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The real effect of the measure will be not to encourage volunteering, but to put young people at even more risk when they participate in adventurous
activities. It will also discourage parents from allowing their children to undertake such activities. It will create different standards. For example, in relation to driving, a minibus of scouts going to camp would have less protection than a bunch of football supporters going to a match. The clause will lower safety standards, lead to fewer precautions and condone negligence.
What responsible parents would allow their children to go mountaineering, open-sea canoeing or sailing if they were told, “By the way, this is a desirable activity, so if Johnny or Jill is hurt badly, breaks a limb, becomes paraplegic, or is even killed, and if it’s our fault, there may be no compensation as a result.” Clause 1 stinks, and must be withdrawn from the Bill. It does not restate the law, but weakens the position of the average ordinary person in the street.
We should use the Bill to redress the balance. We should consider what needs to be done to improve the position of accident victims. There needs to be a clear exemption from clause 1 for employers’ liability cases, and from clause 2 for trade unions. We need to recognise that in the past the courts have, in many respects, failed accident victims, and we should take this opportunity to put right those mistakes.
We have already heard at length about Barker v. Corus and other asbestos cases; we have heard about the pleural plaque cases; there is the Crown Proceedings (Armed Forces) Act 1987, about which I made a point earlier; and there are many similar points to be made about asbestos. But that is only the start. If an insurer makes an admission of liability early in the case, why should that admission not be binding on it? The case of Sowerby says that it is not, and when a case is further down the track the insurer can say that it has changed its mind and does not admit liability after all. How does that strengthen the rights of claimants and avoid the need for litigation?
The Law Commission, in its 1999 report, made it clear that damages for personal injury claims were far too low. It recommended that in cases where general damages exceed £3,000 they should increase by between 50 and 100 per cent. The Court of Appeal considered that in the case of Heil v. Rankin, and did not do as the Law Commission recommended, but said that it was a matter for Parliament. It is a matter for Parliament, and we should take this opportunity to deal with it.
This Government rightly introduced the system of periodical payments to allow those who are seriously injured to have compensation assessed and paid out over the rest of their lives. However, the system for indexing those payments is drastically wrong. It simply refers to the retail prices index and does not take account of the fact that many of the elements in those compensation awards are tied not to the RPI but to much higher indexes, such as the index of average earnings. We should use the opportunity of this Bill to put right that injustice and ensure that claimants receive the compensation to which they are entitled.
The discount rate applied to an assessment of a future loss of earnings has been fixed at 2.5 per cent. since 2001. It is supposed to reflect the returns that a claimant can expect when investing his award, but unless it is reviewed regularly the discount rate does not accurately reflect market changes, which could put the claimant at a disadvantage. That, too, needs putting right, and the Bill is a vehicle by which we could do so.
I agree with the hon. Member for Ryedale (Mr. Greenway) that rehabilitation is a crucial process for any injured claimant. There has been considerable discussion between the Government and stakeholders about ensuring early rehabilitation for claimants. Where liability is clearly established, insurers should have a statutory duty to ensure that funds are released to facilitate early, appropriate and independent rehabilitation. That would provide the impetus needed to ensure that rehabilitation becomes an integral part of the compensation system. Again, we could take the opportunity of putting such a duty in the Bill, but the Government have indicated that they are not prepared to do so.
I was tempted to say that I would not vote for the Bill because of clause 1, which dramatically weakens the right of people in this country to compensation, thus pandering to the insurance industry, to the tabloids and to the myth of the compensation culture. But I shall vote for Second Reading because I passionately believe in the need for regulation of claims farmers, as set out in part 2. This is an opportunity to do some good in that respect, and the positive changes that I have advocated would take that even further. I first advocated regulating claims farmers many years ago, long before I came here, and I raised the issue at the very first meeting I had with a Minister in what was then the Lord Chancellor’s Department, back in 1997. Nearly 10 years on, I am very pleased that the Government have, at long last, recognised the problem and are dealing with it. This has been a serious problem since the 1980s, when claims farmers first got off the ground.
