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The Parliamentary Under-Secretary of State for Social Security (Mr. Roger Evans): I shall ignore the discourtesy in the last part of thhon. Gentleman's speech.

He was right to say that asbestosis cases are some of the hardest for anybody to litigate. The circumstances are usually tragic, the problems of proof many years afterwards and the difficulties of medical evidence all too apparent, but they are the most difficult and hard cases, analogous to the problems of pneumoconiosis and the dangers of radiation damage and other forms of cancer.

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There are fundamentally difficult problems of proof that give the plaintiff considerable disadvantages. [Interruption.] I shall finish the sentence. Until the Limitation Acts were relaxed a decade or so ago, they were classically the cases which would never get to court, as the injury did not manifest itself until well after the limitation period.

Mr. Worthington: I am grateful to the Minister. I assure him that it is not simply an issue of asbestosis. I can show him other cases which are equally tragic, but I know about asbestosis. He mentioned pneumoconiosis. Is he aware that there is a separate scheme for pneumoconiosis sufferers, so that they are not caught up in this scheme? Will he introduce a similar proposal to lift those with asbestosis out of this tragic situation?

Mr. Evans: That is widening the argument considerably. The point at stake is this: we are discussing the assessment of damages for common law actions. If the hon. Gentleman wants to argue that asbestosis cases should be treated in some different fashion, that is a separate issue. If he does so, he has to bear in mind that they are not necessarily the only hard and difficult cases.

I accept that the operation of the scheme has been seriously misunderstood, and it is painfully obvious that it has been seriously misunderstood by the hon. Gentleman. The fundamental principle--a very old one--is that there should not be double recovery by the plaintiff: in other words, the plaintiff cannot have his cake and eat it. [Interruption.] It is not just the Government who claw back what they pay out. In an ordinary indemnity policy, when the insurers have paid up, they take the advantage of the plaintiff's rights and extract what they can from the defendants.

There is nothing unusual about that principle; indeed, it was embodied in the Beveridge report. A compromise was made in the Law Reform (Personal Injuries) Act 1948, whereby 50 per cent. of certain benefits was deducted under a statutory exception for five years. That compromise, however, was plainly a confusion. The courts added to the difficulty: some benefits were subsequently held to be non-deductible in full, while some were held to be deductible in half.

The most startling conclusion in the line of cases occurred in Hodgson v. Trapp, decided just before the legislation that we are discussing. More than £30,000 in respect of attendance and mobility allowances, cast forward without limitation in terms of numbers of years, was deducted from the plaintiff. The injustice, however, was even worse than that. Under the old scheme, what was deducted went for the benefit of the tortfeasor--the negligent employer; the person who was partly to blame.

It is hardly surprising that the original arrangements under the 1948 Act underwent considerable criticism in a report by the National Audit Commission and another by the Public Accounts Committee--a Committee of the House. The Government were persuaded to act on the basis that the existing system was not working in a coherent fashion, and aspects of it were plainly unjust--particularly to the severely disabled.

Under the old scheme, in the hard cases to which the hon. Gentleman referred--cases in which someone might be rendered paraplegic, for instance --enormous sums of attendance and mobility allowance would be deducted in

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full from that person's damages. Something obviously had to be done, and that is why the Government legislated as they did.

Mr. Mackinlay: Out of the frying pan into the fire.

Mr. Evans: That is not the case.

Under the scheme for which we have now legislated, those who receive benefits and recoup moneys must repay the benefit. That is hardly an unjust proposition, and it is hardly startling in an international context. Many other countries in every part of the world have a variety of different mechanisms to protect state welfare payments, and to provide for certain arrangements for the recovery of those payments from those who are guilty--

Mr. Mackinlay: Let us set aside for a moment the question of how compensation should be comprised and assessed. Does the Minister not understand that employers and insurance companies are exploiting the position, because they know that it gives them maximum leverage to make a poor, sick individual settle early and settle for little?

Mr. Evans: No; that is a gross exaggeration. If the hon. Gentleman has evidence to that effect, he should give it to the Select Committee. We shall await its report and see what evidence there is. The Association of British Insurers did not accept that the £2,500 lower limit--which is a practical arrangement--was being abused in the fashion suggested by the hon. Members for Thurrock (Mr. Mackinlay) and for Clydebank and Milngavie.

The arrangements under the legislation are, in broad terms, acceptable and fair to all the parties involved.

Mr. Worthington: No.

Mr. Evans: I appreciate that the hon. Gentleman may not be persuaded by my argument yet, but let me at least complete this facet of it.

In so far as the plaintiff has received state benefits just as though he had paid out for a private insurance policy on an indemnity basis, if he recovers he has an obligation to repay. If he does not recover, he does not have to repay, but he still receives his state benefits immediately and in full, like anyone else.

