Mesothelioma (Insurance Premiums)

Shailesh Vara Excerpts

Wednesday 29th January 2014 Westminster Hall

[The Parliamentary Under-Secretary of State for Justice (Mr Shailesh Vara)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I echo the words uttered about our former colleague, Paul Goggins. If Paul was with us, there is no doubt that he would have been in the Chamber with us today, expressing his views as passionately as he always did. Paul spoke with conviction and passion on a number of issues, and he will be sorely missed by all of us. He was a true parliamentarian, and a very decent parliamentarian at that. We will all miss him.

I congratulate the hon. Member for Middlesbrough (Andy McDonald) on securing this important debate. I commend him on the passion with which he spoke. All Members from across the political divide have spoken on this important subject with conviction and passion.

A number of issues have been raised, and I hope to be able to address some of them in the time remaining. I refer colleagues to the last sentence of the written ministerial statement of 4 December 2013:

“The Government will publish their response to the consultation, and the report under section 48 of the LASPO Act, shortly.”—[Official Report, 4 December 2013; Vol. 571, c. 56WS.]

The report is not something that is not going to appear; it will appear. I hope that hon. Members appreciate that today’s debate is in response to a request by the hon. Member for Middlesbrough. That request was made before the report was published, but it will be forthcoming.

Other issues were raised. The hon. Member for Hammersmith (Mr Slaughter) referred to comments by the Lord Chancellor. He rightly referred to consultation, and we hope to consult further with stakeholders to try to ensure that we improve the claims process. I will return to that.

[Kate Green]

I note the final sentence of the written ministerial statement. Presumably the report, which must be in the Minister’s hands by now, offered sufficient information and analysis to enable the Government to make their decision, so will he explain what has held up its publication for almost two months?

[Mr Vara]

I hope the hon. Lady will agree that, given the sensitivity and importance of the matter, it is right and proper that we should make known to the public our broad thrust of thought, rather than people having to wait a further few months before the report comes out. The hon. Member for Sefton Central (Bill Esterson) secured a debate when there was much agitation about the timing of the review, what it would say and so on. I am sorry if trying to be helpful is now being held against the Government.

Let me say at the outset that the Government recognise that mesothelioma is a terrible disease and has a devastating impact on the families of its sufferers. We take very seriously the plight of sufferers and their right to be able to claim compensation for negligently caused personal injury. The subject is, understandably, emotive, and that has been demonstrated in our heartfelt and thorough debate today, as well as during the passage through both Houses of the Legal Aid, Sentencing and Punishment of Offenders Act 2012. Debates on LASPO included consideration of the Government’s reforms to no win, no fee conditional fee agreements, or CFAs, and led to the limited exception of mesothelioma cases, to which I will return shortly.

This debate has highlighted the importance of the issue, and the Government wholeheartedly agree that, given the short life expectancy after the disease has been diagnosed, it is imperative that there is early payment of compensation when necessary. That is why we announced on 4 December 2013 that we will explore whether more can be done to improve the compensation claims process.

I appreciate that today’s debate has been about the Government’s decision to remove the limited exception from no win, no fee reforms in relation to mesothelioma cases. I want to deal with three main issues. The first is why our reforms to CFAs are the right way forward, and the second is the limited exception to these rules in respect of mesothelioma claims and the circumstances in which that exception will end; thirdly, I want to clarify the position relating to the section 48 review and how it was carried out.

I will start by setting out briefly the rationale for our changes to CFAs. Many mesothelioma claims are funded under such agreements. Legal aid has not been available for some time. The previous Government’s Access to Justice Act 1999 removed legal aid for the majority of personal injury cases, including mesothelioma cases, when alternative forms of funding, such as CFAs, were available. As hon. Members will know, the Government have introduced reforms in England and Wales relating to the way that civil cases are funded, and the costs involved in bringing those cases. Those reforms are set out in part 2 of LASPO and took forward recommendations by Lord Justice Jackson, a distinguished Court of Appeal judge.

Hon. Members will be aware that Lord Justice Jackson had been asked to investigate the high costs of civil litigation, and to make recommendations for reform. He found that the arrangements for CFAs were

“the major contributor to disproportionate costs in civil litigation in England and Wales.”

He recommended that the recovery of success fees and after-the-event insurance from defendants be abolished, saying that that would lead to

“significant costs savings, whilst still enabling those who need access to justice to obtain it.”

The Government accepted the recommendations, and they were implemented in sections 44 and 46 of LASPO, with the reforms coming into effect in April 2013.

