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My hon. Friend the Member for Canterbury (Mr. Brazier) and other hon. Members have cited many such cases, and I should like to make special mention of the examples provided by the scouts and the Field Studies Council.
We have all seen headlines in the newspapers: a teacher won £55,000 after slipping on a chip at school; a boy received £4,000 after falling 1 ft from a tree; and a council tenant who had drunk 10 pints fell in the middle of the night as he tried to change a light bulb. I am sure that the hon. Member for Hendon would say that those are meritorious claims, but they give rise to questions, and they are certainly food and drink to the tabloid newspaper industry.
Mr. Dismore: I am loth to accept tabloids as a guide to what is happening in the law courts, because they rarely reported accurately the cases in which I have been involved. The most famous example is the McDonald’s coffee case, which was successful because, despite numerous warnings, McDonald’s super-heated its coffee to such a high temperature that the individual who brought the case suffered third-degree burns. Those facts were not reported properly or fully.
Mr. Heald: What people think is important, too. In “The Man Who Shot Liberty Valance”, it was said once a fact becomes myth in the west it is the myth that is printed. There is a perception that there is a compensation culture, and we cannot ignore that perception. I do not agree that we should ignore educational leaflets.
David Howarth: The hon. Gentleman began by accepting that in reality there was not such a problem, as the number of claims has fallen. Those of us who have doubts about clause 1 want to know how passing a law will solve a problem that relates to perception, not reality.
Mr. Heald: I know that this is not popular in the Cambridge law faculty, but we can deal with the problem by accepting a clause that declares what the law is and advertising widely what its effect will be. According to the Better Regulation Executive, tort costs in the UK, as the hon. Gentleman said, are low compared with those in other countries. The Law Society, the Country Land and Business Association and others say:
“The fact is, Britain spends less on compensation than almost any other industrialised country...the number of accident claims had remained static and in fact fell last year” .
Mr. Brazier: It is not inconsistent on the one hand to accept the fact that there is not a general compensation culture, and on the other, to argue that the attitudes of the lower courts towards sport and adventure training is deeply damaging. In the USA, there are five times as many compensation claims as there are in the UK, but most American states have a provision that protects sport and adventure training from the ordinary standard of negligence in court cases.
Mr. Heald: My hon. Friend makes an important point, and we all look forward to his speech.
Excessive risk aversion and the mistaken perception that it is caused by litigation are serious problems, and the reports that I cited provide various examples.
Jeremy Wright (Rugby and Kenilworth) (Con):
My hon. Friend speaks about risk aversion in the context of
civil negligence claims. He will know that those of us who worry about clause 1 are concerned that it does not contain any provision affecting criminal prosecution by the Health and Safety Executive. Many of those who are risk averse are worried about the HSE taking criminal action against them. Does my hon. Friend agree that that should be dealt with in clause 1?
Mr. Heald: The matter needs to be reviewed but, given that the Bill deals with the civil aspects of compensation, I am not convinced that clause 1 is the place to do so. My hon. Friend raises an important point, which needs to be fully considered and reviewed. It would be interesting to hear from the Minister, perhaps later, whether the Government intend to do that.
When I was speaking to Norwich Union earlier this week, its representative explained to me that the current common law is clear and well established, and that Norwich Union questions whether new legislation on negligence is necessary. That was also the view of the Constitutional Affairs Committee, but we do not go that far. We believe that there is a case for clause 1, and that it is important to get the wording right. We have some comments to make about that in due course. As my noble Friend Lord Hunt made clear in the other place, the courts will have to build up their case law on the basis of the Bill if it is passed. I agree with the Minister that that is unlikely to create the huge difficulties that some claim.
Clause 2 recognises my noble Friend’s wish to support rehabilitation and early settlement of claims. The clause is one of his attempts to establish that if at an early stage an insurance company or an employer makes an apology and offers treatment, remedial works or whatever is necessary, that should not prejudice any later legal action.
My noble Friend achieved an important change in the law that will help to encourage mediation, boost rehabilitation and hopefully prevent cases from coming before the courts except where absolutely necessary. Citizens Advice and the Association of British Insurers are keen that such proposals should be pursued, as am I. We are pleased that in the other place the Under-Secretary of State said that she would not argue further about clause 2. I hope that the Minister will give us an assurance that she does not intend to remove or substantially amend it in this place.
One aspect that we intend to pursue is personal responsibility. It is an important issue and we shall press the Government to define the responsibilities of individuals and to consider whether in certain circumstances that might provide a defence of individual negligence. The matter has been considered in other jurisdictions. There is a problem for those who run leisure parks and other institutions where there is an element of risk. If someone is grossly irresponsible and negligent, it should be possible to defend a claim on that basis.
