Mesothelioma Bill [Lords]

Mark Reckless Excerpts

Monday 2nd December 2013 Commons Chamber

[Tracey Crouch (Chatham and Aylesford) (Con)]

It is a pleasure to speak on this issue, on which I have a great deal of knowledge from working in the insurance industry for five years before I became a Member of Parliament and from representing a constituency with very high levels of mesothelioma. Britain has the highest rate of mesothelioma in the world and sadly that rate is rising. In the past five years, the south-east of England has had the highest rates of deaths from mesothelioma compared with anywhere else in the UK. Medway, with its heavy industry and dockyard history, is a particular hot spot.

Mesothelioma is a horrific disease that is contracted exclusively by exposure to asbestos. Those who are diagnosed are often dead within a year. For many years, lawyers and insurers have taken their time to settle claims through civil procedures, leaving great financial uncertainty for sufferers and their families. A great deal has been done to speed up civil claims for victims and tribute ought to be paid to the work of Senior Master Whitaker for making that happen. However, there remains a small yet significant group of people who contracted mesothelioma but could not be compensated either because of poor record keeping by their employer or their employer’s insurer, or because neither existed any more.

The Bill will help to rectify that and is therefore welcome, but it still contains shortcomings that, if Ministers, insurers and lawyers were open-minded, could be rectified at little extra cost to them. Before going into detail, I congratulate Lord Freud on his sterling efforts to introduce the Bill. From my own experience of working in the insurance industry and alongside lawyers, I know that the negotiations would have been very difficult. He deserved the praise he received from peers on both sides of the House as the Bill progressed through the other place, but it still lacks fair compensation for victims of this dreadful disease.

In my preliminary discussions with interested parties, there was consensus on one point: the Bill will give sufferers something. That is true and something might be better than nothing, but the Bill puts the something squarely in the pockets of the insurers and lawyers, and not as much as there should be in the hands of the victim. The victim is the one who turned up to work and was exposed to asbestos. The victim is the one who happened to work for a company that kept shoddy records. The victim is the one who will die through no fault of his own. The Bill has room for improvement, based on further compromise.

Their lordships debated the Bill on a set of assumptions that have been revised since it has progressed to this place. The goalposts have moved. It is a shame that what should be a simple piece of legislation has become so mired in suspicion and confusion regarding what is and is not included in the levy. When the Bill was discussed in the Lords, Lord Freud made it clear that the levy could not be more than 3% gross written premium. That was to ensure that insurers financing the scheme would not incur additional costs that would be passed on to their existing customers. At that point, the levy agreed with the insurance industry was 75% and equated to, as illustrated in the Department for Work and Pensions’ own analysis in support of the Bill, 2.79% GWP in the first four years of the scheme and 2.27% GWP in the first 10 years of the scheme.

Since the debate in the Lords, the assumptions relating to legal costs have changed. Their lordships debated a fixed legal fee of £2,000, but we are now debating a fee of £7,000. In truth, there is total confusion about who will pay the fee. As the Association of British Insurers understands it, it will be paid by claimants out of their compensation which the Government will uplift accordingly. Not only is it unclear what precisely the fee is for, but what the other 25% is paying to administer. It would be helpful if the Government clarified who pays the legal fees. Is it the claimants out of their compensation or the insurance companies out of the administration fee? If it is the claimants, we need to be absolutely clear that when they are awarded £57,000 of compensation, £7,000 of legal fees will have to be deducted from that award.

Lawyers, insurers and the Government are, unsurprisingly, at loggerheads on the fixed fee, presumably because if it is acceptable for this scheme, why could it not be applied to civil claims? Where would it fit into the LASPO review that the Ministry of Justice is expected to complete and report on next year? At the heart of the Bill is supposed to be the fact that the victim is coming into the scheme at last resort. A lot of what is required will have already been done, so lawyers in a civil claim might not be as necessary as they would be in this scheme. Senior Master Whitaker has helped a great deal and the Department is clear that in some circumstances a medical report would be enough. The underlying point, however, is that because of the revised estimates, about which I remain sceptical, there is no room to raise the compensation limit from 75% to 80%—a much fairer level of financial recompense for victims of the disease. In his introduction, the Minister said that 75% is not the important figure and that the 3% levy is. With the greatest respect to the Minister, it is the level of compensation that is important to the victim, not what the level of GWP is to the insurance industry.

[Mark Reckless (Rochester and Strood) (Con)]

My hon. Friend mentioned that Medway is a hot spot for the disease. There have been 42 deaths in my constituency in the past five years—a greater number even than in her constituency, and about three times the national average. She mentioned the 3% and 75% figures. Is it not the case that the changes to which she referred will affect the sums relating to the 3% cap? If that is so, will it not be open to Ministers to show some compromise or movement in the direction that she is so ably arguing for?

[Tracey Crouch]

My hon. Friend is right that our constituencies are particularly affected and I am delighted to see him in his place to debate this important issue. He makes an important point. The Government have set a cap of 3% and there is no room for manoeuvre unless they are willing to stand up to the insurance industry and say that there is a firm view on both sides of the House that the 75% they have currently negotiated is not good enough. They need to agree on another figure. I believe that 80% would be appropriate as a good compromise between the 90% being called for by the lawyers—they cite the Financial Services Compensation Scheme as a useful comparator—and the 70% the insurers were originally willing to accept. Furthermore, with the previous assumptions under which their lordships debated the Bill, 80% would have been 2.98% GWP over the first four years and 2.42% over 10 years. Now, with the 3% cap, under the new legal costs associated with the scheme, there is no room for manoeuvre. I find that disappointing, unless the Minister is willing to stand up to the insurance industry and discuss this.

--- Later in debate ---

[Mr Hepburn]

I think that many issues of that kind will be exposed as the Bill proceeds through its stages. The media gave the scheme a warm welcome because they did not know the details and the nitty-gritty.

The Bill falls short of what we intended when we issued our consultation document. It falls short in regard to the cut-off time—in its present form, it will deny compensation to thousands of mesothelioma victims and save the insurance companies millions—and it falls short in regard to the payments, which will be 75% of the average payment made following a civil claim. I think that the proportion should be 100%, and that insurance companies should be fined a further 25% for ignoring their responsibilities over the years. The money could then be used to establish some proper research on a cure for mesothelioma.

Why has the Bill been diluted, and why was it kicked into the long grass? Why has this taken so long? The answer is, quite simply, that the insurance companies’ fingerprints are all over the Bill. That shows the unhealthy relationship that the Tory party has with the insurance industry, which has pumped millions into the party’s coffers over the years. It also shows the value that the Government place on working people, especially those in the north-east. I wonder what would have happened if those people had been professionals in the south-east of England. I wonder what would have happened if, for example, judges had all of a sudden developed an occupational cancer as a result of inhaling hairs from their wigs. We know exactly what would have happened. Those would not have been working-class people breathing in asbestos fibres, and the Tories would have looked after their own people.

[Mark Reckless]

I do not make this point from a partisan perspective, but the hon. Gentleman said that the scheme was not as generous as the one that the previous Government had planned. Is there something about the disease, about the insurance industry or about politics in this country that explains why it has taken so long for us to reach this stage?

[Mr Hepburn]

This came about because of the Labour party’s links with the trade unions, which brought the issue to our attention. Labour Members in the last Parliament—many of whom are sitting here now—had a number of meetings with the then Prime Minister and with justice Ministers. The Bill has been a long time coming. It could have been here two years ago, but because the insurance industry was crawling around and because the Government wanted to appease it, it was kicked into the long grass. Eventually, however, the Minister—and all credit to him—took over the brief and, very recently, enabled us to make progress.