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Lord Irvine of Lairg: My Lords, the sentiment which underlies this amendment is the scepticism which has just been expressed about the propriety of consulting the Treasury, given that the Government are often a potential defendant in personal injuries litigation, so that the Treasury may be said to have a vested interest in the rate of return prescribed. We understand that, but on this side of the House we also appreciate the importance of drawing on all the available expertise when deciding on the most appropriate rate of return. We believe that the Treasury may well have useful advice to contribute.

Provided that the noble and learned Lord consults widely--as he has assured us, and I accept, that he will--before determining the prescribed rate, then we are not convinced that it would be wrong to draw on the expertise of the Treasury. Also the decision in relation to the prescribed rate will not lie with the Treasury but with the noble and learned Lord. Therefore, we do not believe that the principle requiring justice to be seen to be done will be infringed. For those reasons we are not persuaded to support this amendment.

Lord Simon of Glaisdale: My Lords, I intervene only because what I said in Committee apparently misled my noble and learned friend the Lord Chancellor into thinking that my contention was inconsistent with that of my noble and learned friend Lord Ackner. That is not so: they were perfectly consistent. There are two

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separate situations. Either my noble and learned friend is entitled in the circumstances of this clause to consult the Treasury, which is his contention, or he is not, because, as my noble and learned friend Lord Ackner points out and as it is accepted by the noble Lord, Lord Irvine, the Treasury is an interested party. If the Treasury can, with propriety, be consulted, it is absolutely unnecessary to have these words in the Bill. They occur time after time in Bill after Bill and in Session after Session. It is small wonder then that the statute book continues to increase in size, format, bulk, the number of statutes and the number of pages to the immense cost of the taxpayer.

If the Treasury is properly consulted the internal machinery of government takes care of that. I do not believe that anyone has controverted that point. The Treasury is in close contact with all the spending departments and with all departments in so far as they have the power to influence spending. It has special officials who liaise particularly with each department. So if the Treasury is entitled to be consulted, and if it is to be properly consulted, it is quite unnecessary to have these words. It is against the Treasury's own interests that money should be wasted by having this formula in statute after statute. It is in fact a sort of "draftsman's tick"; the words come up on the computer in this sort of context. That is one situation.

The other is that put forward and defended by my noble and learned friend on the Woolsack. He says that it is right in these circumstances to consult the Treasury. The noble Lord, Lord Irvine, is perfectly right when he says that the Treasury has expertise, and so it has. But that is expertise that should not be tapped in the context of this clause because the Treasury is an interested party. I hope that I shall not myself be thought in any way inimical to the interests of the Treasury; on the contrary, I freeze with horror whenever I hear the word "Treasury" hissed out in tones of hatred, which is the general mode of expression. But here it seems to me that my noble and learned friend is absolutely right. The Treasury is an interested party and therefore these words are not merely unnecessary but malign because they direct my noble and learned friend the Lord Chancellor to do something that he should not do merely because the Treasury has expertise. As the noble Lord, Lord Irvine, said, it should not be consulted because that expertise is put to an interested use. Therefore, I support the amendment of my noble and learned friend.

Lord Meston: My Lords, it has to be said that the reference to the Treasury originates from the Law Commission's draft Bill. But it is certainly correct that the reference to the Treasury can only be said to be very necessary because the Government have departed from the recommendations of the Law Commission. Its considered view was that it was preferable to discount by reference to returns of ILGS, which was considered to be both realistic and fair. The Bill does not adopt that recommendation, and the noble and learned Lord the Lord Chancellor at the previous stage said expressly that he wished to be able to consider other rates.

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Like the noble and learned Lord, Lord Ackner, I have had the benefit of a very interesting paper from Sir Michael Ogden. There has to be great force in his point that there would be no need for the forecasts of the Treasury if in fact the Bill had simply said, as the Law Commission Bill said, that the normal rate should be based on ILGS. Another way of looking at it is to say that by adopting ILGS rates the Treasury would have had an input already because it decides on the rate.

The more I think about this matter the more I feel that there is force in the point that the Treasury's involvement should be minimal as it underwrites the awards against government departments when they are defendants to actions for personal injuries and death.

7.30 p.m.

The Lord Chancellor: My Lords, in my submission, if and when the Lord Chancellor is minded to make an order fixing a rate, it would be right for him to consult widely and certainly to consult the insurance industry as well as representatives of those who are plaintiffs in actions.

