Enterprise and Regulatory Reform Bill

Lord McKenzie of Luton Excerpts

Wednesday 14th November 2012 Lords Chamber

[Lord McKenzie of Luton]

My Lords, I rise to speak on one specific aspect of the Bill, but one that I consider to be very important. I refer to Clause 61, already spoken to by my noble friends Lady Dean, Lord Clinton-Davis and Lord MacKenzie of Culkein. This is a provision which seeks to turn back the clock on employer liabilities for breaches of health and safety duties. I wholeheartedly agree with the assessment of my noble friend Lord Whitty that it is an “ugly” part of the Bill. Noble Lords will doubtless have had briefings from the Law Society, the Bar Council, the Association of Personal Injury Lawyers, the Personal Injuries Bar Association, trade unions and the All-Party Health and Safety Group. They deliver a consistent and compelling message: if adopted as it stands, this clause will mean fewer injured employees being able to claim for their injuries, claims will be more costly to pursue, greater costs will fall on the state and safety standards for employees will fall. As the Association of Personal Injury Lawyers points out, if the Health and Safety at Work etc. Act 1974 is amended in accordance with this clause, the law relating to workplace health and safety will be returned to where it was more than a century ago, which is quite unbelievable.

Currently when a worker is injured at work, perhaps by inefficient and unsafe machinery provided by an employer, they do not need to prove negligence to make a claim for compensation because the regulations provide for “strict liability”—that is, liability without proof of fault on behalf of the employer. The law was changed to create this situation because it became abundantly clear that it was difficult for employees to prove fault on behalf of the employer. As the Bar Council put it by way of an example, the equipment may have been chosen and bought by the employer, installed by the employer, maintained by the employer, and the employee may have been required to use it. The employee may know nothing of the history of the machine, and will probably be in no position after the accident to investigate whether the employer was at fault for the machine breaking down and injuring them. If Clause 61 remains intact, an injured person would have to rely on the law of negligence to claim compensation in the future. This is a much more complex approach, with the burden of proof shifting to the employee. The balance of power in these matters will shift dramatically against employees, a point that the noble Lord, Lord Low, made earlier.

Litigation will become more costly, time-consuming and protracted for everyone. Of course, the gainers from reduced compensation claims are the insurance companies because compulsory employer liability insurance would otherwise have to meet these costs. It certainly was the case that premiums on such policies have never been particularly sensitive to differential health and safety performance. I doubt this will change much, so employers will not see reductions in premiums. If the gainers are the insurance companies, the losers are the individuals, their families and, of course, the state. We should be mindful that compensation should not be viewed as some bonus or prize for an individual or family. Who would not want their life back to where it was before an accident rather than have the compensation? Which family would not prefer to have a loved one, who will never return home, back with them again?

The state will pick up the tab too. There is a scheme for compensation recovery where the state—the DWP, in fact—recovers elements of civil compensation awarded where benefits have been paid to claimants. In 2011-12, this amounted to some £75 million. Fewer compensation claims will mean reduced compensation recovery and therefore greater costs on the state. The adoption of Clause 61 will send signals to employers that they can be more lax in their health and safety arrangements. Coming at a time of restricted funding for the Health and Safety Executive, the curtailment of proactive inspections and the lack of resources for major preventive campaigns, all this risks undermining our health and safety system.

The Government point to the recommendations of Professor Ragnar Löfstedt in his independent review, Reclaiming Health and Safety for All, as the basis for these provisions, but they can derive no such authority. The report recommended that a review of the strict liability provisions should be undertaken by June 2013, with either a qualification of “reasonably practicable” attached or consideration of removing civil liability, but no such review has been undertaken—or certainly no review involving notice, consultation and engagement with stakeholders. As we have heard, the clause was slipped into the Bill on Report in another place with little opportunity for scrutiny. That task now falls to us.

The Löfstedt review concluded that there is no case for radically altering our current health and safety legislation. It is fit for purpose. Indeed, it states in its foreword to the Minister:

“There is a view across the board that the existing regulatory requirements are broadly right, and that regulation has a role to play in preventing injury and ill health in the workplace. Indeed, there is evidence to suggest that proportionate risk management can make good business sense”.

We strongly support this view, although it could not have been music to the ears of much of the Government, where we have heard the Prime Minister perpetuating the myths around health and safety to get cheap conference platform applause. Neither is it palatable to a Government who believe deregulation is the answer to everything, despite it not yet delivering sustainable growth.

We should be proud of our health and safety system in the UK. It was born of a political consensus generated by the Robens report and the Health and Safety at Work etc. Act 1974. Its core that those who create the risks are best placed to manage them is indeed central to the issue before us today. Over the years, it has helped save hundreds of lives and hundreds of thousands of people from being injured. It is a tribute to the Health and Safety Executive, local authorities, trade unions and stakeholders such as IOSH, RoSPA, the British Safety Council and others which strive to deliver the message of proportionate risk management. Indeed, it is an approach that helped deliver the extraordinary health and safety outcomes for the Olympics recently.

However, we should not be complacent. Still too many people die or are injured as a result of work. The system is beset by too many myths, sometimes happily perpetuated by the tabloids and politicians. Overzealous application remains a challenge. This is why we must fiercely resist Clause 61 as set out, which would undoubtedly further undermine our health and safety system. It is wrong in terms of parliamentary process, egregious in content and its outcomes would be grossly unjust. It must be removed from the Bill.