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19 Mar 2002 : Column 58WH

Asbestos (Scotland)

1 pm

John Robertson (Glasgow, Anniesland): Let me say at the beginning of my speech how helpful my hon. Friend the Member for Clydebank and Milngavie (Tony Worthington) has been. I commend him for all the work that he has done on the issue.

A year after Chester Street Insurance Holdings collapsed we appear to be no closer to meeting the needs of those who were affected—and that includes people who do not yet know that they have been affected. At business questions on 7 March I asked my right hon. Friend the Leader of the House whether he knew that companies that had agreed to pay compensation to asbestos-related disease sufferers, and to future sufferers, were now reneging on the deal. My right hon. Friend replied:

That I have done, in part, by securing this debate. I intend to do whatever else I can to ensure that people suffering because of asbestos will receive the money to which they are entitled.

Asbestos dust is responsible for more work-related deaths than any other cause. Doctors have warned that the number of deaths has not yet reached its peak. Use of asbestos has been widespread since the mid-19th century. As a result, victims are not confined to one industry but are spread through many industries, including and particularly shipbuilding, construction and energy. Asbestos-related disease creates a chronic respiratory problem for sufferers, resulting in impaired mobility, and the dust can also cause mesothelioma, a cancer for which there is no cure.

It is known that 90 per cent. of mesothelioma cases in the United Kingdom—some 1,500 a year—follow asbestos exposure. Years can pass before the effects on those exposed to asbestos become apparent. Because of that latent period, cases of asbestos-related disease will continue to rise. Furthermore, although the delay between first exposure to asbestos and the development of the cancer is likely to be 10 or 15 years, the cancer is usually fatal within two years.

Because of that it is vital that claims for compensation are settled speedily and in a straightforward manner. My hon. Friend the Under-Secretary of State for Transport, Local Government and the Regions, the Member for Southampton, Test (Dr. Whitehead), said in a debate in this Chamber on 16 January:

In other words, delays to claims for compensation are not acceptable if time is of the essence.

People are now doubly victims. They are exposed to asbestos by their employer and then let down by the failure of insurance companies to compensate them. Thousands of people who worked at Upper Clyde Shipbuilders, John Brown in Clydebank or Fairfields had taken out policies, together worth up to £400 million, with Chester Street Insurance Holdings.

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When Chester Street became insolvent and Iron Trades was sold off, hundreds of pre-1972 cases were left in limbo. A scheme was worked out with the insurance industry covering the pre-1972 cases left by the collapse of Chester Street. However, solicitors representing my constituents who are seeking compensation tell me that people who suffered as a result of the Chester Street collapse have not received a penny from the scheme.

The debacle raises several questions. I am concerned because the Financial Services Authority approved the Chester Street restructuring when it was quite clear that the company was heading for collapse. The FSA interpreted its duty as protecting the company and its shareholders, not the ultimate victims. How many times have we heard that in the last 20 years?

Cases such as Chester Street and Turner and Newell have highlighted what happens when things go wrong. Sufferers of asbestos-related disease endured a major blow in the Court of Appeal on 11 December 2001 as a result of the Fairchild case. The Court of Appeal stated that if two defendants had exposed a claimant to asbestos equally, the "guilty" fibres could not be identified, so both defendants escaped liability. As my hon. Friend the Member for Leeds, West (Mr. Battle) said in an earlier debate on the issue, that is like saying that if two people shoot someone and we cannot tell which bullet the victim died from, both those people are innocent of murder.

Shipyard and building workers often work for a number of employers. Under that ruling, it is impossible to prove the source of the disease. As a result, such people have nowhere to go under current legislation. They stand no chance of receiving compensation unless a national compensation scheme is put together by national Government. What has happened to natural justice? Will the Secretary of State put pressure on her colleagues to introduce such a scheme?

The Court of Appeal's decision effectively overturned the principle that the courts have applied in such cases for many years. Previously, and in my opinion correctly, defendants were joined and liability was apportioned according to the time for which the person had worked with each employer. In the previous debate that I have already mentioned, my hon. Friend the Under-Secretary of State for Transport, Local Government and the Regions also said:

Sadly, I feel the former will have to be the case.

I have seen no evidence of insurance companies hurrying to pay people compensation for catching any asbestos-related disease.

The move to ensure that one employer does not suffer unduly because of the negligence of another means that the victims have no protection; thus thousands of victims of fatal disease have been deprived of compensation. It is crucial that the Government introduce a national policy of compensation for asbestos workers. Again, I ask the Secretary of State to ensure that this happens.