The defendants have to pay out money. They have to recoup it under the administrative arrangements of this scheme, whereby insurers pay it direct to the CRU--so the insurer has to pay. The taxpayer is now being paid out a not insignificant sum of money, whereas that sum of money--this shows the injustice of the 1948 scheme--was being used previously to subsidise the negligent and those who were partly to blame for accidents. That cannot be a sensible or reasonable targeting of public expenditure on social security priorities. Of course, members of the public who are suing prefer to win the maximum damages that a court will award or which the insurers to the defendants might pay up. But traditionally, damages for tort injuries are based on compensation--no more and no less. I think that someone said that the awards for compensation may not be high enough, but that is a rather different issue. The principle is: a person will be compensated for his injuries, no more and no less, under a scheme which is well established and long known.

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The problem with the arrangement under the old scheme was that it was unfair to the taxpayer and it dissipated public money in a way that was inconsistent. It was not fair as between different classes of plaintiffs, particularly the severely disabled who had on-going obligations to deduct in respect of attendance and mobility allowance.

Mr. Worthington: The Minister is doing the same as he did this afternoon--telling us what was wrong with the old scheme. I am asking him to justify the new scheme. It was clear this afternoon that the Department does not keep statistics or information. I have more information about the working of the scheme and its consequences for people than the Minister does. Why will he not turn his attention to the workings of the new scheme and its consequences for people?

Mr. Evans: If the hon. Gentleman will bear with me, I shall come to the workings of the new scheme. He undoubtedly has a certain amount of information about its operation. He has tabled large numbers of parliamentary questions about it. The Department of Social Security is well aware of how the scheme operates.

It is not helpful to the House or to anyone to cite, as the hon. Gentleman did, the bald facts of a number of cases, some of which would undoubtedly be thought tragic. But the arrangement must be that the plaintiff in an ordinary action at common law has a case which may be strong, indifferent or weak. That is reflected in the amount that he succeeds in recovering. Understandably, those who may wish to obtain more do not always do so.

The Government had a choice about the way in which the new scheme would operate. How were they to make provision for the repayment of the moneys? As the hon. Member for Thurrock has suggested, it was open to the Government to say that all recouped damages should be added as an extra head of damages. That sounds an extremely attractive proposal to plaintiffs --

Mr. Mackinlay: And fair.

Mr. Evans: I hear what the hon. Gentleman says, but there is then an element of double recovery.

It is hardly surprising that such a proposition would be entertained by the insurance industry as an appalling increase in its costs, and a burden by way of additional expenditure on insurance premiums for the rest of the public who are not injured--

Mr. Mackinlay: But it would help health and safety standards in factories.

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Mr. Evans: The hon. Gentleman makes the perfectly fair point--even if it is perhaps not in order--that there is a strong public interest in improving safety standards at work, on the roads or anywhere else. The old system, which enabled the negligent employer to take advantage of the taxpayer, is hardly consistent with that argument. The Government, in introducing the new scheme, had a number of options. We could have created the kind of statutory repayment right--a statutory right of subrogation--that exists in certain other parts of the world, whereby we would nationalise all plaintiffs' claims, take conduct of them and settle them on behalf of the plaintiff, on the basis that so much of the damages could be identified as loss of earnings against which benefit could be offset. The other option that I heard about this afternoon was to agree the proportion of contributory negligence.

The Government, rightly, chose not to do either, because it would have involved considerable administrative expense and meddling in the affairs of plaintiffs who have, and ought to have, free conduct of their litigation. The Government's choice is administratively extremely simple. By placing a requirement on insurers to pay the compensation recovery unit a certified amount to the Government, we have introduced a scheme that, for the first time, gives the taxpayers' interest proper representation.

It would be possible to introduce a case-for-case breakdown to deal with the issues of whether there should be separate heads of damages and contributory negligence. However, only a fraction of personal injury cases lead to litigation, and an even smaller fraction--less than 10 per cent.-- are determined by a judge.

The trade unions or lawyers representing both sides in such arguments deploy an exact practitioner's art, and such claims are cheaply and economically settled, with the avoidance of litigation. If we were to introduce a system whereby the Government were to act as big brother and to interfere in that settlement process, we would inevitably create considerable expenditure and place the Department of Social Security in the position of judge, without the expertise and a full and fair trial.

It is simpler and fairer on all parties involved for the Government to recover the whole of their loss. That is not startling or unfair, but is the basis on which insurance companies operate in respect of, for example, ordinary indemnity insurance. You may pay your premiums, Mr. Deputy Speaker, but the insurance company always expects to recover its loss from you.

Question put and agreed to.

Adjourned accordingly at twenty-eight minutes to Eleven o'clock.

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