Mesothelioma Bill [Lords]
The Committee consisted of the following Members:
Fergus Reid, Committee Clerk
† attended the Committee
‘apportioned in such manner as the scheme shall direct’.
The amendment will allow the Minister to deal with why clause 4 provides, as I understand it, that when there is more than one eligible dependant who receives compensation under the scheme proposed under the Bill, that compensation will be equally divided between the eligible dependants. The Bill achieves that simply by stating that
Eligible dependants are dealt with in clause 3, which we have already debated and in which their entitlements are set out. The definition of an eligible dependant under clause 18—perhaps there is something even in clause 3—is set out by reference to section 3 of the Pneumoconiosis etc (Workers’ Compensation) Act 1979. I have that Act with me, but I will not read the entire definition in it into the proceedings of the Committee; suffice it to say, as I understand it, that if the scheme is set up under the present drafting, when there is more than one eligible dependant, which would include spouses, children and those who are in the position of spouses though not formally married, the compensation would be divided equally between them.
The Minister needs to reflect on that and justify it, because there may be eligible dependants who ought to receive a greater chunk of the payout under the scheme that will be set up by the Bill—should it pass its remaining stages and receive Royal Assent—than other eligible dependants. This probing amendment is therefore an attempt to elicit from the Minister some indication of why the Government think that the compensation should be equally divided between eligible dependants in all circumstances. For example, if there is a spouse and young children, it would seem sensible for a far greater chunk of the compensation to go the spouse who is responsible for those young children, at least until they achieve their majority.
My hon. and learned Friend makes an important point. In the circumstances he described, the compensation would go to the spouse. If the spouse or partner was not there, it would be equally divided among the other dependants. The reason why we have taken such an approach is that we do not want to bog down the administration of the fund with disputes between family members. We feel that that is something that should be done outside the administration. I understand his point, but I do not think that it will become a problem, especially given that the fund will pay to the spouse or partner.
With that clarification, I hope that my hon. and learned Friend will withdraw his amendment. Although I understand where he is coming from, we want to keep administration costs to a minimum and we do not want to get involved in disputes.
Stephen Phillips: I am grateful to the Minister for his comments. From what he says, I understand it is intended that, if there is a surviving spouse, the payment will go to the spouse, and thereafter it will go to eligible dependants, such as children. Perhaps I have misunderstood, or not properly read, the definition of “dependant” in the 1979 Act but, on the basis of the Minister’s assurance—although I would like to discuss this point with him outside the confines of Committee—I beg to ask leave to withdraw the amendment.
‘including the disapplication of strict rules of evidence.’.
Clause 5 deals with applications and procedure for the administration of the scheme. Subsection (1)(c) indicates that the scheme may make provision with regard to evidence. What is important about the scheme—this point has been made by the right hon. Member for Wythenshawe and Sale East and other members of the Committee—is that those whom it is intended to benefit should receive the compensation, which they have for far too long been denied, without having to go through too many formal requirements. In such circumstances, it is obviously sensible that the scheme not only should be able to make provision about evidence, but should not become a quasi or pseudo-court proceeding.
My amendment would enable the scheme to make provision not only about evidence, but to disapply the strict rules of evidence. What I have in mind—the Minister might give suitable assurances in any event—is that the proceedings before the scheme administrator,
Kate Green (Stretford and Urmston) (Lab): It is a pleasure to serve under your chairmanship once again, Mr Davies. I want to raise a slightly different issue regarding provision about evidence. I recently wrote to the Exchequer Secretary to the Treasury regarding my worries about recent changes to the requests procedure for employment schedules for deceased persons. Evidence of employment is one of the elements that will have to be considered by the scheme administrator or the technical committee when determining whether someone is eligible to access the scheme.
On 12 November, Her Majesty’s Revenue and Customs published a new policy on applications for employment schedules for deceased persons, indicating that a court order will be required. Until that point, all that had been needed was the completion of a simple application form. Clearly, the implications of that change give rise to a number of concerns regarding mesothelioma sufferers. Given the long latency of the disease, a crucial aspect of any mesothelioma claims procedure is the attempted identification of previous employers and their insurers, which necessarily frequently requires the release of an employment schedule.
As we know, mesothelioma is invariably terminal, and sufferers die very quickly after diagnosis, so we cannot really hang about on ensuring that the victim—or if they have, sadly, died, his or her successors—obtains the employment schedule. Changes by HMRC to the procedure for requesting the employment history of deceased persons may therefore have a considerable and adverse impact on mesothelioma sufferers and their families.
As I said, I wrote last month to the Exchequer Secretary requesting clarification of the factors driving the changes to the request process. In anticipation of this debate, my office made several attempts this week to expedite a response from the Exchequer Secretary’s private office, but we had not received anything when I left my office first thing this morning.
I have asked for details of any consultations or impact assessments that have been undertaken before the implementation of the changes and whether the specific circumstances of mesothelioma sufferers can be, or have been, taken into consideration. In addition, I have asked for clarification of how the changes have been reconciled with the objectives of the Ministry of Justice review to streamline and simplify the claims procedure.
I appreciate that the issue is not part of the Minister’s direct remit, and I very much hoped that I would have received a satisfactory response from the Exchequer Secretary so that I would not need to trouble the
Mike Penning: First, let me address the shadow Minister’s quite understandable concerns. My officials and MOJ officials have been meeting Treasury officials to discuss this matter. This is a piece of Government legislation and, as the hon. Lady can imagine, we do not want any hiccups in implementing it. We will get some answers on the issues she raised as soon as we can. If I cannot get them today, I will make sure that I or my neighbour, the Exchequer Secretary, get an answer to her. I am with him tomorrow, and my officials and I will nudge him.
I can give my hon. and learned Friend the Member for Sleaford and North Hykeham the assurance he wants. We desperately do not want to replicate strict court processes in the guidance we give the administrator, so we have disapplied the rules, and that will be set out in the guidance. The whole principle is that we want to expedite access to the fund.
‘(5) An appeal from the decision of the First-tier Tribunal shall lie to the relevant court, but only with the permission of that court and rules of court may be made accordingly.
