Legal Aid, Sentencing and Punishment of Offenders Bill

Tom Brake Excerpts

Tuesday 1st November 2011 Commons Chamber

[Mr Slaughter]

I am grateful for my hon. Friend’s intervention. I am sure that some companies have been driven out of business, but the everyday experience of hon. Members, and certainly of our constituents, is that the industry is not properly regulated, which is why corrective action must be taken. However, the proposals in the Government’s new clauses are, I fear, insufficient. They are riddled with inconsistencies and loopholes, which is another symptom of the haste with which they were prepared.

I will deal with the point that the Minister dealt with. New clause 19(8) states that a payment is

“to be treated as a referral fee unless”

it can be shown

“that the payment was made…as consideration for the provision of services, or…for another reason”.

The Minister’s impact assessment explains what that means. Claims management companies may adapt their business models so that they are not reliant on referral fees paid by lawyers, or they may move into alternative types of business such as marketing or advertising. That is staggering to those of us who recognise that it is precisely that marketing and advertising, whether on daytime TV adverts or via spam messages, that lead to perceptions of a compensation culture.

What is the point of the new clauses? The truth is that they are an afterthought to a package of changes in the Bill, some of which we will debate tomorrow, that have far more bite but a different purpose. The changes to conditional fee agreements mean that losing defendants—wrongdoers—and their insurers will benefit at the expense of winning claimants—victims—and that is the real objective of the Government’s legislation. Tomorrow, we will seek to overturn those provisions.

As Bob and Sally Dowler have told us; as the lawyers that brought Trafigura to justice have told us; as victims of asbestosis, who have been fighting insurers that simply do not want to pay out to hard-working and long-suffering people; as those who have been unfairly dismissed or subject to harassment in the workplace have told us; and as Christopher Jeffries, who was persecuted by the media last Christmas, as he wrote in The Guardian this very day, has told us, the changes are unacceptable. The Government’s proposed changes, which they had thought about and on which they had taken instructions from the insurance industry, are in the Bill, but very little thought has gone into the new clauses before us today, and none would have gone into them had it not been for my right hon. Friend the Member for Blackburn.

In summary, we believe that there is merit in a ban on referral fees as part of a package to stop the abuses that I have talked about. That is why I tabled amendments not just to clamp down on those fees, but to make the payment and solicitation of referral fees in road traffic accident personal injury cases a criminal offence. My right hon. Friend has tabled amendments to new clause 18, and I hope that he will press them to a vote. If he does so, I hope that hon. Members on both sides of the House will join him in the Lobby if the Government still refuse to accept the criminalisation of referral fees.

We sought to make unsolicited text messages and phone calls regarding personal injuries a criminal offence. We would have strengthened the rules against the sale of personal data. We would have restricted whiplash claims by placing a lower limit on the speed at which a vehicle must be travelling before damages may be paid. We would have outlawed third-party capture, another dirty secret of the insurance industry. I freely acknowledge that we plagiarised some of that from my right hon. Friend’s private Member’s Bill.

If the Government had had the courage of the conviction in the Minister’s speeches earlier in the year, we would have got to the heart of the perception of a compensation culture. In doing so, we would have done what the Government are now failing to do. The new clause alone will have little effect. We believe that it deserves further scrutiny, and we hope that amendments in another place will toughen it up, if that does not happen tonight. We also hope that amendments to make these practices criminal offences will be accepted. We therefore have no intention of voting against the new clauses; we simply regard them as not going far enough.

The Minister’s incompetence in getting to grips with claims farmers who engage in unscrupulous practices and his Department’s failure even to recognise the scale of their failure to regulate effectively have got us here. These are symptoms not of a litigation culture, as he would have us believe, and of the rhetoric that goes along with the cuts in legal aid to the poorest, as well the neutering of no win, no fee agreements which will affect almost everyone except the super-rich and will prevent access to justice, but of regulatory incompetence by the Minister’s Department. Indeed, he has now surrendered responsibility for that regulation.

I commend my right hon. Friend’s amendments to the House. We accept the new clauses as far as they go, but it is about time the Government stopped using their rhetoric as a mask for preventing victims from obtaining justice and used it to ensure that the abuses that we all put up with day to day from fraudulent and criminal practices are stamped out.

[Tom Brake (Carshalton and Wallington) (LD)]

I shall be brief. I welcome the Government’s action to address referral fees. There is no doubt that consumers have paid a significant price. I hope that we can clamp down heavily on other things, such as unsolicited text messages and spam, which we have all experienced, through other measures such as those on data protection.

I would like the Minister to deal with just one point. The industry has been pressing for these changes, and consumers in particular want to understand what guarantees, if any, they will have that when the changes have taken effect they will see a difference in the prices they pay for services.