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It is time that someone in Government stood up for the victims, not the perpetrators of the crime—the companies and those who work so hard at not paying up. The ruling has left those seeking compensation in limbo; some lawyers in the insurance industry are working not to seek justice for the defendants but to find a route around the industry's liabilities and responsibilities towards its asbestos victims. I understand that the House of Lords is to hear an appeal in two cases relating to Fairchild on 22 and 23 April. I shall be interested to see the outcome; I hope that sanity will prevail and that the decision will be overturned.

I should also like to raise the issue of British Shipbuilders, which is very important to my constituents. British Shipbuilders is a public corporation, and it has concluded that it should not accept liability from other limited companies. I appreciate that the DTI does not intervene in legal cases, but we must ask whether the Department should hold an inquiry—or would that slow things down even further? I wonder whether that is what the insurance companies want; it fits their modus operandi.

The Government's pneumoconiosis scheme provides for the payment of compensation to sufferers of certain dust-related diseases who are unable to obtain redress in the courts because their employer has gone out of business so there is no one at whom they can direct a legal action.

I understand that in the light of the Fairchild case, my right hon. Friend the Secretary of State for Transport, Local Government and the Regions has announced that the Government's compensation scheme will apply to Scotland. That is helpful, but the Fairchild judgment has manifold implications for that scheme. Is it right that as a first step, action should be taken against former employers of people who have contracted one of those diseases, and only when it is not possible to establish whether the employer is liable, or if a liable employer cannot be found, will the pneumoconiosis scheme take over? During that time, of course, the asbestos sufferer is dying.

I agree that the Government scheme should not allow companies to walk away from their liabilities, but in that limbo stage, what else can we do for the victims?

Mr. James Wray (Glasgow, Baillieston): Does my hon. Friend agree with me that one of the bugbears for the 1997 Labour Government concerning compensation was the small payment of £2,500, which did not carry the clawback tag? When we abolished that small payment, we gave those who suffered from pleural plaque, mesothelioma and asbestosis the opportunity to claim much larger sums.

John Robertson : I thank my hon. Friend for that information. He is much more experienced and knowledgeable in such matters than I am. Those small payments must have helped at the time, but they do not help people today, and it is those people whom we need to consider.

Insurance is about taking risks, and making payments when things go wrong. Some companies have already gone into liquidation, but others are using such tactics as going into voluntary liquidation in order to avoid

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their liabilities. Turner and Newall and Federal-Mogul took that route to escape their responsibilities. The Government must consider what needs to be done to deal with that problem. We do not want the insurance industry to be able to abandon its responsibilities and leave them with the taxpayer. When considering compensation, we must remember that lump sums and periodic payments should be the equivalent of the compensation payments that courts award in negligence cases.

Almost 1,000 claims were made during the last complete year of the scheme, whereas fewer than 10,000 payments were made during the 20 years from 1980. Clearly, those payments are increasing annually. Considering the rise in the number of cases and in the number of claims for compensation, that could cost the Treasury tens of millions of pounds. The amount of money, however, is small compared with human life.

I end by asking a few more questions of the Secretary of State—questions that are of prime concern to my constituents and to those of the other hon. Members here today, and possibly throughout the country. What is being done in Scotland to allay fears that the Scottish courts may deal less favourably with asbestos sufferers? What action is being taken to safeguard the interests of asbestos suffers, who have seen Turner and Newall go into administration? We should collate a "name and shame" list, which would at least let the people know whom to trust when doing business with insurance companies. Why should the people of Scotland—or even the people of Britain—keep them in business? Honour would appear to matter only when money is not involved—but asbestos sufferers are not interested in honour, only in justice.

1.14 pm

The Secretary of State for Scotland (Mrs. Helen Liddell) : I begin by congratulating my hon. Friend the Member for Glasgow, Anniesland (John Robertson) on securing this debate. It raises a number of issues of considerable concern to people in the west of Scotland. I too associate myself with his remarks about my hon. Friend the Member for Clydebank and Milngavie (Tony Worthington), who led the campaign to get justice for the victims of asbestos.