(6) In this section—
(a) “First-tier Tribunal” shall mean the tribunal established by the scheme to hear appeals against a decision taken on review;
(b) “the relevant court” means—
(i) the High Court in England and Wales or Northern Ireland, or
(ii) the Court of Session in Scotland.’.
Stephen Phillips: Clause 6 deals with reviews and appeals, and makes provision for an applicant seeking compensation under the proposed scheme to request a review of a decision—self-evidently that would be an adverse decision. The clause is therefore an important mechanism by which those who are entitled to compensation that they are initially wrongfully denied may seek to have the decision reviewed in their favour. The amendments would expand on those rights and, in one respect, clarify them, although the Minister may, in any event, be able to clarify matters now.
At the moment, the clause provides that a review should take place, but it does not say before whom it should take place. It is obviously important that whoever reviews the initial decision is totally separate from the individual who reached it. All hon. Members have experience of authorities that make decisions and judgements about people’s rights then effectively reviewing their own decisions. That is obviously unsatisfactory and, not surprisingly, it rarely leads to original decisions being reversed.
Amendment 24 would make it clear in subsection (1) that an applicant’s right to request a review of any decision under the scheme is a right to a review by someone other than the person who made the original decision. The Minister may say that the regulations setting up the scheme will make that clear. If he is prepared to give an undertaking to the Committee that that will be in the regulations, the amendment will be unnecessary.
Amendment 25 would deal with the situation when, following a review, the decision still goes against the applicant. In those circumstances, the applicant obviously would have lost twice—on the original decision and then on the review. However, the review will be administrative—it will not take place before a court—so applicants who are twice denied the compensation to which they believe they are entitled will rightly feel aggrieved that they had never had their day in court. The amendment would therefore add two provisions to permit an appeal from the first-tier tribunal, which I understand is the body of last resort, to the relevant court: the High Court in England and Wales, and the Court of Session in Scotland. Again, the Minister may be able to satisfy me that there are alternative routes by which decisions reached wrongly and adversely to an applicant could come before the courts, such as by way of judicial review. If he can say that that is the case, or if he will reflect before Report on whether that will be the case, I will be sufficiently satisfied not to press the amendment.
The amendments would ensure that a suitable review and appeal structure was in place so that those wrongfully denied the compensation to which they are entitled under the scheme would have recourse to a process that ensures that they receive that compensation.
On amendment 25, we do not intend to interfere with the first-tier tribunal under the Tribunals, Courts and Enforcement Act 2007. Its decision will be binding. However—I will be happy to discuss this with my hon. and learned Friend before Report—if an applicant is not happy with a decision, that will not stop them from going to the Court of Appeal.
Stephen Phillips: On the basis of the Minister’s first assurance, I will be happy to withdraw amendment 24. I will not press amendment 25 at this stage, but if he cannot satisfy me before Report, although I am sure that he will, given that he is such a good “bluerk”—
I tabled this entirely probing amendment because I do not understand what subsection (6) does or what it says. I appreciate, as does the Committee, that I am a bear of very little brain, but all I really want to know from the Minister is what on earth it means.
Mike Penning: My notes say that removing the provision would mean that the scheme administrator would not be bound by the provisions in enactments when administering the scheme—in other words, they could make their own decision. That would mean that the scheme administrator would not have to follow the rules or any of the Bill’s provisions. It cannot be right that the administrator could move away from anything that Parliament decided in this Bill, so the subsection has been included to bind the administrator specifically within the rules of the fund that the House has set out.
I heard what the Minister said that the provision was designed to achieve. No doubt if anyone is troubled regarding any application under the scheme or in a court, they will read with care what the Minister said about what the subsection is designed to achieve. I have to say that I still do not really understand it; it does not seem to make much sense, even as a matter of English. However, on the basis of what the Minister said, I beg to ask leave to withdraw the amendment.
Kate Green: This is an important clause for defining the operation and administration of the scheme. It allows the Secretary of State either to administer the scheme himself, or to make arrangements for another body to administer it. We all anticipate that the latter course of action is more likely. Although there are two options in the Bill, it is clear from the debates that took place in the House of Lords and the discussions that I have had with the Association of British Insurers that
Even the perception of such a conflict of interest may concern victims and their families, no matter how scrupulously the scheme is administered. Baroness Sherlock made a number of alternative suggestions, such as arrangements similar to those for the Financial Ombudsman Service and the Financial Services Compensation Scheme. Those bodies are set up in statute and funded by an industry levy, which is similar to what is envisaged for this scheme, but they are administered by independent scheme operators.
“We have fundamental concerns that there is not enough detail on the face of the Bill to generate confidence that the scheme will be robust in serving and protecting claimants…This lack of independence is completely unsatisfactory. We submit that an independent body should be established, on a statutory basis, to review regularly the work of the scheme and the technical committee, and to ensure that the scheme is operating fairly, and in the best interests of those it has been established to compensate. The review body should report to the Secretary of State, who should then report to Parliament on an annual basis.
For the insurance industry to run the scheme without independent oversight from such a body would be of enormous concern in terms of the potential for conflict of interest. Clause 4(3)(b) for example, gives the scheme administrator the ‘power to decide when to impose conditions or what conditions to impose’. The scheme administrator will clearly be responsible for making crucial decisions about each case including, of course, the eligibility of applicants. An insurer body would have an obvious interest in keeping the number of applicants, and therefore the levy on insurers, low.
APIL has serious concerns about the prospect of the insurance industry, which has fought tooth and nail for years to avoid its responsibilities to mesothelioma sufferers, being in control of the compensation process from all sides—by running the scheme for untraced cases without independent oversight, to controlling the way cases are handled when the insurer can be traced… If the scheme is to be run by the insurance industry, there is real likelihood of conflict of interest, with insurers seeking to save costs where possible, at the expense of the claimant, even at the point of refusing an applicant entry to the scheme. The oversight committee should, therefore, monitor all decisions to ensure corners are not being cut just to save money for insurers.”
I have tabled a new clause that would establish an independent oversight committee, which was discussed in the House of Lords, to ensure that the scheme operates fairly and in the best interests of those it has been established to compensate.
