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Baroness Scotland of Asthal: I am grateful to the noble Lord for his clarification. By restricting the scope of the order to circumstances where it was proved or admitted that the disease, deterioration or improvement in the claimant's condition would definitely occur rather than where there was a chance that it would occur the amendments would prevent our making the initial order in the terms we propose, which go no further than the provisional damages. If the noble Lord seeks to replicate the position in relation to provisional damage there is probably nothing between us.

Restricting the terms of variable periodical payments beyond those governing provisional damages would discourage their use and could force awards to be made by way of lump sums and provisional damages where variable periodical payments were more suitable. That is our worry. By preventing any future orders being made in different terms in the light of experience and future developments in the insurance market, the amendments would undermine the purpose of the order-making power. Not only would they prevent extensions to the scope for variation, they would also prevent any restriction that might be necessary.

Amendment No. 141A proposes the removal of the provision that allows an order for variation made by the Lord Chancellor under Section 2B(1) to have effect irrespective of the original terms and conditions of the court order or agreement. That provision is intended to ensure that the framework for the order-making power is wide enough to capture all possible eventualities for variation. Any such order would of course be subject to consultation and the affirmative resolution of Parliament under the terms of Section 2B(6).

However, I recognise the concern outlined by noble Lords and the noble Baroness, Lady Finlay of Llandaff, about the provision. They fear that it could create unacceptably high levels of uncertainty, and the Government are therefore willing to accept the amendment. I hope that that gives the noble Lord, Lord Goodhart, pleasure.

Amendment No. 141AA removes the provision enabling an order of the Lord Chancellor to make provision of a kind that could be made by civil procedure rules. The provision in the Bill is intended to provide greater flexibility, as it is likely that provisions relating to variation may contain elements of substantive law which would be more appropriate to an order than rules of court. There may also be occasions where it is more efficient to deal with a particular matter

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wholly by order rather than by rules. As noble Lords are aware, rules of court are subject to negative resolution by Parliament. If it is decided to implement any provision by way of an order, it will be subject to consultation and the greater scrutiny of affirmative resolution.

Amendments Nos. 141AB and 141B would prevent an order for variation amending legislation governing provisional damages. Amendment No. 141AB would also prevent an order from applying such legislation. As we intend that the initial order for variation will operate on similar terms to that of provisional damages, it is clearly practical that an order should be able to apply the legislation that governs those damages. There is also the possibility that the courts may wish to award a lump sum by way of provisional damages in conjunction with a variable periodical payments order. If the power to amend provisional damages legislation was removed from the scope of the order-making power, any necessary amendments to ensure that the two regimes could operate in tandem would have to be made through primary legislation instead. That would be extremely cumbersome and inefficient. We believe that the most effective way to achieve compatibility is through the order-making power. That provision has, of course, been considered by the Delegated Powers and Regulatory Reform Committee, which did not consider that the attention of the House needed to be drawn to it.

Amendment No. 141C raises a drafting point. The use of the word "may" in Section 2B(6)(b) is standard drafting and is not permissive but prescriptive. It is used elsewhere in the Bill. The Lord Chancellor will be required to consult before making an order under Section 2B(1). I hope that the noble Lord will agree that the amendment is unnecessary.

The Bill requires the Lord Chancellor to consult,

    "such persons as he thinks appropriate".

The noble Lord, Lord Hunt, raised that issue in relation to Amendment No. 141D. He and the noble Lord, Lord Renton, asked about the people whom the Lord Chancellor was likely to consult. Consultation will include—I hesitate to call them the usual suspects—the legal profession, the Association of Personal Injury Lawyers, the Forum of Insurance Lawyers, the insurance industry, the Association of British Insurers, medical defence organisations, the National Health Service Litigation Authority, the judiciary, the Civil Justice Council, disability groups and other government departments. It will be available on the departmental website.