The Minister mentioned the case of Barker v. Corus, and I have set out our views and our constructive approach on that.
Have the Government any plans to deal with a problem pointed out by Citizens Advice? In hospitals the advertising
of claims management services and legal services seems rather inappropriate. When the Minister reflects on the regulation of claims management companies, will she consider whether advertising is an aspect that needs proper attention?
Although we agree that regulation is long overdue, we believe, as I said earlier, that the trade unions need to be considered. I pay tribute to the work of many trade unions. I have worked as a volunteer in advice centres and undertaken cases for trade unions, and many of them provide an excellent service in the area of personal injury and employment law. However, if solicitors and all the other groups are to be regulated, is it possible to exempt the trade unions, which would be completely unregulated in this area?
It is mentioned that the Union of Democratic Mineworkers has had its problems, but that it is not the only trade union that has been criticised for making money out of referrals of this sort. It is said that many trade unions are solvent only because of this area of their activities. I notice that the right hon. Member for Newcastle upon Tyne, East and Wallsend (Mr. Brown) seems to agree with me.
Mr. Heald: If the hon. Gentleman asks around among his trade union friends, he will find that many of them would not disagree with that.
Mr. Heald: I do not want to get into a long argument on that. I have had a good go on it. It is certainly said by me, and if the hon. Gentleman disagrees, he can take it up with me some other time.
The Government suggest that the regulator should be the Lord Chancellor, but that is not adequate. People expect a regulator who will deal with organisations in the financial and insurance sector. Surely it is not beyond the Minister to persuade one of the economic regulators to take on the role. It would be better if the Office of Fair Trading or the Financial Services Authority could be persuaded. We agree that the Claims Standards Council is not the answer. We want a proper regulator with an established reputation who can put a little fear into those who have been running those businesses in a way that has not been ideal.
The question remains whether the proposed regulation is adequate. Our view at this stage is that it does not seem to be. On the breadth of regulation, will the Minister ensure that regulation does not interfere with legitimate practices, such as insurers offering treatment or vehicle repairs to insured third parties at an early stage? If that is to be regulated or even prohibited, as is suggested, that would interfere with the agenda of trying to encourage early settlement and rehabilitation.
We will want to explore these many matters in Committee. In general, we welcome the Bill. It is not perfect in every respect. It provides us with an opportunity to tackle the perception of a compensation culture, to ensure that some common sense and proportion are injected into compensation cases, and to ensure that unscrupulous claims management companies are unable to exploit the vulnerable. The Bill has our support this afternoon.
1.58 pm
Mr. Nicholas Brown (Newcastle upon Tyne, East and Wallsend) (Lab): I begin by congratulating my hon. Friend the Minister on her introduction to the Bill. One of the great pleasures of being in this place is to be able to follow an expert speaker speaking with knowledge on a specialist subject. Unfortunately, one does not always get the opportunity to do that, and on this occasion I do not. The knowledge of the hon. Member for North-East Hertfordshire (Mr. Heald) about the way in which trade union legal services work does not show hands-on experience. He seemed a little hazy about the real issue involved in the mesothelioma cases as well, although my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) tried to put him right about that.
I shall confine my remarks to part 2, which deals with claims management services. It is the Government’s intention, as my hon. Friend announced today, that the Secretary of State would be the regulator. That is, I think, intended only as a temporary expedient, and the Government’s long-term intention is that the mechanisms that form part of the new regulatory framework for legal services will encompass these arrangements as well. The Minister will correct me if I have got that wrong, but it seems to be the perfectly sensible direction in which we are heading.
I want to deal with three aspects: regulation in controversial areas, which essentially means personal injury cases; trade unions, which I know something about; and the mesothelioma situation. I should declare my interest as a member of the GMB trade union. I was an official of the union before I was elected to Parliament, I maintain close connections with it, and I am proud of my long-standing relationship with it.
Conservative Members have made much of the need to regulate unions, but the Minister made it clear that there will be a code of practice, and that if unions breach it they will lose their exemptions. In other words, if a union behaves like a claims farmer, it will be treated as such. As a Labour Member, I think that that is absolutely right, and I am pretty certain that my right hon. and hon. Friends agree with me.
Mr. Heald: One of the groups regulated under the Bill is organisations that refer cases to solicitors. Unions do that—but they are not regulated, are they?
Mr. Brown: The hon. Gentleman is correct to say that organisations that refer cases to solicitors are regulated by the Bill, and so they should be. The relationship between a trade union and its individual members is based on the rule book, which is itself a contract. The primary reason for joining a trade union is not to get access to its legal services; people join for a whole range of reasons, which are primarily concerned with work and bargaining between the employer and the employees collectively. Alongside that negotiating relationship, trade unions offer a range of services, one of which is the provision of free legal services at the time of need. It is a very different kind of organisation from the claims farmers that we are seeking to regulate, which go out to find whether there is a cause for action, and then, if there is something that can plausibly be made something of, pass it on to a solicitor. They are claims farmers, and should be regulated as such.