These important reforms will generally ensure that meritorious claims can still be pursued, but at a more proportionate cost. As part of our reforms, earlier settlement will be encouraged, and damages for non-pecuniary loss, such as pain, suffering and loss of amenity, will be increased by 10%. The Government agreed with Lord Justice Jackson that the level of such damages in England and Wales was generally low, and that a 10% increase could assist claimants in meeting the costs of the success fee and other funding changes. Lord Justice Jackson argued that in the majority of cases his proposals

“should leave successful claimants no worse off than they are under the current regime”.

Those words are relevant.

During LASPO’s passage through Parliament, the Government accepted that the reforms should not be brought into effect for mesothelioma claims until a review had been carried out of the likely effect of those reforms on such cases. That review provision is in section 48 of the Act. If Parliament had intended the LASPO provisions not to apply to such claims at all, it could have legislated to that effect. In the event, mesothelioma claims were exempted, and Parliament legislated to the effect that the provisions could be commenced for claims following the conduct of a review, as set out in section 48. Of course, we must recognise that a review could lead to a number of possible outcomes—to claims continuing to be exempted from the reforms, or alternatively to the exemption not continuing.

The Government carried out the section 48 review as part of the consultation on reforming mesothelioma cases, which concluded on 2 October 2013. That was a 10-week public consultation, and all interested parties had the opportunity to participate. Some 105 responses were received from interested parties and expert stakeholders on both sides of the debate; that is the specific advantage of a public consultation. The respondents included Thompsons, the personal injury solicitors firm to which the hon. Member for Middlesbrough referred when declaring an interest at the outset of the debate.

Some respondents to the consultation questioned the timing of the review and how it was carried out. However, the Government are satisfied that it meets our obligations under section 48. The Act makes it clear that in conducting the review under section 48, the Government are required to consider the likely effect of sections 44 and 46 on proceedings on a claim for damages in respect of diffuse mesothelioma. That is what we have done.

Comments have been made about the Mesothelioma Bill and the timing of the review. As Members will know, the Government introduced the Bill in May 2013. It creates a compulsory payment scheme for victims who are unable to trace a liable employer, or liable employer liability insurer, from which to claim the damages that are rightly due. The Bill has completed all stages in both Houses and is awaiting Royal Assent. It is an important milestone in ensuring that those who were previously unable to claim can do so when the scheme is up and running.

[Andy McDonald]

Will the Minister give way?

[Mr Vara]

I am about to come to the point to which I think the hon. Gentleman wants to refer, but I am happy to take a question.

[Andy McDonald]

The Minister is concentrating on the Mesothelioma Bill, but we are talking about LASPO. Does he accept that there is no connection between the two?

[Mr Vara]

I am coming immediately to the point that I anticipated the hon. Gentleman would refer to. In conducting the review, the Government focused their consideration on matters relevant to claims for mesothelioma that are subject to litigation—in other words, where a solvent defendant is identified. The provisions of the Mesothelioma Bill, however, apply to sufferers who cannot trace a defendant to sue for compensation. If claimants are able to identify a defendant, the Mesothelioma Bill is not directly relevant to their claim, and the Government have carefully borne this in mind.

The Government have not therefore taken the Bill into account in relation to litigated cases in respect of the review. However, the Bill is relevant to the timing of the application of sections 44 and 46 of LASPO, since we have always intended to synchronise the implementation of any decision on this matter with other reforms directed at improving the position of mesothelioma sufferers. This was made clear when Parliament agreed the relevant provisions in LASPO. Much was made of that in earlier speeches, so I refer hon. Members to a debate on LASPO on 24 April 2012. The late Paul Goggins asked the then Justice Minister, my hon. Friend the Member for Huntingdon (Mr Djanogly):

“Crucially, how will the commencement of the relevant provisions of the Bill be aligned with the proposals that the Department for Work and Pensions hopes to publish before the summer recess? I would be happy to take an intervention from the Minister if he wishes to make a clear commitment this afternoon that he will not seek to implement the relevant provisions in the Bill unless and until an improved system of compensation is in place.”

My hon. Friend the Justice Minister replied:

“I do not want to give any binding commitments about the process today, because things have not been finalised. However, I can tell the right hon. Gentleman that if the process is to be improved by the Department for Work and Pensions, which we hope it will be—he will have some insight into our proposals from the discussions he has had—that could well require DWP legislation, in which case”—

the relevant words—

“we would look to roll the ending of the provisions into the commencement of the DWP provisions. That is how I foresee the process now, but again, I am not making that a commitment.”—[Official Report, 24 April 2012; Vol. 543, c. 838-39.]

The following day, the noble Lord Alton questioned the Justice Minister in the upper House, the noble Lord McNally. Lord Alton asked:

“First, is the Minister able to assure us that there will be absolute synchronisation between the Ministry of Justice and the Department for Work and Pensions to ensure that the mesothelioma provisions in the Bill will not be implemented in advance of the new regime coming into force?”