There are two aspects of clause 7 that should particularly be highlighted. The first is the fact that costs associated with the scheme’s administration, including the industry’s legal fees, will be funded by the levy on the industry, thereby effectively reducing the size of the pot available to fund payments to mesothelioma sufferers by £30 million. The second concern is about the transparency of both the administration process and the tendering process that the Government intend to run for the body designated to administer the scheme.
“The costs of the scheme are split between a levy of £371m on the insurance industry and £17m in government funding. This covers scheme payments direct to individuals (£261.4m), benefit recovery (£72.2m), applicant legal fees (£24.6m) and admin of £30.0m (including case legal fees of £24.2m, set up of £1.4m and running costs of £4.4m).”
It is not clear to me that the scheme should be paying for legal services provided to a multi-billion pound insurance industry that is the very cause of our needing the scheme in the first place. Given that it is likely that the scheme will be administered by the insurance industry, why should the industry benefit from the increased revenue derived from the scheme’s £1.4 million set-up costs and £4.4 million running costs? If administrative charges were not funded by the levy to be imposed by the Bill, the additional money could pay for at least a 5% increase in the percentage rate of average civil compensation claims. I am sure the hon. and learned Member for Sleaford and North Hykeham will be interested in that calculation, because it would bring us back to the 80% compensation level that he proposed earlier this week.
My second concern, on which the Minister may be able to offer some useful comments, is about the independence and transparency of the tendering process by which a scheme administrator will be appointed. On Second Reading in the House of Lords, my noble Friend Baroness Donaghy said:
“If the administration of the scheme is to be contracted out, I ask the Minister what safeguards will be written into the tender to ensure absolute independence and integrity. This would apply in particular if the insurance industry were to be the scheme administrator. The conflict of interest would be obvious, even if we were looking at an industry with a benign record. However, we are looking at one more commonly characterised by delaying tactics, spurious arguments and obfuscation.”—[Official Report, House of Lords, 20 May 2013; Vol. 745, c. 701.]
In Grand Committee, Lord Freud said that the insurance industry was setting up a company to meet the requirements of the scheme rules. During the Bill’s passage through the House of Lords, noble Lords expressed concern about potential conflicts of interests were the insurance industry ultimately to be the successful bidder for the contract to administer the scheme. On Report, in response to suggestions that the appointment of an administrator was already a done deal with the insurance industry, Lord Freud said:
“I offer my assurance that this is not the case and that we intend to run an open competition for the contract of scheme administrator, which will be chosen through the open tender process according to our commercial criteria. I hope this reassures noble Lords.”—[Official Report, House of Lords, 17 July 2013; Vol. 747, c. 762.]
It is reassuring to know that there will be an open and competitive tendering process. Will the Minister tell us a little more about how he expects it to operate to ensure the appointment of the best possible administrator to run the scheme? What assurances can he give us that the administration of the scheme will be fully independent if, in the end, the contract is awarded to an insurance industry body? I look forward to hearing his response to my concerns.
Mr Nicholas Brown (Newcastle upon Tyne East) (Lab): I, too, look forward to hearing the Minister’s response to the concerns expressed by my hon. Friend. In that response, however, will the Minister say a little more about who will do the choosing between the different bidders in any competitive tender? How independent will the chooser be? It would be helpful to the whole Committee if he could be as specific as possible about who will be doing the choosing and have oversight of the arrangements, which are fundamental to the operation of the rest of the scheme.
In answer to the initial concerns about ensuring that the Bill says that the tendering process will be as open as possible: it will be. As the noble Lord Freud indicated in the other House, the tender competition will be completely open—exactly the same as any other tender process. We will ensure that we have as much expertise on that committee as possible. The commercial staff in the Department for Work and Pensions will be responsible for the tender, as they are for our other tender processes—exactly as happened when the right hon. Member for Newcastle upon Tyne East was a Minister in the Department.
The contract will obviously be chosen on the usual criteria of value for money—commercial criteria. If there is a conflict of interest, that will be exposed at that stage, as will a bidder’s ability to operate the scheme. The shadow Minister was concerned about what would happen if—a big “if”—there was a conflict of interest that allowed the insurance companies to limit or pick and choose, but the criteria are set and the administrator has no say as to who gets money from the fund other than on the basis of the specific criteria agreed by this Committee. The administrator has to abide by the regulations to follow.
The legal costs relate to support for the scheme applicants, not to the setting up of the scheme. I have a note to that effect, but I will clarify matters in a longer letter to the hon. Lady. Running costs are of course a factor, which we will take into consideration when we look at the tenders.
Kate Green: To press the Minister a little on the legal fees, I did understand, when I referred to case legal fees of £24.2 million, that those were specifically for dealing with the cases of applicants—they were not legal fees in relation to establishing the scheme. Will the Minister clarify absolutely, however, that they are not legal fees that are being spent in order to defend cases against applicants or to seek to thwart applicants’ claims? I was surprised that the scheme might be seeking to take legal action to protect the legal position of applicants, but perhaps that is what the Minister is saying.
Kate Green: I am very happy to have further clarification from the Minister, but the reason I am doubtful is that applicant legal fees are also covered, as a separate sum of £24.6 million. I just want to be absolutely clear that all these fees are being spent for the benefit of applicants.
Mike Penning: The hon. Lady is absolutely right. We will come later to clause 10, which relates to help with funding and, later, with proceedings. I will clarify the exact points the hon. Lady raised, but—I will come back to this, sadly, on many occasions—this is the deal that we have, this is the deal that was done and this is the deal that went through the House of Lords. I saw the comments from noble colleagues in the Lords, but the Bill came out of the Lords in this form. We have a structured deal so that the Bill can make its way through the House. On that basis, we are where we are. We will go through an open tendering process, and we will make sure the scrutiny of that process is exactly the same as it would have been when Opposition Members were in government.
‘(b) in relation to a body corporate established by the Secretary of State under section 7(3), means any person exercising the functions of a director; and
(c) includes a shadow director within the meaning of section 251 of the Companies Act 2006.’.
