Mesothelioma Bill [HL]

Lord Howarth of Newport Excerpts

Monday 22nd July 2013 Lords Chamber

[Lord Howarth of Newport]

My Lords, if it is in order to make some brief remarks in the debate on these amendments which go a little wide of them, as the Minister has just done, I will do so now rather than on the Motion that this Bill do now pass. In the absence of the noble Countess, Lady Mar, I will take a chance and hope to have the indulgence of the House. In our proceedings on the Bill, we have considered very closely the predicament of people who have suffered the tragic misfortune of contracting mesothelioma. This predicament has elicited strong feelings of sympathy all around your Lordships’ House. It is the role of your Lordships’ House to advise our elected colleagues in another place and I would like to reflect for just a moment on what the essence of that advice should be.

In the Bill, we are attempting to deal with the consequences of what should certainly be regarded as a major scandal. Of course, among employer’s liability insurers there are many honourable and conscientious people, but in their ranks there have also been, I regret to say, a significant number who have been deeply dishonourable and reckless. Some of the employer’s liability insurers have behaved as badly as the worst of the bankers and the worst of the touts of mortgage loans did in the run-up to the crisis of 2008.

Because of the long latency of mesothelioma and the three to four decades that the disease takes to incubate, there was scope for genuine administrative confusion, but a significant proportion of insurers have managed to lose the documentation that would have enabled mesothelioma sufferers to make a claim against their employer, or their employer’s successor, and perhaps to make their case in the civil courts. Within that number, it is very clear that there were also significant numbers of insurers who wilfully destroyed that documentation. Such negligence and criminality in relation to people who are doomed to suffer from this most horrible illness and to die of it seems peculiarly cynical and, I would say, depraved. There has been the inhumanity of that but there is also another fundamental issue at stake; the proper administration of contracts is fundamental to the functioning of a free-enterprise economy and to the maintenance of trust in society.

We have all admired and applauded the Minister who, building on the initiative of my noble friend Lord McKenzie of Luton, negotiated with employer’s liability insurers the scheme that this Bill would legislate. The Minister and his officials have invariably been helpful to us, and he was most generous in his remarks just now about noble Lords who have participated in these proceedings. As he said, it has been a collaborative process. We recognise and thank him for the improvements that he has made to this scheme during the passage of the Bill—the raising of the rate of payment to 75%; his agreement that details of the scheme should be brought in by regulation; his acceptance of the principle of an oversight committee; and his decision that the scheme should go out to open tender. I am sure that he will continue to give attention to the significant issues raised just now by my noble friend Lord Browne. The noble Earl, Lord Howe, made a very constructive set of proposals in response to the noble Lord, Lord Alton, on how to facilitate and fund further research into mesothelioma.

The difficulty that the Minister has had, and one that we entirely understand, is that having conducted his negotiation with the industry and reached an agreement with it, he has found it very difficult to budge from the exact terms of that agreement. I do not think that Parliament is bound by the terms of an agreement negotiated between the Government and the industry. Indeed, it is the responsibility of Parliament to improve the scheme further if we can in the public interest. There is therefore a small number of issues which we should commend to our colleagues in the House of Commons for their further consideration. I hope that they will want to look again at the rate of payment and the date for eligibility. I very much hope that they will want to look at the plight of people who are at the moment excluded from the scope of the scheme, such as members of the households of people who were employed and exposed to asbestos, where the employee has not so far contracted the disease but the household member, perhaps someone who did the household laundry and washed the contaminated overalls brought back from the workplace, has contracted it. People in that situation are not covered by the scheme. The self-employed too, even if self-employment was something of a technicality, will not be eligible to benefit. I hope also that the Government will after all agree that there should be an annual report on the progress of the scheme to assist Parliament in its necessary further vigilance in the interests of mesothelioma victims.