Lord Renton: I am grateful to the noble Baroness for giving way. She has now made it clear that, although it appears to me from the wording of the clause that the Lord Chancellor can require the courts to deal with cases on an individual basis, that is not the intention of it and that, therefore, there is no question of particular cases being dealt with by an order by the Lord Chancellor but merely dealt with by the powers given to the courts.

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That being so, and I suppose I must apologise for thinking that it could be meant the other way, I believe that between now and Report the Government should consider the wording of the clause in case other people imagine—it is quite easy to interpret it as such—that it gives power for action to be taken in individual cases.

Baroness Scotland of Asthal: I hear and accept what the noble Lord says. However, I hope that during these debates in Committee we shall give those who come to construe the Bill in due course the kind of information that will enable them to be clear as to how these matters should properly be read. I hope that that will prove to be of assistance to them.

Amendment No. 141D would replace the words,

    "such persons as he thinks appropriate",

with the words,

    "as widely as is reasonable in the circumstances".

The wording used in the Bill is not intended to limit the scope of consultation. It will of course be important to seek the views of all those with an interest before any change is made. If Parliament is not satisfied with the degree of consultation in any particular instance, then it will be able to indicate that under the affirmative resolution procedure. Therefore, I believe that Amendment No. 141D adds nothing further to the existing provision.

Amendment No. 141E provides that an order for variation would apply only to claims arising after the date of the commencement of this section. Amendment No. 141EA has a similar effect but limits the application of an order further—that is, to injuries which occur after the date of commencement. Although I recognise the general concerns of defendants and insurers on the "retrospective" effect of legislative change, the initial order will be no more than is provided for under the current system of provisional damages. I understand that those damages cause no difficulty at present.

In those circumstances, where it is known that there is a chance of medical deterioration in the future, compensation is now paid, one way or another, either as provisional damages or built into the award as a contingency payment. As I explained, this latter practice may well lead to overcompensation overall while leaving some people who need it undercompensated. Where the court makes a variable periodical payment order, insurers should be able to reserve or reinsure against that, as they do now with provisional damages orders.

If the provisions relating to the court's power to vary periodical payments applied only to claims arising or injuries occurring after the date of commencement, it could be several years before the provisions took effect. In the meantime, awards would continue to have to include provision for events which might never occur in cases where a variable order might be more appropriate. The precise transitional arrangements for the provisions regarding periodical payments have yet to be settled.

However, I can say now that the relevant clauses of the Bill will not apply to claims concluded by its implementation date. I hope that that statement will

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give the noble Lord, Lord Hunt, the clarity and assurance that he needs in relation to this difficult and, I accept, testing issue.

While I understand the need for suitable insurance products to fund variable periodical payments, it is not practical to require the Lord Chancellor to be satisfied with all the arrangements that might be put forward by defendants before the provisions come into effect, as Amendment No. 148A would require. Under the intended terms of the initial order, the possibility of variation will be known at the time of the original court order. As I have said, insurers should be able to reserve or reinsure against that.

In addition, the court will have to be satisfied before making a periodical payments order that the continuity of the payments is reasonably secure. It would be open to the defendant to inform the court if the terms of an order would cause particular difficulties. In the event that a second order under the order-making power was considered, the need for different funding options would undoubtedly be taken into account and consulted upon. I therefore invite noble Lords not to press those amendments.

I have tried to answer comprehensively, because these are difficult issues. There has been a lot of worry and concern among all parties about how they will operate, but I hope that there is now sufficient clarity for noble Lords to be comfortable that these are sound provisions that they can support.

6.45 p.m.

Lord Goodhart: I am obviously grateful to the Government for accepting Amendment No. 141A. We shall have to return to Amendments Nos. 141ZA and 141B, together with other amendments in the name of the noble Lord, Lord Hunt, no doubt, because there is still some difference of opinion between us. I am particularly concerned that it is desirable in everybody's interests that the restrictions on the making of orders should be parallel with those in relation to provisional damages and that that should be on the face of the Bill.

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