Later in the debate, Lord McNally responded:

“I can absolutely guarantee that we will work in a synchronised way with the DWP.”—[Official Report, House of Lords, 25 April 2012; Vol. 736, c. 1818 and 1824.]

The hon. Member for Stretford and Urmston (Kate Green) was present at the House of Commons debate. She made a contribution at Hansard column 834—

[Kate Green]

I accept everything that the Minister has said. Are we to conclude therefore that the connection is simply about synchronisation of timing, and not in any way about synchronisation of approach to treatment of victims, or am I misunderstanding what he is saying?

[Mr Vara]

I hope that I am clear when I say that it is important that we synchronise the timing, so that everyone affected by this terrible illness knows what the position is, whether or not they have a traceable employer or liable insurer. It is the timing that is at issue. That is what was referred to in the debates in both the upper and lower Houses.

[Andy McDonald]

rose—

[Mr Vara]

I am happy to give way, because it is the hon. Gentleman’s debate, but I hope that hon. Members accept that I have limited time, and I want to get through things.

[Andy McDonald]

I am grateful to the Minister for giving way. Will he explain something? We have a group of people way over in the distance with one group of problems—in Weymouth, for example—and another group of people in Wolverhampton with another set of problems. If he addresses one situation, how would that benefit the people in the other place? They are not connected; it is just that he is trying to do things at the same time. Does he not agree with that analysis?

[Mr Vara]

It was agreed by Parliament in the debate that there would be a synchronisation of what the Department for Work and Pensions did and what we did. That is what has happened. I trust that Members will now allow me to proceed, because a number of issues were raised, and I want to put the Government response on the record.

The Government have carefully considered the likely effect of implementing the LASPO reforms on mesothelioma claims, including the evidence put before us by respondents to the consultation. The issues raised, however, were generally similar to those in other very serious personal injury cases to which the reforms already apply. There was little explanation of any particular feature of the mesothelioma claims process that would lead to a different or disproportionate effect on claimants’ access to justice, should the reforms apply. Ultimately, in our view, there needs to be a specific justification for the continued difference in treatment between mesothelioma cases and other personal injury cases—most particularly, other serious personal injury cases that have their own tragic features involving, as some do, catastrophic injury and the need for substantial care arrangements for the remainder of a claimant’s life, sometimes when the claimant is very young.

Let me emphasis that we entirely understand that mesothelioma victims face an appalling and fatal disease with which they and their families have to come to terms, while also having to engage with the claims process. Without in any way seeking to minimise the distress that this entails, however, there are many other serious personal injury and fatal claims, to which the LASPO reforms already apply, that produce difficult challenges for victims and families.

On 4 December, we announced that we intended to apply sections 44 and 46 of LASPO to diffuse mesothelioma cases from July this year, when the Mesothelioma Bill is expected to be implemented. When the reforms take effect, claimants will be entitled to a 10% increase in general damages. The average general damages for such cases, as set out in the Judicial College guidelines, is £70,000, so that would be an average additional £7,000 in damages.

Claimants will be liable for any success fee claimed by their lawyer, as in any other personal injury case, but there is no requirement for a success fee to be charged. The amount of any success fee is a matter for negotiation between claimants and their lawyer. Claimants will also benefit from costs protection in the form of qualified one-way cost shifting, to protect them from having to pay the other side’s costs if the claim fails. Additionally, the costs of any after-the-event insurance that claimants feel they need in order to deal with defendants’ part 36 offers—a process of negotiation between parties on a reasonable offer for resettlement—are expected to reduce. If a part 36 offer is unreasonable, a claimant is not at risk for rejecting it. Claimant lawyers tend to know what is and is not a reasonable offer. Claimants are of course liable for disbursements in relation to their case, but the general rule in all civil litigation is that reasonable costs will be paid by a losing defendant.

We announced in December that we anticipate publishing the Government’s response some time in the next few weeks. Colleagues will appreciate that we could have waited until we announced the outcome of the consultation, but we were keen to let stakeholders know the outcome as soon as possible, especially on those issues that we are not currently taking forward.

I want to emphasise that the Government firmly support the right of those who suffer from this terrible disease to be able to claim compensation. Over the past 10 years, significant progress has been made in streamlining the process, including in relation to those matters headed by Senior Master Whitaker. We wish to explore further ways of streamlining the process, and we seek the co-operation of the appropriate stakeholders.

The LASPO reforms are about tackling the high cost of civil litigation, rather than questioning the validity of claims. The Government believe that the reforms should apply to all personal injury cases, including those of the utmost severity. We have conducted the review as required, and as soon as we are able to do so, we will publish our report. In the meantime, my thanks again to the hon. Member for Middlesbrough for securing this debate. It is fair to say that we are united on at least one matter: the great importance of this issue.