Mesothelioma Bill [HL]

Lord Howarth of Newport Excerpts

Wednesday 17th July 2013 Lords Chamber

Moved by

[Lord Howarth of Newport]

17: Clause 7, page 4, line 12, at end insert—
“( ) must ensure as far as possible that the scheme administrator is unbiased as between the interests of the insurance industry and the interests of applicants to the scheme,”

[Lord Howarth of Newport]

My Lords, this amendment is intended to highlight the important issue of conflict of interest, which we have not sufficiently considered so far in our proceedings. The Government are proposing that a scheme intended for the benefit of mesothelioma sufferers should be run by the same insurance industry whose negligence deprived mesothelioma victims of legal redress and which for years held out against fair and decent treatment. As envisaged by the ABI, the industry would create an incorporated body, accountable to its funders in the industry through its board.

In its briefing to us, the ABI has made no mention of the possibility of competition that the Minister informed the House about earlier today. I applaud his intention to ensure that there is a competitive tender of the administration of the scheme; that is right in principle. However, it may be difficult for the noble Lord to find other tenderers that are competent to run the scheme. Let us see.

Meanwhile, the difficulty we need to keep clearly in sight is that it is in the insurers’ interest to pay 75% or even less of the average civil court settlements. It is in their interest to avoid costly procedures and negotiations of the kind the court route requires of them. Indeed, it is in their interest to determine that applicants for awards from the scheme are found to be ineligible. It is in their interest, after all, to reduce the levy.

The Bill, as drafted, and the scheme, as proposed, create an administrator and a technical committee that have pretty well plenipotentiary powers to assess eligibility, the validity of documentation and the significance of evidence. Under Clause 4(3)(b), the scheme may,

“in particular, give the scheme administrator power to decide when to impose conditions or what conditions to impose”.

That is a fairly blank cheque. In the scheme contents that we have been shown, which are to be brought in by regulation, the scheme administrator has powers to refuse altogether to make payment. We need to be well aware that there is a bias built into this system. It may be unavoidable but it is there.

The ABI has informed us that, of 4,051 ELTO searches in the year from May 2011 to April 2012, 2,354 were successful in tracing the documentation; it follows that 1,697 were unsuccessful. Yet the ABI is predicting that only 200 to 300 claimants will be found to be eligible each year. What is to happen to the other five-sixths of those whose documents could not be traced?

The powers of the administrator and technical committee are, as I have suggested, almost total. Admittedly, there is provision for reviews and appeals and, if this is to be a body created under legislation, there may be scope for judicial review, but that of course is not a desirable way to resolve these cases.

The insurance industry is going to be judge and jury in what is in its own interest. The case for using the insurance industry to administer the scheme is that it understands the business. However, I hope that the Minister will describe to the House how he intends to ensure fair play. The history of employer’s liability insurers does not inspire confidence and it is not satisfactory to design into the scheme a blatant conflict of interest. Therefore, the question is: will the oversight committee proposed in the amendment from my noble friends on the Front Bench be sufficient to ensure fair play?

My Amendment 30 would require the Secretary of State to report on the performance of the scheme and the administrator to Parliament each year. This amendment is modelled on a provision that the Government have written into the Intellectual Property Bill. It is an admirable provision. If the Minister is willing to agree that there should be an oversight committee, should it report to the Secretary of State and the Secretary of State then report to Parliament on an annual basis? I hope that that will be the case. The matters on which we should look to the Secretary to State to report to Parliament include: the performance of the administrator; all the relevant data and statistics to enable us to know the performance of the scheme in detail; the number and variety of cases; the speed at which cases are processed; the pattern of tariff payments; the evolving relationship between payments under the scheme and awards made by the courts; and the scale and nature of compensation recovery unit recoveries from payments. We should also be told about what is happening in the field of research, which we debated at length this afternoon.

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Other amendments deal with the issue of scrutiny via some form of oversight committee. We are still working on the details, but we expect that performance information will be made available, probably online. This may be in another format. Perhaps it will be monthly rather than annual. We are looking at the matter and will consider it alongside the oversight committee. Indeed, the oversight committee may have views on the best way to make the information available. With that, I urge the noble Lord to withdraw his amendment.