Tony Lloyd: My right hon. Friend is right to say that no Labour Member would want any union to operate as a claims farmer without being treated as one. Will he confirm that far from trade unions not being regulated, there is a whole host of legislation that determines how they can deal with their members, gives remedy to members when they are in dispute with their union, and so on? In fact, the Conservative Government brought in quite a lot of that legislation, which this Government have not changed.
Mr. Brown: I am reasonably certain that the hon. Member for North-East Hertfordshire was more enthusiastic about that legislation than I was. One cannot escape the fact that trade unions are highly regulated. They are governed by specific laws, and there is a specific certification officer.
Professional people are deemed to be regulated by their own professional organisations. The hon. Member for North-East Hertfordshire announced proudly that he is a lawyer. Lawyers are regulated by the Law Society. It is worth pausing to consider how well it does that. To help us, we have the report from the legal services ombudsman for England and Wales—incidentally, there is no analogous report about the TUC—in which she examines how well the Law Society has done as a regulator of the legal profession in the most controversial area that we are discussing: the miners’ compensation cases.
I do not have time to read out the whole document, but let me read some of the key findings. The ombudsman states:
“It became clear to me during my investigations that the Law Society had not put into practice their stated approach for dealing with these cases”—
that is, the miners’ compensation cases. She found that the Law Society had
“failed to obtain solicitors’ files or to ask them to provide relevant papers.”
“failed to take account of the individual circumstances of each case...failed to adopt a neutral stance when seeking to conciliate the complaint”—
“failed to put their conciliation proposals in writing to the miners’ authorised representatives”.
What makes this a lot worse, from my point of view, is that those authorised representatives include Members of Parliament. To behave in a high-handed way towards Members of Parliament in respect of individual cases is completely and utterly unacceptable to me, and I think that I speak for a great many Members when I say so.
The ombudsman goes on to say that the Law Society
“failed to consider whether solicitors should pay back in full the fees wrongly deducted from miners’ compensation settlements, and, in addition, compensate miners for any inadequate professional services identified.”
“failed to examine a possible over-payment of the fee to the claims-handling agent...failed to examine the respective roles of solicitors and of the claims-handling agents in the processing of individual compensation claims and failed to examine the question of what advice, if any, solicitors had offered complainants about the claims-handling agents’ fees...failed to examine the relationship between solicitors and the claims-handling agents or to consider whether the relationship had resulted in a conflict of interest between their clients, the
claims-handling agents and individual miners, or a conflict between the solicitors’ own interests and those of their clients”—
“failed to consider whether solicitors may have acted in breach of the Solicitors’ Practice Rules...and in breach of the Solicitors’ Introduction and Referral Code”.
“In all the Law Society failed to properly investigate the miners’ complaints.”
The ombudsman gives a list of recommendations and says:
“As part of the reconsiderations the Law Society itself should consider paying compensation to the miners whose cases have been inadequately investigated by them.”
That is pretty damning stuff. I am sorry to have read out all the failures, but there are a lot of them. Although the Government are right not to want to regulate twice over—we want only one regulator; I do not quarrel with that approach—the regulation must be properly done. It is clear that in this case it was very inadequately done. It is not for me to set out what the reasons are, but it is for me to assert that it has to be put right. That means that miners must get the justice due to them, and that the lawyers who have taken money that they should not have taken must give it back. We as a House should assert that as a principle, and we look to the Minister to do whatever she can through the powers that her office has to ensure that matters are put right as quickly as possible.
Mr. David Hamilton: My right hon. Friend is talking about the ombudsman for England and Wales. Will he encourage the Minister to have discussions with her opposite number in Scotland to ensure that the legal system in Scotland, too, applies to miners in their just cases?
Mr. Brown: I should emphasise that the report that I quoted applies to England and Wales, but it is not beyond reason that there would be similar circumstances in Scotland. A United Kingdom-based approach to this would be the best way forward.
Mr. Heald: The right hon. Gentleman is right to say that there have been scandals about the way in which solicitors and claims farmers have behaved—and, as we heard from the right hon. Member for Berwick-upon-Tweed (Mr. Beith), the way in which some unions have behaved. The Government are introducing independent regulation for solicitors and claims handlers, but what is happening to the trade unions?
Mr. Brown: Nothing. The relationship is different. Trade unions must adhere to the code of practice that the Minister mentioned. If they do not, and behave like claims handlers, they will be treated as such, as they should be. I should have thought that the hon. Gentleman and I could agree on that.
Mr. Heald: But there is no regulation.
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