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Session 2005 - 06 Publications on the internet Standing Committee Debates Compensation Bill [Lords] |
Compensation Bill [Lords] |
The Committee consisted of the following Members:Geoffrey Farrar, Gosia
McBride, Committee Clerks †
attended the Committee Standing Committee ETuesday 27 June 2006[Mr. Peter Atkinson in the Chair]Compensation Bill [Lords]Clause 5Exemptions 4.30
pm Mr.
Oliver Heald (North-East Hertfordshire) (Con): I beg to
move amendment No. 7, in clause 5, page 4, line 13, at end
insert— ‘(4A) The Secretary
of State may not make an order under subsection (1) or (2) in relation
to a trade union or other similar
body.'. If we are to regulate
the claims-handling world, we must do so properly. The definition of
claims management services in the Bill has clearly been drawn
intentionally wide to ensure that there are no loopholes that
unscrupulous individuals or companies could use to evade regulation.
The definition captures all those who provide claims management
services, subject to the points that I made about the term
“regulated”. However, there
is also a power to exempt. While I can see the logic in exempting
bodies whose claims management services will be regulated under the new
Legal Services Board umbrella, I cannot understand why the Government
believe that trade unions should be exempt, because some have clearly
behaved in the same way as disreputable claims handlers.
The Times has exposed the activities of the
National Union of Mineworkers. It says:
“Elderly men suffering
from chest diseases and a crippling hand condition were advised to
allow the National Union of Mineworkers to fund their legal claims in
return for paying part of their eventual compensation to the
union. But what the
miners were never told was that in reality, the Government—and
not the union—was paying the legal bills for successful
claims. The solicitors
concerned, Yorkshire-based Raleys, have been paid £53 million of
public money for their work on the cases settled so
far. The NUM has
banked an estimated £10 million from the compensation scheme but
has not paid legal costs in any of the 28,000 cases that Raleys
has...handled.” One
of the claimants, Mr. Roberts from Worksop, Nottinghamshire, said
that “when he first
contacted Raleys he was told he could only proceed if he signed a
document agreeing to pay NUM contributions out of his
compensation.” He
added: “I was
under the impression that the NUM was paying for the claim to go
through and that they were supporting
me.” Recently, however,
the Law Society’s adjudication panel has ruled against
inadequate professional services in this connection.
According to The Times,
the right hon. Member for Rother Valley (Mr. Barron), who was a senior
NUM official, described the union’s arrangement with Raleys
as “a scam from day
one” and
added: “The NUM
has not put a penny into fighting these cases and they have raked in
millions of pounds for doing very, very
little”. On
Second Reading, the hon. Member for Bassetlaw (John Mann) described the
NUM’s activities and highlighted the case of his constituent
Mrs. Beckett, who was not a union member, but who was invited to have
the NUM fund the case. That shows that the NUM was acting as a pure
claims handler.
John
Mann (Bassetlaw) (Lab): Mrs. Beckett was never invited to
do anything. She was presented with a fait accompli, having signed with
a solicitor and had no dealings of any kind with the third
party.
Mr.
Heald: The hon. Gentleman makes the point even more
forcefully than I did. What has happened is a scandal. The hon.
Gentleman continued by calling on the NUM immediately to repay all the
money that it had acquired through compensation cases, and I echo his
comments. As far as we know, however, the NUM still chooses to keep the
money. The hon.
Gentleman also pointed to the activities of the Union of Democratic
Mineworkers, which shows that the NUM case is not unique. Indeed, there
have been 750,000 registered claims so far, 390,000 of which have been
settled. The damages total £2.8 billion, and the
solicitors’ fees total £665 million.
The hon. Member for North
Durham (Mr. Jones) cited the two unions for their behaviour and said
that Thompsons solicitors had been garnering claims for the NUM and
joining people up at £20 a time as so-called associate members.
Those individuals then have 7.5 per cent. of their compensation
deducted and given to the union for nothing. Unions should not be
allowed to conduct themselves in that way; they ought to be regulated.
There is no justification for their exemption. The Constitutional
Affairs Committee, which after all has a Labour majority, reached the
same conclusion in its report entitled “Compensation
Culture”. It said that it did not see any benefit in exempting
trade unions, “since all
claimants should have protection and the opportunity of redress, where
malpractice has occurred.”
And it concluded:
“We would expect that
trade union services would be able to comply with any regulatory regime
without any
difficulty”. The
Minister has said that she can exempt the unions and still apply
conditions to them under clause 5(3). She talks of a code of conduct
and the possibility of withdrawing exemption if it is breached. Other
hon. Members have talked about the role of the trade union
certification officer, but that is prescribed in statute and it does
not include the area under discussion. We have heard nothing to suggest
that his powers will be expanded. We have not seen the code of conduct,
and we would question what teeth there are to enforce it. If it is
going to be a forceful and satisfactory measure, I am surprised that we
have not seen it.