[Mr Straw]

As a preliminary, I wish to draw the House’s attention to the fact that against my name on the amendments relating to referral fees there is an R, which indicates that I have a declarable interest. It arises from three engagements that I undertook for fees on matters relating to referral fees and the motor insurance industry generally. They were on 28 September, 12 October, and earlier today. In respect of the first two, I have made a declaration to the Registrar of Members’ Financial Interests, who told me that because I have not yet received payment, the time for these is not yet running. The declaration for my engagement this morning will be made tomorrow.

I tabled amendments to new clauses 18 and 19 and, as my hon. Friend the Member for Hammersmith (Mr Slaughter) indicated, in the absence of a sudden Pauline conversion from the Government Front Bench between now and when the question is put, I shall press amendment (e) to new clause 18 to a vote.

According to the AA, over the year to March 2011, there has been a 40% increase in motor insurance premiums. In many areas of the country, mine included, although it is by no means the worst, the increase has been even higher. As a number of colleagues of all parties have pointed out, that has very severe social consequences.

May I say that I am extremely grateful for the wide support that my Motor Insurance Regulation Bill has had throughout the Chamber? Motor insurance is the only insurance affecting an individual that is compulsory, and in certain areas and for certain categories, particularly younger drivers, premiums are now so high as to place motor insurance out of reach altogether. A driving licence is often a necessary qualification for taking a job. In any case, people in areas that are not blessed with a high level of public transport, which means most places outside inner urban areas, need a motor vehicle to go about their business. The increase in premiums, and the fact that they are much higher in some areas than others, is leading to some people not being able to work or move around.

The increase is also unquestionably leading to an increase in criminality, both through people going around uninsured and, increasingly, through people deciding to borrow a friend’s address with a lower-premium postcode. People also fail to disclose relevant information about themselves, to enable them to become insured. It cannot serve any public purpose that we have ended up with such a dysfunctional system.

I readily concede that that has happened because of a nexus of factors going back a number of years. The operation of the conditional fee system was introduced in the Access to Justice Act 1999 for good a reason: it was thought that it would improve access to justice. To some extent that has certainly been true, but as we all know, it has had the unintended consequence of generally —I am not talking the Trafigura case or one or two others—creating an imbalance in the equality of arms between parties on either side of a legal action. It has gratuitously encouraged the so-called compensation culture.

That, in turn, has been compounded by the costs of the road traffic accident electronic portal being too high. In a recent statement, the Minister said that the figure that was introduced when I was Secretary of State had been agreed in the Civil Justice Council. It was agreed to by both sides, which was why I did not interfere with it. I believe there is now widespread agreement that the current fee, of at least £1,200 for claims under £10,000, is at least twice as high as it should be. It is leading to lawyers advertising as two firms at the end of my street in Blackburn do: they have great banners across their windows saying, “Bring your claim in here, we’ll pay you up to £650 in cash for it.” They can do that and still make a profit out of the £1,200, because the actual costs of running the portal are about £100.

Claims for whiplash, which I have described as an invention of the human imagination, undiagnosable except by dodgy doctors employed by claims management companies, have got completely out of control. The level of whiplash claims is not related to the level of accidents or physical injuries. Accidents are reducing, as is the possibility of being injured in an accident, because cars and road engineering are much safer. It is related principally to the density of claims management companies operating in a particular area. The evidence of that is incontrovertible.

I concede to my hon. Friend the Member for North Durham (Mr Jones) that the regulators have acted properly on claims management companies in some ways, but the regulatory system established under the Compensation Act 2006, during our Administration, has not had sufficient resources to control the trebling in the number of claims management companies that has taken place in recent years.

Another change that took place was in the 2004 solicitors conduct rules, which allowed solicitors to pay referral fees that were previously banned. I will come back to that point when we deal with the enforcement of a ban on referral fees.

--- Later in debate ---

In order to deal with this issue, we must invest in homes. We must invest in council properties, control rents and stop the obscene profits that the private rented sector is making as a result of the housing shortage. Then, we will begin to see a solution. Criminalising people is not a solution.

[Tom Brake]

Squatting clearly has a devastating impact on private owners, and it can also have a devastating impact on councils. When I was a councillor in Hackney back in the late ’80s, it was eventually discovered that many council properties were squatted, and that in many cases council employees had sold the keys to the squatters. We clearly need to tackle squatting, therefore. I would have welcomed a fuller debate on the matter, however, and I now want to raise a few points that would, perhaps, have been more pertinently raised in Committee, if that stage had taken place.

The first aspect of new clause 26 on which I seek clarification is proposed new subsection (3)(b), which states that

“a building is ‘residential’ if it is designed or adapted, before the time of entry, for use as a place to live.”

Could a commercial building be so “designed” or “adapted”, and what would be required for that to be achieved? Would simply placing a bed in a commercial premises be enough for it to be “designed” or “adapted” as “a place to live”?