Stephen Phillips: Clause 9 must be read in conjunction with clause 8, to which no amendments were tabled, and which the Committee has decided should stand part of the Bill. It deals with penalties and other provisions in relation to the unauthorised disclosure of information by those who come into possession of that information for the purposes, principally, of administering the scheme. One such group of people is the directors of bodies corporate that may, potentially, administer the scheme.
As the Committee knows from clause 7, however, one mechanism by which the scheme could be administered involves the Secretary of State setting up a body corporate to carry out the administrative functions that need to be carried out under the scheme. The body the Secretary of State sets up—if that is the route the Government choose to go down—might or might not have directors. It may be a classic body corporate in ordinary terms, or it may be a company limited by guarantee—I know not what the Secretary of State may have in mind. However, if the Secretary of State chose to set up a body corporate by some mechanism that did not result in that body corporate having directors, those who administered the
Paragraph (b) of amendment 28 would include in the definition of a director for the purposes of clause 9 anybody exercising the functions of a director where the Secretary of State chooses to administer the scheme by setting up his own body corporate. Paragraph (c)—this is possibly an omission, and it should perhaps be obvious—would include not only directors, but shadow directors, so that they are caught by the criminal penalties created in clause 9. Again, that is desirable in case, for whatever reason, someone who is not properly or formerly a director but none the less is in breach of the scheme puts into the public domain information about an applicant that ought not to be there.
The amendments therefore seek to clarify that which ought to be obvious in the Bill and to make consistent the Government’s intention that there ought to be some sanction under criminal law for those who are responsible for the unauthorised disclosure of highly personal information about applicants. For that reason, even if I do not seek to test the will of the Committee on the amendment, I hope that the Minister will consider the matter on Report.
the subsection also encompasses a person purporting to act in one of those capacities. A person who gives orders for a company or part of it as a member of its management team cannot escape liability. That broad definition applies to officers of all forms of corporate organisation. I will look into the request made by my hon. and learned Friend and we will also look into whether we need to bolster regulations, but we feel that the definition is broad enough to fit.
Stephen Phillips: If the Minister looks at subsection (6)(a), he will see that the words “or other similar officer” would appear to apply only to the category of secretary; the drafting of the provision does not seem to imply a reference to a manager or other similar officer, or a director or other similar officer. Although I understand that the Minister feels that the definition was intended to be drawn sufficiently broadly to encompass the point that we are currently debating, a respectable argument could be made that a shadow director is not caught by the wording of the provision, as the words “or other similar officer” can be interpreted as applying only to the word “secretary” and not to the words “manager” or “director”.
I will not seek to test the will of the Committee at this stage but the point is one on which the Minister will need to reflect. I would be grateful if he would write to the Committee before Report—or intervene now—to give his thoughts on the matter.
Mike Penning: I am more than happy to write to the Committee on the issue. I will make sure that the Department’s legal team addresses the concerns that my hon. and learned Friend has put to the Committee.
‘in the name of that person’.
‘including indemnities against adverse orders for the costs of any proceedings or any application made therein’.
‘(1) Section 48 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Sections 44 and 46 and diffuse mesothelioma proceedings) is amended as follows.
(2) In subsection (1), omit from “mesothelioma” to the end of the subsection (including paragraphs (a) and (b)).’.
The purpose of amendment 29, which I do not intend to press, is to confirm that the proceedings to which subsection (1) refers are proceedings that will be taken in the name of the applicant to the scheme. It may be that the Minister will be able to confirm that now.
Stephen Phillips: The amendments are now in the hands of the Committee. I shall say no more. After the right hon. Member for Wythenshawe and Sale East has spoken on his new clause, I will seek leave to withdraw the amendment.
Paul Goggins (Wythenshawe and Sale East) (Lab): It is a pleasure to see you in the chair again, Mr Davies, and a pleasure to follow the hon. and learned Member for Sleaford and North Hykeham. Any member of the Committee could be forgiven for asking the straight question, what on earth has new clause 6 got to do with the Bill? If they thought that, they would have a considerable amount of my sympathy. The Legal Aid, Sentencing and Punishment of Offenders Act 2012—the LASPO Act—has absolutely nothing to do with the Mesothelioma Bill, but Ministers keep trying to connect them. I am sure they are doing so with the best intentions—to send a message that they care about the support available to those who suffer from mesothelioma—but unfortunately there is no connection. With the help of the Minister, my hon. Friend the Member for Stretford and Urmston and others, I hope that we can get clarity this morning.
Kate Green: I am pleased to support my right hon. Friend. I first raised the issue with the Justice Secretary in Justice questions on 12 November, where I asked precisely what my right hon. Friend asks: what connection, if any, exists between LASPO 2012 and this Bill? The Justice Secretary said that he did not know, but would undertake to find out. I have not heard back from him, but as my right hon. Friend says, the Department has continued to issue statements, including a written ministerial statement last week, connecting the two. I asked again, by letter, this week if the Justice Secretary could advise me, but I am afraid that I have not had a reply.
Paul Goggins: I am sorry that my hon. Friend has not had a reply from the Justice Secretary. I took heart from the fact that he did not know the answer to her question and was honest enough to say so from the Dispatch Box, because at least that meant there was nothing in the front of his mind that connected the two. It gives me hope that when he finally replies to her, we might get a better answer than we have at the moment.
Sections 44 to 46 of the LASPO Act brought in the new arrangements for conditional fee agreements—so-called, no-win, no-fee arrangements. Section 48 provides an exemption from those new arrangements for mesothelioma victims, until such time as the Justice Secretary carries out a review and issues a report. Parliament made its view clear during the passage of the Act. An amendment was passed in the House of Lords that exempted mesothelioma sufferers. Hon. Members from both sides will recall our vigorous debates in the House of Commons over the issue and the strong sense that it was repulsive that people who are given a diagnosis of mesothelioma and know that they might have only months to live might have to give up 25% of their damages to pay a success fee to their lawyers and would therefore have to shop around to get the best deal from those who might represent them. The idea was repulsive. Although there was no successful vote in the House of Commons, there clearly was a strong view.
