Mesothelioma Bill [HL]

Lord McKenzie of Luton Excerpts

Monday 20th May 2013 Lords Chamber

[Lord McKenzie of Luton]

My Lords, I thank the Minister for his explanation of the Bill, for facilitating a briefing with officials and the follow-up notes, and indeed for his kind words. The core of the Bill, a lump-sum payment scheme funded by insurers for those diagnosed with diffuse mesothelioma who cannot otherwise access redress from their employer or an employer liability insurance policy, is one that we strongly support. The Bill has its shortcomings and we will outline our view on those in a moment, but they will come as no surprise to the Minister. Without this sounding too much like a love-in, we should acknowledge the Minister’s personal commitment to bringing forward this legislation, which I can well understand has involved difficult discussions with the insurance industry, which in times past has resisted such arrangements.

We must also take this opportunity to pay tribute to those who have campaigned tirelessly for those whose lives have been blighted and shortened by exposure to asbestos and other occupational poisoning, not least the trade unions and the Asbestos Victims Support Groups Forum. Doubtless the campaigns will go on, but their efforts have not been in vain.

Mesothelioma is a particularly pernicious disease of malignant cancerous cells in the mesothelium, creating great suffering. It is caused by exposure to asbestos, as we have heard, and is invariably fatal. Life expectancy post-diagnosis is between nine and 13 months. As we have heard, mesothelioma is a long-latency disease that might not be diagnosed until 30 or 40 years after exposure to asbestos.

As the Minister has explained, the passage of time between exposure and diagnosis might mean that the negligent employer cannot be located or might have gone out of business and, as important, that the employer’s liability insurance policy that should have covered the employee cannot be identified. Such individuals are currently thrown back on statutory schemes and benefits for support.

It is, then, entirely reasonable that the insurance industry, which has had the benefit of the premiums over the years, collectively funds by way of a levy a scheme that supports those who cannot make a civil claim. We have not seen the detail of the scheme and look forward to draft rules being available in Committee, together with some detailed indicative figures of payment values and the construction of the tariff, and indeed details of the technical committee.

However, on the basis of explanations given so far, we have some concerns and disappointment with the Bill. The suggested levels of compensation at around 70% of average damages awarded by the civil courts are too low and unfair; we reject the “careful balance” proposition. Coverage is inadequate; not all asbestos-related or other long-tail diseases are covered. The cut-off date for the scheme at July 2012 is too restrictive. And the prospect of the insurance industry running the scheme gives rise to possible conflicts of interest: on the face of it, insurers have been able to negotiate a proposal that excludes half of asbestos victims, liability for claims before July 2012 and a 30% discount on compensation levels. This must be challenged.

We should also like to see the insurance industry, through the scheme or otherwise, continuing with an earlier commitment to fund ongoing medical research into cancer. The ABI reminds us that in recent years the insurance sector has contributed some £3 million to the British Lung Foundation. Was the prospect of ongoing funding part of the negotiation surrounding the arrangements in the Bill? We make common cause with those who believe that the industry should commit to a further round of funding research.

The Government seek to justify setting payment levels at some 70% of average damage levels awarded by the civil courts. They argue that the level of the award should be below the 100% level as a means of encouraging claimants to seek to trace an employer or employer’s liability policy that could lead to higher compensation. We challenge this analysis, and certainly wish to examine in Committee the effect of using a tariff based on average civil compensation. The process for a claimant to establish exposure to asbestos and a relevant employment nexus and to seek to trace an EL insurance policy would be necessary for entry into the scheme, just as it would be for making a civil claim. Indeed, would not both have to go through the same portal in future?

That aside, though, it is surely indefensible to pay compensation at 30% less just because someone cannot identify an employer’s liability policy—a policy that existed but now, through no fault of the claimant, is lost or destroyed. As the briefing from the Asbestos Victims Support Groups Forum points out, reduced scheme payments are an invitation to individual insurers to see the scheme as a cheaper option. Why pay full individual compensation when you can pay 70% of average compensation? We will seek to get some improvement to the proposed compensation levels in Committee.

We support the imperative of getting the scheme for those diagnosed with diffuse mesothelioma in place as quickly as possible, and recognise that, in a way, the fact that the awful consequences of a disease that is invariably fatal must have been caused by exposure to asbestos and negligence, when an employment is involved, creates a scenario that makes for some administrative simplicity.

However, there is no moral reason why the scheme should just be limited to mesothelioma. For the future, the tracing office, ELTO, will improve access to compensation, although it is by no means yet perfect, but it will be a long while before it covers long-tail diseases. In Committee we will examine why the scheme cannot be extended to all asbestos-related and long-tail diseases, and at least see why the Bill does not provide for an extension of the scheme in future in a way that does not hold up the current proposals for sufferers of mesothelioma. Can the Minister say—I think he did in his opening remarks—whether the Bill currently precludes such an extension, and if so why, particularly as the technical committee can be expanded to cover diseases over than diffuse mesothelioma?

The Government have set the start date of the scheme as 25 July 2012, for the reasons which the Minister outlined, which is more than two years after the close of the February 2010 consultation. During that period, another 600 people will have died from this awful disease without them or their dependants receiving proper compensation. We will argue for an earlier commencement date but not an open-ended commitment. There are, of course, other things going on in this area. The ABI makes clear that it sees the pre-action protocol, fixed-cost arrangements, the central mesothelioma claims gate or portal, and improvements to ELTO as an intrinsic part of the overall arrangements.

Clearly, only a part of this package is before us when considering the Bill, so it is difficult to evaluate the overall effect. However, concerns have been expressed about whether the pre-action protocol might make matters more difficult for claimants by imposing a more onerous burden in upfront disclosure rather than streamlining the claims process. Can the Minister say how the emerging process will improve on the current civil litigation fast-track process operated by Senior Master Whitaker? Can he also say whether the Government see these other components as an intrinsic part of an overall package and how the terms of the support scheme might have been modified because of them?

Concerns in this area have been heightened generally by the Government’s tightened attitude to compensation for workplace injury, displayed by the denial of future claims of strict liability and breach of statutory duty for health and safety failures. The Bill allows for the scheme to be administered by the Secretary of State or for this to be undertaken by another entity. Our briefing sets out that the insurance industry itself is setting up a body to run the scheme, and this might have timing benefits because it can be developed while the legislation is proceeding through Parliament. This might be so, but we need to examine possible conflicts of interest as the scheme administrator is supposed to help claimants or their dependants to bring and conduct proceedings against insurers.

Moreover, the ABI expects the technical committee to be set up by ELTO, which has itself been set up by the industry. The technical committee will consider evidence of whether or not a particular insurer will provide cover. Its decisions in this regard are binding on insurers—active and in run-off—and claimants are subject to review and arbitration. Can the Minister say whether it is agreed that ELTO will set up the technical committee? We will want to test the balance of power in all this where the ABI expects that the insurance industry will administer the support scheme, has developed ELTO and expects to run the technical committee, and is developing and expecting to run the portal.

It is shocking to think that in this rich and sophisticated country of ours more than 2,000 people each year will continue to die from this terrible disease, which is a consequence of past negligent employer health and safety practices. It is also important to recognise that the problem has not gone away. We need to support the HSE and others in current awareness campaigns. Despite some misgivings, this Bill is a welcome step forward. It will get compensation to some 300 sufferers of mesothelioma or their dependants each year who previously could rely only upon support from the state. It will enable benefit recovery for the Government of some £50 million net. We will work with the Minister to seek to improve the scheme where we can but will do nothing to frustrate its speedy passage on to the statute book.