Like my hon. Friend the Member for Glasgow, Anniesland, I feel a deep sense of grievance about the events surrounding Chester Street Insurance Holdings Ltd. Chester Street, formerly known as Iron Trades Holdings Ltd., had significant exposure to employers' liability insurance, and almost all the shipbuilding firms that had used asbestos were insured through Chester Street. The circumstances surrounding the company's failure are interesting, in that two companies were formed, one with the assets and another with the liabilities. Guess which one was left with responsibility for the victims of asbestosis? When Chester Street failed, former employees were faced with a defunct manufacturing company and a defunct insurance company.

There was particular uncertainty for people employed before 1972. Employers' liability insurance became compulsory in Great Britain only from that year, and it was initially unclear whether any pre-1972 claims against Chester Street would be met. After careful

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examination of the company's assets and liabilities, the Chester Street administrators set the initial dividend for creditors at 5 per cent.—5p in the pound.

As an MP for the west of Scotland, I have received representations from several asbestos victims. Like many of those who had to challenge the insurance industry, they found that they had no voice. I am delighted that so many of my hon. Friends have taken it upon themselves to act as the voice of those innocent victims. I have some form in dealing with the insurance industry, as I dealt with issues relating to personal pensions mis-selling when the Government were elected in 1997, and the situation grieves me because I regard the insurance industry as a major contributor to the financial services industry, and such behaviour by rogue companies gives the whole industry a bad name.

I take this opportunity to pay tribute to the Association of British Insurers, to leaders in the insurance industry and to my right hon. and hon. Friends in the Treasury who, when the Chester Street situation became apparent, immediately took action with a view to securing some means of compensation for the victims. I am speaking to members of the Chartered Insurance Institute this evening and I shall reiterate those points in my speech.

I was absolutely delighted when I heard that we had arranged a compensation deal for victims. I know some of the victims, and some of the widows of victims, who are dealing with difficult financial circumstances, and it was a source of great irritation to me to discover that payments were not being made in a timeous manner. I know that there are complications in ensuring that payment will be made to the victims. The Government have responsibilities through their involvement with British Shipbuilders, and we are meeting our liabilities towards former public sector employees, but where a private sector company still exists, it is expected to meet its liabilities. Where the company no longer exists, the ABI and the financial services compensation scheme will meet those liabilities at 100 per cent. in respect of post-1972 employment, and at 90 per cent. for earlier periods.

John Robertson : Does my right hon. Friend agree that the time taken by the ABI to get the money to the people who need it is now bordering on the extreme? The victims need the money now. Unfortunately, next year will be too late for some of them.

Mrs. Liddell : I could not agree more. My hon. Friend has just made what is probably the most important point of all. Indeed, the High Court has already approved the scheme, and I can see no reason why there should not be progress in making payments. I accept that the administrator has a legal obligation to be fair to all the creditors, but I feel that one of the best ways of doing that is to get the payments made as rapidly as possible.

Annabelle Ewing (Perth): Will the Secretary of State give way on that point?

Mrs. Liddell : This is my hon. Friend's debate, and I am duty bound to reply to his points. If I have time near the end, I shall take the hon. Lady's intervention then.

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The administrator has said that he is doing his best to keep fees and expenses to a minimum. I accept that, but we shall not see much progress until we see the actual cheques in the post to people.

I have received representations about delays in making payments through the Chester Street arrangements. I met my hon. Friend the Member for Clydebank and Milngavie, Frank Maguire of Thompsons solicitors, Phyllis Craig of Clydeside Action on Asbestos and Tommy Gorman of Clydebank Asbestos Group to discuss that and related matters. Following that meeting, I was so appalled at the stories that I had been told that I invited to Dover house various organisations involved in dealing with the claims, including Iron Trades Management Services, the service company that deals with the validation of claims and with settlement documents. It works for the Chester Street administrators PricewaterhouseCoopers. Other groups involved are the Association of British Insurers and the financial services compensation scheme.

The first point made was about the complexity of the process. I accept that it is a complex process. I have some experience of complex processes, having just had to deal with coal-related health compensation, with something like 200,000 claimants; the Government are currently paying out £1,000 a minute in compensation. I am receptive to points made about complexity, but not to people who try to hide behind the complexity of the process. The bottom line is very straightforward, and human beings are suffering from terrible diseases as a result of their former employment. They are right to look for the quick payment of compensation, and I see no reason why there should be a delay at all.

I have been given assurances that everyone in the claims process, including lawyers, will ensure that their procedures are as efficient as possible. I make the point again that not only those administering the scheme but the lawyers handling the claims must make sure that they are on top of things, and moving as rapidly as possible.