Section 48 was a compromise. The Government got the LASPO Act and Parliament got its exemption, albeit subject to the review and the report that would then be issued. However, there was no time frame on that review and report so there was a question about how long the grass would be and when the review would be carried out.
In passing, I strongly commend the hon. Member for Chatham and Aylesford (Tracey Crouch) who, throughout those debates, sought properly to work on a cross-party basis to bring forward the arguments that we cared deeply about on both sides of the House. She happens to have had considerable experience in this field before coming to the House. It is the tradition of this House that most of us are fundamentally loyal to our parties, but we sometimes reach out to those on the other side who share our concerns. It was positive of the hon. Lady to do so on that occasion.
The compromise has been beneficial. Just the other day, I was talking to Tony Whitston of the Asbestos Victims Support Group Forum UK—we have all had the benefit of his briefings—who described the new arrangements under which mesothelioma victims are exempted as a real boon, because he can now say to the victims and their families, “There is no complication. You can take this case on and if you win you keep the whole of the damages, and if you lose it costs you nothing.” It is as simple as that. For people in great distress, that is a comforting message to hear. Parliament should be pleased that the compromise produced a simpler and clearer system. We must remember that one in seven people with a diagnosis of mesothelioma do not make a claim, such is the complexity of the system. It is important to make it as simple as possible.
We had a compromise and it is working well for victims, but in July the Ministry of Justice produced “A consultation on proposals to speed up the settlement of mesothelioma claims in England and Wales”. It is about civil claims and how to speed up the system. It contains two main proposals. I do not want to dwell on the details because they are not relevant to the Committee, but one is a pre-action protocol and the other is a proposal for fixed costs. The victim support group expressed great concern about that because it believed that the two proposals would slow the system down instead of speeding it up. I am delighted that having conducted the review, Ministers in the Ministry of Justice concluded that that was correct, so they do not intend, at least at this stage, to proceed with the pre-action protocol or the fixed costs.
“The Government have carefully considered the responses and have concluded that they intend to apply sections 44 and 46 of the LASPO Act to mesothelioma cases, as for all other personal injury cases. The Government do not believe that the case has been made for mesothelioma cases to continue to be treated differently”.——[Official Report, 4 December 2013; Vol. 571, c. 56WS.]
The Minister made a clear statement that the Ministry of Justice has taken a different view from that of Parliament and that there should be no exemption for mesothelioma sufferers. It is interesting that the statement says that the case has not been made out for mesothelioma cases to continue to be treated differently, because that question was never asked in the consultation.
The review of section 48 was an afterthought in the consultation document. Clearly, Ministers thought they could tack it on to the core consultation about speeding up the process. The question that respondents were asked was:
which this has nothing to do with. The question is pretty flawed. The actual question about whether mesothelioma victims should still be exempt was never actually put. Parliament believed there should be an exemption for mesothelioma sufferers, albeit it was a compromise and a temporary arrangement, but we made it very clear to Ministers that an exemption should be in place. It is important for Ministers to reflect that they have drawn a conclusion based on a question in a consultation that was never properly and rigorously carried out.
My new clause 6 seeks to make the exemption of mesothelioma victims from the new conditional fee agreement permanent. There are two reasons for that. The first is the human impact. I go back to the view that Parliament expressed, which is that expecting mesothelioma victims with months to live to give up 25% of their damages to lawyers as a success fee is repugnant, and Parliament should continue to be against that. We should not expect people with a terminal illness to shop around for the cheapest deal that they can get.
Secondly, the decision to proceed with the introduction of sections 44 and 46 is based on a flawed consultation. The question about whether mesothelioma victims should continue to be exempt was never put, so people were not asked to answer that specific question. Had they been, they would have provided considerable evidence to support the argument that the exemption should be allowed to continue. Based on those two arguments, the exemption should continue.
There is no connection between the two because the LASPO Act concerns civil claims where the victim knows who the employer was, knows the insurance company, and can therefore make a civil claim. The Mesothelioma Bill, which Ministers keep saying is connected with that, is about a scheme to produce a fund of last resort for those who do not know who the employer and insurance company are. Someone able to benefit from the fund introduced by the Bill would never be in a position to make a civil claim, because they would not know who the employer or insurer was.
Mike Penning: The right hon. Member for Wythenshawe and Sale East is absolutely right. When I looked at new clause 6, I thought, “What has this got to do with my Bill?” I still feel the same. The majority of his speech on his new clause was to do with issues that relate to another Department, and, in all good faith, absolutely nothing to do with the Bill before the Committee today.
To the hon. Member for Stretford and Urmston I can say only that I will do my personal best to make sure that a reply gets to her as soon as possible, but I am a lowly Minister, and the Ministry of Justice will work in its own way, as former Ministers know.
Stephen Phillips: If, as my hon. Friend says—he may well be right—his view is that the Mesothelioma Bill has nothing to do with either the amendment or section 48 of LASPO, does he agree that the reference in the written statement, to which the right hon. Member for Wythenshawe and Sale East has drawn attention, to the Mesothelioma Bill is at best misplaced?
Mike Penning: I do not think I referred to section 48 in my comments; I referred specifically to the amendment. I too would like to pay tribute to my hon. Friend the Member for Chatham and Aylesford. I have known her for many years and she is an extremely honourable lady. Quite understandably, she has expressed her concerns on the issue not only on the Floor of the House, but at other times, particularly during the passage of LASPO. On this occasion, unusually, I must disagree with the right hon. Member for Wythenshawe and Sale East. I would ask him not to press his new clause to a vote so that we can make some progress. I do not feel that his proposals have a place in the Bill.
Stephen Phillips: In relation to my own amendments, I have already indicated that, with the permission of the Committee, I will withdraw them. However, if I may, I would like to say two things about the new clause tabled by the right hon. Member for Wythenshawe and Sale East. First, I must say that I was not aware of the written ministerial statement to which the right hon. Gentleman has drawn the Committee’s attention, but I am afraid that I think my hon. Friend the Minister misunderstood the point that I was putting to him. None the less, it is a good point: if, as the Minister says and as seems to be obvious, the Bill has nothing to do with LASPO or section 48, then the reference to the Bill in the written ministerial statement last week seems to be at best misplaced and nothing to the point in that context.