The second point on which I seek clarification relates to proposed new subsection (4) on the “permission of a trespasser”. If a person has not been informed by someone who is a trespasser that they are in a building that they are squatting, and that person then squats in that property, would they be guilty of the offence of trespass? I hope the Minister can provide some clarity on that point.

At the risk of the Opposition accusing me of trying to have my cake and eat it, I will say that the hon. Member for Hayes and Harlington (John McDonnell) has raised some interesting points in amendment (a). Setting a bar of six months would not be appropriate, however, because there are many circumstances in which people might legitimately choose to leave a property empty—for example, if they are abroad for a year. However, I am sure that every Member of Parliament here tonight probably has one, two, three or possibly more properties in their constituency that have been empty year after year—possibly for decades. I know for a fact that residents living on either side of such properties may prefer to have someone in them so that the property is not allowed to fall down, be taken over by foxes, have trees growing in the front room and so on. I accept that the difficulty lies in trying to distinguish between those cases and cases where a squatter takes advantage of a property. The amendment raises an interesting point and I hope that the Minister will be able to respond to it.

[Nadine Dorries (Mid Bedfordshire) (Con)]

Is the right hon. Gentleman truly saying that neighbours on either side of a property would prefer to have squatters in it than to have foxes in it or trees growing in it? Is that actually what he is saying?

[Tom Brake]

I think that the hon. Lady may, if she examines her constituency cases, find some examples where people are frustrated at the length of time—it could be years—that a property next to theirs has been empty and has been allowed to fall into disrepair, with all the environmental and other dangers associated with that.

[Simon Hughes (Bermondsey and Old Southwark) (LD)]

I just want to try to disabuse the hon. Lady of a simplistic view about this. The council had determined to knock down a block over the other side of the river—the Pullens estate in my constituency, which is a fantastic old estate—but it was squatted, as were some estates in Surrey Docks. Had that not happened, these places would have been demolished. They were squatted, they were kept, they have been refurbished, and they are now properly let and in use. So this is not nearly as simplistic as it has been made out to be, and often people would rather a property was occupied than sitting empty.

[Tom Brake]

I thank my right hon. Friend for his intervention, which provides its own explanation.

The final point that I wish to make is about the retrospective nature of the provision as, again, it is an area that the Government need to examine carefully. As we have not had an in-depth debate here tonight, I suspect that it may well be a point that is examined much more closely when the matter is raised in the other place.

[Kate Hoey]

I, too, wish to congratulate my hon. Friend the Member for Hayes and Harlington (John McDonnell) on the way in which he spoke, because this issue too often becomes one of exaggeration, where inaccurate things are said on both sides. He gave a very reasoned outline of why this coalition Government are rather silly in proposing this measure at this time and in this way. I, too, have been in this place a long time and I have seen legislation go through as a knee-jerk response to something that has happened. Very often people later regret very much that such legislation went through.

It is quite wrong that something that has been introduced so recently, and where a substantial number of people in a consultation—90% of them—were opposed to it, is being put through in this way. As everyone else has said, this is, in reality, a Second Reading debate. No scrutiny will be provided in the House of Commons on the detail, so all these questions are being raised by different people about different aspects of it and we will not get a full answer. We are abrogating our duty and our responsibilities as Members of Parliament if we allow this measure to go through and hope that it will be dealt with in the other place. I am disappointed that Labour’s Front-Bench team is not taking a more robust view on this measure. There is always a danger for politicians in that regard, because they may worry about what the headline will say, but sometimes the headline is totally inaccurate and sometimes it has been devised because of the inaccuracies, the half-truths and the mistruths that have been put around over a period of time. Even at this stage, I hope that the Labour Front-Bench team will consider amendment (a) seriously.

I believe that the retrospective nature of the measure is quite wrong. I also believe that there is squatting and squatting. The public see the difference in the kind of squatting that we have all condemned, whereby people take over someone’s house because they are away on holiday. However, there is already a law to prevent that from happening and those Members of Parliament who say that that has not been observed in their area should talk to the police because it means that the police are not enforcing the law.

The kind of squatting that I support is the kind that the right hon. Member for Bermondsey and Old Southwark (Simon Hughes) mentioned, when large blocks of flats and houses that have deliberately been emptied early by a local authority or a private developer sit empty for months or years waiting either for some work to be done or to be knocked down. I see absolutely no reason why people who have come to London as the capital city of their country to try to get work and to live but who have nowhere to live and no chance of getting a local authority flat or of affording a private sector property should not live in those empty properties. Most of those squatters would be perfectly willing to sign something saying that they will move out as soon as work is to start. Instead, we see such places being left empty for years.

I am very sad indeed that we are seeing this knee-jerk response and that the Government are trying to introduce this measure so quickly. They will live to regret it and I hope that even tonight, at this late stage, Members who have come along thinking that there was no debate to be had and that this was a matter of, “Let’s just get this through”, will think very carefully and will at the very least support the amendment of my hon. Friend the Member for Hayes and Harlington.