As the noble Lord, Lord Meston, said, the Law Commission proposal which refers to other than the rate on those securities which are independent of inflation contains the provision that the Government Actuary and the Treasury should be consulted. This clause is modelled on that provision. In my submission, proper consultation with those interests is perfectly in order. It is for the Lord Chancellor ultimately to decide. Of course, the Lord Chancellor himself is a potential defendant in actions from time to time, but the responsibility has to rest with a Minister, and I suggest that in this context that Minister should be the Lord Chancellor.

I believe that the Lord Chancellor should be able to consult the Treasury. That is the primary point about which my noble and learned friend Lord Ackner is concerned. As I have said before, my noble and learned friend Lord Simon of Glaisdale appeared to be taking a somewhat different point on the last occasion and he elaborated on that today. Fundamentally, however, the argument that you do not need to mention the Treasury because the Treasury will be consulted anyway is a different argument from and, to my mind at least, is not entirely consistent with the view that the Treasury should not be consulted in the circumstances of a particular case.

I have considered carefully what my noble and learned friend Lord Ackner has said, but I believe that it is appropriate that "the Treasury" should be left in the clause on the basis that any representations that the Treasury may make will have to be considered carefully, bearing in mind that it is potentially responsible for the effect of any awards against the Government. Equally, that could be said in respect of the insurance industry, for example, when it makes representations. In my submission, it is entirely appropriate that that industry should be consulted. Therefore, I invite your Lordships not to accept the amendment.

Lord Ackner: My Lords, I hear what the noble and learned Lord says about his intention to consult widely.

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He has mentioned the insurance market. I imagine that in that consultation he will include also trade unions and solicitors' societies concerned with personal injury litigation. When he receives advice from the Treasury, I have no doubt that the noble and learned Lord will ask for comments on that advice from such organisations, which are likely to have rival or opposite interests; otherwise this legislation has identified one privileged class of litigant, the Treasury. I am surprised that the prospect of having such a provision on the face of an Act of Parliament has not been condemned by the noble Lord, Lord Irvine of Lairg. However, in view of the observations that have been made and my hopes that the wide consultation will be on the basis that I have suggested, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Lord Chancellor moved Amendments Nos. 3 to 5:

Page 1, line 18, leave out from ("references") to ("to") in line 19.
Page 1, line 19, leave out ("respectively").
Page 1, line 20, leave out ("to damages and").

The noble and learned Lord said: My Lords, I spoke to Amendments Nos. 3 to 5 with Amendment No. 1. With the permission of the House, I beg to move them en bloc.

On Question, amendments agreed to.

Clause 4 [Enhanced protection for structured settlement annuitants]:

Lord Meston moved Amendment No. 6:

Page 2, line 45, at end insert ("and as if any reference in those sections to liquidation were a reference to liquidation or provisional liquidation").

The noble Lord said: My Lords, as the House knows, most structured settlements are funded by means of annuity policies. To meet concern about the long-term security of such funds, the Bill as currently drafted would enhance the protection offered by the Policyholders Protection Act 1975, which guarantees payment of 90 per cent. of the policy value where an insurer goes into liquidation, to 100 per cent. in the case of structured settlement annuities. That reform is welcome, but it seems that it will not provide adequate protection for all those injured who find that an insurer cannot meet its liabilities because the protection does not extend to insurers in provisional liquidation.

A situation which has been drawn to my attention has arisen when an insured person has suffered real hardship because he has not been paid by the general insurer and has not so far been able to recover the sums owing because the general insurer is in provisional liquidation. In such situations, the Policyholders Protection Act 1975 fails to provide protection for the injured person, who also has no power to compel the liquidator to make matters final so that payment would be guaranteed under the Act. In the case in question, the general insurer has apparently continued to receive the proceeds of the annuity policy purchased when the case was settled, but, despite requests, the general insurer also continues to refuse to allow the annuity policy to be assigned to the

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particular plaintiff, despite the fact that such assignments have become common practice since the Finance Act 1995.

There seems to be a gap in the legislative protection. The simplest solution seems to be to extend the 1975 Act to provisional liquidations in the case of structured settlements. It is on that basis that this simple amendment is proposed. I beg to move.

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