My second point is really for the right hon. Member for Wythenshawe and Sale East, because it may affect whether or not he chooses to press his new clause to a vote. Considering the meaning of section 48 of LASPO, does he think that the review that has been carried out is, in the words of that section:
Paul Goggins: I have some further thoughts to add. The point that the hon. and learned Member for Sleaford and North Hykeham has just made is correct. My contention is that the consultation was flawed because it did not ask what the effect of sections 44 and 46 on mesothelioma victims would be. That question was never asked, nor was the question of whether the exemption should be continued. There was no evaluation of how well the exemption had worked in order to see whether it should continue. The hon. and learned Gentleman makes an interesting point that the Minister may want to reflect on and discuss with his ministerial colleagues—namely, that the consultation did not fulfil the requirements set out in LASPO.
Paul Goggins: I am grateful to the Minister for that assurance. What with his intervention and the further requests that my hon. Friend the Member for Stretford and Urmston has made for an answer to her letter, alongside the other representations that I am sure are being made, I hope that the point will get through. Frankly, just as in the end we negotiated the compromise over LASPO, the issue here is not about point scoring; it is about getting the best system of support for mesothelioma victims that we possible can.
I appreciate that the Minister has been characteristically straightforward and honest with the Committee in his response to my comments. The issue is not anything to do with his Bill, but he can play an enormously important role by taking back to the Justice Secretary and his colleagues messages about the strength of feeling in the Committee. In the written ministerial statement, in correspondence and in other places, Ministers keep making a connection. They keep talking about synchronisation. Even the coming into operation of sections 44 and 46 is meant to be timed to fit with Royal Assent of this Bill, but they have absolutely nothing to do with each other.
To conclude, I do not know whether the Minister knows when the report is to be published, but let us hope it is quite soon—perhaps even before Report. When it is published, let us hope there is a rather more positive message for those diagnosed with mesothelioma, who have only months to live and who need a system of claims that is as simple as possible.
‘( ) any proceedings before the Technical Committee established under section 15 and any reference to arbitration arising as a result of the decision of the Technical Committee, or’.
Relevant proceedings are not, therefore, defined to include action that needs to be taken by an applicant or anyone else before the technical committee established by clause 15, which we will debate in due course. Among other things, that committee will have the power to decide whether there is an insurance contract against which an applicant under the scheme might make a claim. That is obviously of fundamental importance in determining whether an applicant under the scheme has a claim. The scheme administrator may have strong views as to whether an applicant has a claim, even though the applicant might think differently. However, the administrator should have the ability to help—that is the word subsection (1) uses—an applicant who is before the technical committee, or who is dealing with an appeal after a decision by the technical committee, in relation to whether an employer carried insurance that might respond to a diffuse mesothelioma claim.
Although, again, I will not seek to test the will of the Committee, I hope that the Minister will be able to answer today the serious point I have raised or that he will take it away and deal with it, possibly by way of a Government amendment, on Report.
Mike Penning: If I understand the amendment of my hon. and learned Friend the Member for Sleaford and North Hykeham, the concern is that the primary purpose will be to settle disputes over insurance before proceedings are started in court or before the application is made to the scheme. I will go away and look at this again, but I cannot envisage any circumstances in which a person would voluntarily bring a matter concerning insurance cover to the technical committee in the circumstances my hon. and learned Friend describes. I may have misunderstood him, but I do not really think what he describes is likely. However, as he suggested, I will look at the issue again between now and Report.
‘(6) In any relevant proceedings, whether brought with the assistance of the scheme administrator or not, the court shall, at the request of the person with mesothelioma, assess claimed damages as if the person with mesothelioma had already died and the court were assessing damages, including for bereavement, pursuant to the Fatal Accidents Act 1976.’.
This amendment also relates to the level of payment a sufferer would receive. In particular, it looks at the possibility of adopting the approach taken in the Fatal Accidents Act 1976 to sufferers who are still alive when their claim is dealt with and to those who have already died.
Of course, mesothelioma is invariably terminal. Yet, despite that, the current civil compensation awards will be different for those claimants who are still alive at the time their payment is settled; they will be lower than
“If death is caused by any wrongful act, neglect or default which is such as would (if death had not ensued) have entitled the person injured to maintain an action and recover damages in respect thereof, the person who would have been liable if death had not ensued shall be liable to an action for damages, notwithstanding the death of the person injured.”
The Act allows claims under three headings: dependency claim, for economic loss; bereavement claim, in recognition of grief by a further restricted class of dependant; and funeral expenses. All of those should be available to mesothelioma sufferers, regardless of the time of the claim.
In contrast, as I understand it, civil employers’ liability claims are assessed under just two headings: pecuniary damages involving monetary loss, such as loss of earnings, medical and travel expenses and so on; and non-pecuniary damages involving compensation for pain and suffering and loss of amenity, such as changes in impact on lifestyle. Consequently, claims for damages after a mesothelioma sufferer has died are reportedly more generous than those that are made while the claimant is still alive. My concern is that that will have the same knock-on effect for receiving payments under this scheme, because the payments that they will receive will be pegged to average civil compensation.
It would be useful if the Minister could share with the Committee—perhaps not today—any statistics that may be available, both on average claim awards before the death of a claimant and the level of awards afterwards. Could he also let us know what proportion of claims is being settled before and after the death of a claimant, and whether similar proportions are expected for claims under this scheme?
Mike Penning: I would like to clarify something before my response. I think the hon. Lady is saying that we should, for want of a better word, interfere with the amount of compensation in the courts, so that that reflects what the Bill’s fund provides. Is that where we are?
Kate Green: The Minister is correct; that is what my amendment says. I do not intend to press for a vote as it is a probing amendment so that we can explore the issue. If for all sorts of justifiable reasons the Minister is unable to accept that we should use the Bill to amend the approach that takes place in the courts regarding civil claims, where an employer or insurer can be traced, I will understand. In that eventuality, would the Minister look—-not necessarily today but as the scheme is developed before regulations—at how we could offer extra support for mesothelioma sufferers through this scheme?
