part of the Government, insisting on taking 100% of 70% and taking no account of pain and suffering? The Government are being too greedy here.

[Lord Wigley]

My Lords, I shall speak primarily to the lead amendment, to which I have added my name, and return to Amendment 12, which stands in my name, at the close of my remarks.

The scheme proposed by the Bill will provide neither the full amount of compensation to which the sufferer would usually be entitled, nor full protection for those suffering from asbestos-related diseases. It is utterly unjust that those who have already suffered a wrong, due both to their injury and to the negligence of their employers in losing their insurance records, should now face losing a significant percentage of their damages.

The Government have offered the justification that mesothelioma claimants should be encouraged to seek out “all other avenues” before coming to this scheme. As I said during earlier stages of the Bill, this attitude shows a flagrant disregard for the harsh realities of this disease, not to mention the fact that the sufferers usually die very soon after diagnosis, so leaving their families with less compensation than they would otherwise have been entitled to. Of course, I welcome the move to increase the compensation payable from 70% to 75%, and I thank the Minister for securing that improvement. However, whether the Government propose that claimants should receive 30% or 25% less than the average worth of a claim, it is essentially unfair that any reduction is happening at all. By point of comparison, the Pneumoconiosis Act 1979 was designed to award full compensation to claimants and is reviewed annually.

The difference between 100% and 70% compensation for these claims is not to be balked at. On 25 June, the noble Lord, Lord Wills, asked the Government what assessment had been made of the likely impact on the insurance industry if it was made to pay the full 100% of compensation to sufferers under the proposed scheme. In his response, the noble Lord, Lord Freud, said that over the first 10 years of the scheme, if the tariff were 100%, the amount of compensation paid would total £451 million. Under the 70% tariff originally proposed, the insurance industry was, by comparison, forecast to pay £322 million. However, the money that the insurance industry saves by getting away with 70% or 75% is a cost suffered by the victims’ families.

The Minister also said that the Government,

“are getting an average of £87,000 a head to people who suffer from this terrible disease”.—[Official Report, 25/6/13; col. 654.]

It is presumably now nearer to £94,000 at the 75% level. According to the Association of Personal Injury Lawyers, if the tariff was set at 100% and based on the figure proposed by the noble Lord, Lord Freud, the amount of compensation awarded would be around £124,000. That is a £30,000 shortfall in what the victims and their families can expect and it is a big difference. It is a difference of millions of pounds for the insurance companies but, my goodness, that £30,000 difference for the victims will be even harder to bear.

Finally, I want to share with the House two of the many comments that I have been sent by families of asbestos victims. Sandra Emery wrote:

“It took Parliament … a hundred years to ban asbestos. As a result, I have lost my mother and brother to mesothelioma. Please do not compound the error by passing such inequitable legislation”.

As Kerry Jackson says:

“All victims and their families deserve 100% of what they are entitled to … this is a disease that has come through pure neglect”.

I ask the Government for an undertaking that they will continue to seek other ways to increase the compensation to around 100%. I plead with them to reconsider. I will not be pressing my amendment for the 80% level, which I would have done had the Minister not come forward with an increase. However, in order to register my support for the principle, if the 100% amendment is pressed to a vote I shall support it.