I know the Minister has been fearful that if such refinements to the scheme were to be brought in by way of amendments to the Bill, the insurance industry would take away its bat and ball and revert to its customary position of taking legal action to prevent the Government from requiring it to do what in decency and justice it ought to do. Of course, we do not want to see any delays to the implementation of the Bill. I hope that Members of the House of Commons will take the view that a legal case by the employers against minor improvements of this kind to the Bill would be very weak indeed, given that they have accepted the principle that there ought to be a scheme of this kind which they should fund. My noble friend Lord McKenzie of Luton has demonstrated that the costs of such improvements would be affordable, and I do not believe that the employer’s liability insurers would be so shameless as to go to court to try to prevent these modest further improvements and further advance of justice for mesothelioma victims.

In the course of our proceedings on this Bill in your Lordships’ House we have defined the issues and laid out arguments and I very much hope that our colleagues in the elected House will wish to pursue these issues.

[Lord James of Blackheath]

My Lords, I had not expected to rise at this stage of the debate but, having listened to the noble Lord, Lord Howarth, I feel compelled to do so on behalf of the insurance industry, as he has made a serious allegation of fundamental dishonesty within it. I remind the House that I myself have stood trial in the USA on a charge that would have got me 24 years in the slammer, and was acquitted. At issue was the integrity and honesty of the British insurance industry, for which I signed the audit certificate that led to the ultimate creation of Equitas. The noble Lord should remember that we are a very public arena, and that there are many in the world with other motives who will look to get any crumb of comfort that they can to mount an action that would lead to a financial advantage for them.

The issue on which I was arraigned in the Justice Courts in New York was that, with the fundamental insolvency of Lloyd’s of London totally at issue, I had signed an audit certificate that said it was solvent when it was not. I had seven days’ non-stop interrogation on the subject, but I won. I would like to go on the record to this gathering, for the outside world as well, about why I won so that we may not find that we are undermining the integrity and financial security of the insurance industry on which this scheme will depend. There is no point in us busting the world of the insurance industry for the sake of the Bill and getting nothing.

The point was that I had signed an audit certificate to say that Lloyd’s of London was solvent and could meet all its liabilities, at a time when most people believed that it could not. I relied upon Section 18(1) of the Insolvency Act, which by the greatest irony I wrote when I was assistant to Sir Kenneth Cork in drafting it. The Act makes very specific statements about what justifies a claim for solvency, and I claimed that those conditions were met in the case of Lloyd’s. The ultimate proof that it was is the fact that Equitas, whose creation by Lloyd’s of London I chaired, has been sold to Warren Buffett for an enormous amount of money, with a guarantee that he will fulfil Equitas’s entire liabilities. In the process, he will pick up about £3 billion in pocket money for himself, and good luck to him.

The events of those days cast a very long shadow. The noble Lord, Lord Howarth, may be right in his comment that there was dishonesty in the loss of documentation and the avoidance of liability by those devious means, but there is no question of integrity in the industry with which we are dealing. It is adequately funded and has adequate backing, and it is completely solvent for the discharge of all the liabilities that we want to meet, including those that we are discussing in the Bill. It would be an outrageous act of complete disregard for the facts of history and the integrity of the industry if we were to cast any doubts on its ability to stand behind its liabilities. The issue is that there are these liabilities but there are the reserves in the world for them—you just have to find the key to unlock them, and the Bill is a wonderful part of the process of doing that. There is no question of the integrity of the industry regarding its solvency.

[Lord Howarth of Newport]

I hope that the noble Lord will accept that I did not in any way impugn the general integrity of the industry, let alone cast doubt on its solvency or its capacity to meet its obligations. I asserted, and I believe this to be correct, that there were within that industry at one time people who behaved dishonestly and, because it was convenient to them, allowed that documentation to go missing.

[Lord James of Blackheath]

I thank the noble Lord for that. I hope that he will appreciate that my concern was that I did not want to start the forthcoming Session by doing the perp walk down the middle of a 747 on an extradition order back to the USA.