Kate Green: I am grateful for that useful suggestion, with which I strongly agree. In the context of the Bill, I hope the Minister might at least be able to give thought to how in the context of this scheme we could be as generous as possible to sufferers, in the certain knowledge that the condition is invariably fatal and quickly so. I do not intend to press to a vote but I look forward to the Minister’s comments.
Mike Penning: The shadow Minister is right that I do not feel that this Bill is the right vehicle for the discussion. I agree with my hon. and learned Friend the Member for Sleaford and North Hykeham, who intervened, that the issue should be discussed more widely because this is not the only disease that has such terrible effects on people’s lives and is terminal.
As I understand it, the National Institute of Economic and Social Research publishes relevant figures. If it were not to do so, I would arrange for the relevant Department to indicate how it intended to publish the figures, so that we could have a comparison going forward, because I think that that is a very important point. I am pleased to hear that the shadow Minister will not pursue the amendment.
Kate Green: I am grateful to have had the opportunity to raise the issue and I am grateful for the Minister’s offer to obtain the necessary statistical information. I hope that, specifically in relation to mesothelioma, that will be available to inform our continuing discussions on Report and as the regulations are debated. I also hope that the Minister will want to support what I think is a fairly widespread mood in the Committee that this issue is one that Parliament should take an early opportunity to look at in its broadest context. Any support that the Minister can give us in that endeavour would be extremely welcome. As I said, I do not intend to press the amendment to a vote. I beg to ask leave to withdraw the amendment.
‘But nothing in Schedule 1 shall be construed—
(a) as permitting the recovery of any benefits, other sums or scheme payments unless and until an eligible person or an eligible dependant has been made whole;
(b) as permitting the recovery of any benefits, other sums or scheme payments such that an eligible person or an eligible dependant would not be made whole.’.
For the purposes of this section, an eligible person or an eligible dependant has been made whole when, by means of benefits, other sums, scheme payments or compensation, that person or dependant has received an amount equivalent to the average damages which a person diagnosed with diffuse mesothelioma would recover against a relevant employer who had negligently or in breach of statutory duty caused or permitted that person to be exposed to asbestos (or, in the case of more than one eligible dependant, the relevant proportion thereof determined in accordance with the scheme).’.
This amendment matters, at least as I understand the way in which the Bill is to work. Clause 11 gives effect to schedule 1 to the Bill. We will come to that in due course, but broadly, as the clause says, part 1 of schedule 1
My understanding of schedule 1—I think that the Minister confirmed this on Second Reading and, indeed, when we opened the proceedings in Committee—is that where a scheme payment is made to an applicant, the applicant will lose 100% of their benefits, notwithstanding the fact that because we are enjoined to keep within the 3% of gross written premium so that the industry can swallow the costs of the scheme without passing those on to British business, applicants are to be denied a part of the compensation to which they would otherwise be entitled. My understanding, therefore, is that an applicant who is diagnosed with diffuse mesothelioma and who has no recourse against an employer or against that employer’s insurers will come to this scheme and receive, in terms of compensation, something less than is necessary and would be awarded in the courts to make that person whole, notwithstanding which all the benefits that they receive as a result of the diagnosis of diffuse mesothelioma will then be removed—100% of them. Even though they will get 75% of the damages, 100% of the relevant benefits will disappear. I cannot be the only one to perceive an injustice in that situation, although I think that I am the only one to have moved any amendment before this Committee in relation to it.
What amendment 32 seeks to do, albeit in somewhat convoluted terms, which is the way in which it has to be done for the purposes of debate, is to make clear two things: first, that people do not lose any of their benefits or anything else until such time as they have had 100% of the damages that they would achieve if there were an insurer or employer against whom they could proceed, and secondly, that nothing can be recovered by way of benefits or other sums to reduce them below that 100%, so that they receive full compensation—they are made whole in the same way as they would be if they were not driven to a scheme of last resort but were before the courts.
That seems to me to be eminently desirable, but, much more importantly, it seems to be fair to those who are diagnosed with a disease that will, without doubt, kill them in an unpleasant way and leave many of them with surviving dependents who will not only be faced with the loss of a loved one, but the loss of the income that the loved one might have produced.
It is wholly unfair and wholly wrong that anyone in those circumstances should lose 100% of their benefits or other payments to which they are entitled when they are not being fully compensated for a disease that will kill them and which they have contracted purely because—
Although I probably will not test the Committee’s will on the amendment, I hope that the Minister listened to that. I hope he will go away, reflect and ensure that the Government move amendments on Report to make it absolutely clear that no one who is entitled to a payment under the scheme will lose more of their benefits than they will recover in terms of the percentage of the average damages that would be payable if they were not driven to a scheme of last resort.
Ian Lavery (Wansbeck) (Lab): I tend to agree fully with the hon. and learned Member for Sleaford and North Hykeham. Again, it looks very much as if the poor old victim is being pushed into the background and little consideration is being given either to them or their family. The Department for Work and Pensions will have 100% clawback under the regulations, but at the same time, for the reasons that we discussed at great length on Tuesday, people will receive only 75% of any potential award. That is perverse and I cannot come to terms with that in any way, shape or form.
On Second Reading, I asked the Minister whether he could convince me that that measure was right, just and in the best interests of natural justice, but he did not convince me. I am up for a full and honest explanation from him. He has been forthcoming on every other issue that we have debated in Committee, and I hope that that will be the case with this issue.
Looking at the situation, why indeed should the state have a greater right of financial recovery than the victim? Why should we as politicians be saying that the state can claw back 100% of payments, but victims will get only 75% of any award? That is not natural justice. It just isn’t cricket, and it is not fair. I am desperate for a reasonable explanation of that. Quite frankly, there is not one and I look forward to the Minister’s response. By clawing back DWP benefits at 100% when compensation is paid at 75%, claimants are penalised financially on two occasions. That cannot be right. It is illogical, grossly unjust, wholly unfair and not acceptable.