When we talk about teeth to
enforce a code of conduct, we should not forget the Bill’s
powers that the regulator will use. They are wide-ranging and
tough.
Mr.
Michael Clapham (Barnsley, West and Penistone) (Lab): Most
trade unions use law firms, and they are regulated by the Law Society
and the Legal Services Ombudsman. There is regulation. There may be,
and there have been, one or two unions that stand to be criticised, but
one or two do not make the case for regulating the entire trade union
movement.
Mr.
Heald: I can understand the hon. Gentleman wanting to
defend the union he loves, but when it comes down to it, Raleys the
solicitors has been done by the Law Society. That was the finding. But
the trade union, the NUM, received £10 million, and it has not
given a penny back. So who will regulate the union? That is the point.
It is all very well to say, “It is only a few trade
unions,” but it is only a few solicitors. We still regulate all
them, because we cannot guess which one will
misbehave.
John
Mann: Would that we did regulate solicitors. The hon.
Gentleman and the Committee will be interested to know that Raleys has
not paid back Mr. Roberts despite the fact that the Solicitors
Disciplinary Tribunal upheld the Law Society’s decision, as did
the adjudicator. He still awaits justice. The circulation within the
Law Society, whereby solicitors practise avoidance even when their own
regulator rules against them, must be considered in terms of the teeth
of this Bill.
Mr.
Heald: The hon. Gentleman’s view is that at least
there is power over and regulation of solicitors, but is he really
satisfied with a system that just lets the unions off? What is the
position of the claims handler, Vendside, about which he speaks
regularly, and which does not speak charitably of him? It is wholly
owned by a trade union. Is he really satisfied that under the Bill, a
body such as that can be let off because it comes under a trade
union?
Paddy
Tipping (Sherwood) (Lab): That is the point. Vendside acts
as a claims handler, not as a trade union. It is distinct, and it will
come under the legislation of claims handlers. Where trade unions act
properly and legitimately as trade unions within the code of practice,
they should be exempt. But if, like Vendside, they are claims handlers,
they will be subject to the regulator.
Mr.
Heald: I do not think that the hon. Gentleman has spotted
the full subtlety of what the Government are suggesting. I agree with
him—all claims handlers ought to be covered by this Bill. If
they are already regulated by another body then they may be exempt. But
the Bill says that only people whom the Government choose to regulate
are actually regulated. It is quite easy to be a claims handler under
this Bill and not be regulated at all. The Minister can then say that a
union is exempt. What
is Vendside but a wholly-owned creature of the Union of Democractic
Mineworkers? It is the UDM. I am concerned that the clause is not going
to cover
Vendside. It is not going to cover the unions. And I cannot imagine that
the hon. Member for Sherwood (Paddy Tipping) would sanction the way the
NUM and the UDM have been going on—it just is not good
enough.
Mr.
David Anderson (Blaydon) (Lab): The hon. Gentleman should
be more specific when he talks about the NUM. It is a number of
affiliated bodies, many of which matter in very different ways, so he
must be careful with his language. It is clear that he is trying to
make an analogy between claims handlers and trade unions, but trade
unions are regulated. They have an internal rule book, access
to disciplinary procedures, employment tribunals,
certification officers, and the ultimate one which we have to face, is
that its officials are voted into office, which does not happen with
claims handlers.
Mr.
Heald: Well, of course the certification officer is not
able to interfere in this area because, as the hon. Gentleman will know
with his long record in the union movement, and his great support for
his union which he loves, the certification officer’s remit does
not cover the activities of a trade union acting as a claims handler.
If he wants to tell me of some statutory provision that says that the
certification officer does, then he is quite welcome to stand up and do
so. I have read up on certification officers and I can tell him that
they do not cover this area.
As regards the NUM, I hope that
he was not trying to threaten me in some way. The fact of the matter is
that it is not me but Labour Members of Parliament who have stood up
and made serious allegations against the NUM. One of our best reputed
national newspapers, The Times, has investigated this in the
context of the solicitors’ disciplinary body, where all these
facts have been revealed. So it is not me, as a Conservative, making up
some story—these are the facts, and he ought to get to grips
with them. It is not right for Parliament, just because the hon.
Gentleman has a sentimental attachment to trade unions, and he and his
brother Labour Members are not prepared to stand up and be counted, to
allow vulnerable people to be treated this
way.
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