[Lord Howarth of Newport]

My Lords, I am grateful to the Minister for his full response to each amendment in this group. He tells us that sufficient safeguards are in place to ensure the objectivity and unbiased behaviour of the scheme administrator, and asks us to accept that the open procurement competition will be a contributor to guaranteeing that impartiality. However, it may be difficult for him to find anybody competent to run the scheme who is not in the industry, so the problem of conflict is likely to persist. I do not wish continuously to impugn the motives of people in the insurance industry, and would like to think that those who are appointed to work as administrators of the scheme will set out with the best of honourable intentions.

We are always being warned, however, that we should avoid situations of conflict of interest and, from time to time, people are vulnerable to the temptations that conflicts of interest present to them. There is a whole institutional temptation here because the insurance industry stands to gain significantly from cases not going to court and from cases not being handled generously by administrators, who will have such absolute powers of determination. I therefore remain concerned about this, although the Minister offered a little reassurance about Clause 4(3)(b) when he said that it was harmless. Certainly, on the face of it, the wording of it seems to give enormously large powers to the administrator, but I accept what he said about the purpose of that particular piece of drafting.

Moving on to the oversight committee, it is good that the Minister agrees that there should be such a committee; he made his points about getting stakeholders on to the board of ELTO and the technical committee being within ELTO, so that stakeholders would be in a position to keep an eye on the performance of those parts of the whole apparatus. He said, understandably enough, that he wants a non-legislative solution, but we will probably want to know a good deal more about the provision that he intends to propose before we can agree that it is right in principle that there should be a non-legislative solution. My noble friends may want to reserve the right to return to that, whether that is here or in another place.

As to the report on future schemes, the Minister again rejected the proposal from my noble friends, as he does not want to divert scarce resources—no doubt of time and energy, as well as money—to preparing that. He suggested that the complexities of the other asbestos-related conditions are such that they would not fit well into the mould of the scheme that we are legislating for in this Bill. I hope, however, that the Minister will continue to reflect on the fact that there are—as my noble friends explained compellingly, and rather movingly—large numbers of people who are suffering from these other conditions. At the moment they have all too little support; we know that there is a vast disparity between the lump sums that are paid under government schemes and the awards that the courts provide and the lesser payments that the scheme will provide. These people continue to be seriously disadvantaged and we cannot be happy with that.

I was pleased that the Minister was able to tell us that the success rate in tracing has been improving spectacularly, which suggests that it could always have happened if there had been the will on the part of the industry to do this. We must be pleased that it is now doing better but, equally, we must have means to keep the pressure up and to ensure that, in the future, there is not again any deterioration in the success rate of tracing and, above all, that elements of the industry do not resume the practice of conveniently losing or shredding documentation, which is the great scandal. They are getting off all too lightly in that regard.

On the annual report, the subject of Amendment 30, the Minister wanted us to accept that scrutiny and reviews are already planned and that we do not need to worry because everybody will keep an eye on it and Parliament does not need to be too bothered by it. I do not think that the annual Written Ministerial Statement that the noble Lord has promised is good enough for Parliament, even when combined with the online information that he said will be made available. He will have seen already the intensity of interest in your Lordships’ House and he will certainly see both greater intensity of interest in the House of Commons when it comes to scrutinise this Bill and a wide and deep concern across the country. I think that it is a proper responsibility of Parliament to invigilate this process, and an annual report is a convenient and practical means for Parliament to do so. Therefore, I am disappointed that the Minister has resisted that. This is a subject that I think we will wish to return to but, in the mean time, I beg leave—

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[Lord Freud]

My Lords, my aim is to know where we are with the structure over this Recess. I think that I owe the noble Lord a letter at the end of the Recess setting out where we have got to on that so that he will be able to talk to his colleagues in the other place. If he thinks that a gap is developing, that is a way for me to handle that uncertainty.

[Lord Howarth of Newport]

In the mean time, I beg leave to withdraw the amendment.

Amendment 17 withdrawn.