Kate Green: I share the position articulated by the Members who have spoken so far. It is a palpable injustice that victims should receive only a proportion of average civil compensation when 100% of benefits will be clawed back. However, I can offer some solutions to the Minister, which might help to deal with the injustice. We debated the first solution extensively on Tuesday, but sadly the Minister was not amendable to it. The pressure of the clawback of benefits would be easier to accept if the level of payment under the scheme was more generous. If the level of clawback was aligned with the percentage of the payout, the more generous the level of payment, the larger the clawback would be. I am sure that would be of great interest to Her Majesty’s Treasury.
The Government are willing to put £17 million of public money into the scheme. Rather than gifting that money to the insurance industry, it is eminently possible that they could use it to protect individuals from the clawback of their benefits. I will talk a little more about that. Although the £17 million is to be gifted to the
I hope the Minister will reflect on the strong views expressed by the hon. and learned Member for Sleaford and North Hykeham and my hon. Friend the Member for Wansbeck on the moral argument for aligning the recovery of benefits with the proportion of civil compensation that claimants receive. I hope he will also consider the practical solution that I have suggested, which would make options such as a clawback at 75% of benefits, if civil compensation remained at 75%, affordable to Her Majesty’s Treasury.
Reducing the level of benefits clawback would mean that more money would be left in the pockets of mesothelioma sufferers. At 75% compensation levels, I estimate that sufferers would be £5,000 better off. The hon. and learned Gentleman will be interested in that, because it is equivalent to raising compensation levels to nearly 80%. Claimants would end up with £72,000, at 75% compensation levels with 75% clawback rates.
Stephen Phillips: The hon. Lady keeps ascribing to me a desire to see the level set at 80%, but I have made it clear during the debate that I think it should be 100%. The point about the 80% is that if legal fees are £2,000, 80% can be accommodated within the 3% of gross written premium. I want to make it clear that I am not advocating 80% for any reason other than that. Mesothelioma sufferers should be made whole.
Kate Green: I apologise to the hon. and learned Gentleman if I gave the impression that that is not his position. He was very clear on Tuesday about his position and that those are the constraints under which that amendment would be proposed.
If we could claw back 75% of benefits at 75% payment rates, claimants would end up with £72,000 rather than £73,214 at 80% with a 100% clawback. If no clawback were to take place, claimants would be £20,000 better off, equivalent to 92% average civil compensation.
Paul Goggins: My hon. Friend is making an important point. Does she agree that there would be a greater incentive to the Department for Work and Pensions to try to get the industry to up their contribution to 80%, because if claims were at 80%, the clawback would be at 80%?
Kate Green: My right hon. Friend is absolutely right. There is plenty of scope for manoeuvre with these figures, to the benefit of both the public purse and mesothelioma sufferers. I would suggest that the figures for what can be recouped by the levy over a 10-year period mean that there is plenty of room within affordability for the industry for such options to be explored.
I strongly support the sentiments that have been expressed about this amendment. I very much hope that the Minister will indicate a willingness to be imaginative in improving the position of sufferers and look forward to his response.
Mike Penning: I have listened really carefully to the contributions. I must admit, we had gone over some of this territory already about percentages, the deal and the scheme, which is based on an agreement with the insurers. Recovery legislation is quite specific. The shadow Minister knows that and Ministers who have been in that position before know that one cannot cherry-pick back and forth and make a special scheme on benefit recovery for any individual scheme. I know that the hon. Member for Wansbeck will probably not go with me all the way on this—and I fully understand why—but although some people get 100% and we are on 70%, there are people in the civil courts who get less than they would get in the scheme and there is 100% recovery of the benefits for them.
If we take the 75% out of it, there will be people who get financially less than they would from this fund—that is if they came to the fund. They cannot come to the fund, because it has been settled in court because they found their insurer and their employer. These people will get 100% recovery of the benefits they claim. So there would be a two-tier system. That is why it would not be acceptable.
Kate Green: I am not clear on which circumstances an individual would receive less. He might receive less in absolute financial terms, but that would be for a range of other factors. for example, his age and his dependence. I do not think that the objective basis of assessment would be less fair to people who make a claim through the civil route, even if the monetary sum that they were entitled to was lower because of their personal circumstances.
Mike Penning: That was not the point I was making. My point is that in the civil courts, one would get a 100% deduction, no matter what amount of money one had. We have a 75% scheme within the recovery legislation. There are lots of schemes: we could look at the £17 million, the change in the 3% or, as my hon. and learned Friend the Member for Sleaford and North Hykeham has consistently argued for, 100%. As I said, we are in this position where we have the deal on the table. I have the legislation on recovery where it is, and that is why we are where we are. That is why I am afraid that I cannot accept the amendment.
Stephen Phillips: Very kindly for the Committee, the Minister wrote to everyone who contributed at Second Reading on 6 December. In his letter, he indicated that the Government were minded—at least at that stage—not to accept any amendments in this regard. I have read that letter very carefully in so far as it deals with the recovery of benefits. I do not find within it anything that is particularly palatable as to why someone who will receive at the moment 75% of the compensation to which they are entitled as a result of a diagnosis of a disease which is going to kill them, should have 100% of their benefits clawed back. It seems to me that no benefits should be clawed back at all until such time as that person has been made whole. It also seems to me that in so far as benefits are going to be clawed back, they should be clawed back proportionately.
The Minister did not say during the course of his remarks—maybe he would like to intervene on me now—that he would reflect upon this between now and when the Bill is reported to the House. While I do not in any way want to be difficult, if he can give me the assurance that he will at least reflect upon it, this will enable me to say that I was not minded to press this to a vote. As matters stand at present, I have not been given the assurance that he will at least think about it and see if he can come up with a solution. I will be happy to give way now.
Mike Penning: With regret, I have already reflected quite extensively on this. I am afraid that I cannot reflect any more. If my hon. and learned Friend wishes to push it to a vote I fully respect that position.
Stephen Phillips: I am grateful. I do not want to cause the Minister difficulties but I am afraid I have not heard anything to persuade me to ask leave to withdraw the amendment. In those circumstances, I am minded to test the will of the Committee.