John Robertson : My right hon. Friend has just hit the nail on the head: part of the problem is that there is no communication from those people. Lawyers are not communicating with the people who are suffering, and there is no communication from PricewaterhouseCoopers. They must talk together. The people at the sharp end are those who are left to come to my surgeries to ask me what is happening—and I have to arrange a debate on the subject. That should not happen.

Mrs. Liddell : I take my hon. Friend's point. At that meeting two weeks ago, I told those concerned that I wanted to see them in six weeks—that is, four weeks from now—for an explanation of the progress being made and the action that they had taken. I take on board the fact that we must have concrete information. I want to see progress in paying claims, but I also want hard statistics on the number of claims and the outstanding claims. Iron Trades, PricewaterhouseCoopers, ABI and the financial services compensation scheme have agreed to produce a newsletter about the claims process. I shall

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ensure that my office distributes that to hon. Members with an interest in asbestos issues, so that they can ensure that the victims are given the information they require, and also so that those Members are on hand to let me know as rapidly as possible where there are pitfalls in individual cases of which I have not been made aware.

John Robertson : I make the point again that my constituents, and those of other hon. Members, do not want to receive a newsletter. They want something personal. They do not want their personal cases in a newsletter; they want to know what is happening themselves. I accept what my right hon. Friend says, which will be useful for me as an MP, but sufferers have to get personal letters before they see their case in a newsletter.

Mrs. Liddell : I agree with my right hon. Friend. There must be no question of personal details appearing in a newsletter—but as a constituency MP, I know that it is often useful to have routes for getting answers on individual cases. Hon. Members found that, in coal health compensation, helplines and access to lawyers proved extremely useful for speeding things up in complex cases. We have a responsibility and a role, which we willingly accept, to batter down the doors of bureaucracy to ensure that our constituents get a rapid response.

I shall respond to the point made by my hon. Friend the Member for Glasgow, Anniesland on personalised information by asking for a helpline to be established so that hon. Members and claimants have ready access to information on the status of claims.

My hon. Friend asked a number of other specific questions, which I am happy to answer. There have been past worries about Scottish court procedures when dealing with asbestos claims. However, the Lord President of the Court of Session recently appointed Lord Mackay of Drumadoon to oversee asbestos-related cases in the court. That has resulted in expediting cases. It is a devolved matter, and Richard Simpson, the Deputy Minister for Justice in the Scottish Executive, keeps a close eye on it. I am sure that he would not be averse to receiving requests from hon. Members for information.

My hon. Friend also asked about Turner and Newall, which is a difficult case that causes great frustration to hon. Members. There was a meeting of the Turner and Newall creditors on 11 February at which the administrators approved a proposal to continue to manage the business, assets and affairs of the company, and to work towards the development of a reorganisation plan. It is expected that that will provide a mechanism for managing asbestos liabilities. Creditors' committees have been established, and the interests of people suffering from asbestos-related diseases are represented on them. Administrators are trying to establish the employers' liability insurance that Turner and Newall had. Once that is established, they will consider whether consent should be given to enable former employees to prove their claims against the company. I give my hon. Friend my personal guarantee to monitor such progress.

My hon. Friend also asked me to name and shame laggards. If that proves necessary, I will not hesitate to do so, but I hope that it does not come to that. I would

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rather congratulate companies on rapid progress than make it plain, especially to those who are considering doing business with them, that they have been laggards in paying out much needed compensation.

The legacy of asbestos is serious and tragic for many individuals and families in Scotland. The Government, who are working with the Scottish Executive, are taking steps to tackle the problem, and I assure hon. Members that it is top of my priorities. He is right that the clock is ticking for many victims, and that some of them will not see compensation. We must continue to apply pressure to ensure that they receive fair and rapid compensation.

John Robertson : I should like to ask about the interim payments that are made to people—I mean substantial interim payments, not a few hundred pounds. Perhaps the Minister has some ballpark figures from the ABI. We need money from it right away. Surely that can be done.

Mrs. Liddell : I am not aware of procedures for interim payments, but I shall raise them with the ABI, the financial services compensation scheme and PricewaterhouseCoopers. That is a good idea, which should be seriously considered.

I take on board my hon. Friend's point about channels of communication. I shall ensure that a channel of communication exists between the Government and asbestos groups in Scotland, and ensure that it is fast and efficient. I shall do everything in my power to ensure that we do not forget about the people who are suffering from those diseases. The Government will act in a co-ordinated manner to keep the spotlight on all the parties involved so that just compensation is paid as quickly as possible.

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