I hope that the Government will reflect on clause 1. It has little, if any, support beyond the tabloids, and even that is not clear. It is not supported by the lawyers, by the Constitutional Affairs Committee or by my Committee. I understand from the hon. Member for Ryedale that it is not supported by the insurance industry. Nobody has a good word for it—except the Government, the official Opposition and the hon. Member for Canterbury, who thinks that it does something entirely different from what the Government say it does. It is opposed by the TUC, the Association of Personal Injury Lawyers and the Law Society—just about everyone who has the interests of the little man or woman at heart, as opposed to those of the multinationals. We should not pander to myths; we should look at the evidence and at the harm that clause 1 will cause. I urge the Minister to look at the impact of what could be a useful reforming measure and to get rid of clause 1. Let us go ahead with part 2, which is badly needed.
3.24 pm
Mr. Alan Beith (Berwick-upon-Tweed) (LD): The Register of Members’ Interests contains a reference to an interest that I have in the holiday park industry and states that I am the vice-president of the North Northumberland scouts. I hope that that pleases my hon. Friend the Member for Montgomeryshire (Lembit Öpik).
I shall speak briefly about the work that the Select Committee on Constitutional Affairs did on compensation culture and on the Bill. As many hon. Members have said, we were not satisfied with clause 1. We said:
“It neither satisfies those people who wish for volunteers to be provided with a special defence against claims of negligence, nor does it clarify the law. Instead, it is likely to lead to additional litigation, as people turn to the courts to define the precise nature of the provision.”
The Committee did not conclude that conditional fee agreements or litigation had created a compensation culture, but rather that there was a perception of such, with a variety of causes, that was not soundly based.
”We found no evidence that conditional fee agreements or personal injury litigation were a significant factors in causing risk aversion, and personal injury litigation has not increased in recent years.”
“Risk aversion has a number of complex causes, including advertising by claims management companies, selective media reporting, a lack of information about how the law works and, on occasion, a lack of common sense among those who implement health and safety guidelines. Risk aversion of this sort is a concerning modern phenomenon that has an adverse effect on individuals and on the economy as a whole. Instead of a statutory provision restating the law of negligence what is required is a clear leadership by the Government”
We went on to suggest that that
“should include an education programme making clear that risk management does not equate to the avoidance of all risk and active engagement by the Health and Safety Executive to ensure that it adopts an approach which is proportionate, does not over-regulate vulnerable sectors and instead offers appropriate advice and support”.
On balancing risk, the Committee was given a strong impression by the HSE that balancing different risks was not something in which it engaged. The classic example is the HSE stopping a commuter station from being opened because the platform was not long enough. Somebody might get out through a door, not obeying the guard’s instructions, and sprain or break an ankle. That is a lower risk and a lower injury than if all commuters got into their cars and drove on congested roads into the city. There is the balancing of risks from two different areas. The system is not equipped to carry out that exercise, which leads to the consequences about which hon. Members are concerned.
There is also the widespread and gross misuse of health and safety arguments, and sometimes on the basis of mere error. A lovely example of that is provided by the Lord Chief Justice, who was told when he went to a governors’ meeting at his old school that he could no longer take an early morning dip in the swimming pool because there was no lifeguard or qualified member of staff present to supervise his swim. As a modest man, he did not assert, “I am the Lord Chief Justice, and this would not stand a moment’s chance in my court.” If he had done so, that would have helped to spread greater knowledge of the law.
Perhaps more often health and safety arguments are used as an excuse when a public body does not want to spend some money or does not have a budget for something that is clearly necessary to enable an activity to take place. Health and safety is often loosely quoted when it is not the real reason for not doing something.
On clause 1, most accepted authorities will say that the Tomlinson case got it right, and that there is no clearer and sounder definition of what the law says than what came out in that judgment. I will not quote
them again because my hon. Friend the Member for North Southwark and Bermondsey (Simon Hughes) referred to Lord Hoffmann’s trenchant words on the subject. There are real dangers in trying to second guess, as is done in clause 1. That relates particularly to satellite litigation on, for example, what might be desirable activities. That is only one of the areas in which litigation could take place on the basis of clause 1, and examples of that have already been given.
If, as the Government concede, there is to be litigation to establish the meaning of clause 1, that immediately defeats its sole objective, which is to give people a clearer understanding of what the law is now. The moment that we get into fresh litigation, we have to wait for that understanding to exist.
Mr. Brazier: I have heard that argument several times. Can the right hon. Gentleman explain why providing an extra defence for an organisation that may be sued would lead to extra litigation?
Mr. Beith: It is not an extra defence. Indeed, the Government differ from the hon. Gentleman, because they have sought to make it clear that the provision does not add a legal protection that does not already exist. It is simply designed to remind the public and the courts of the basis of the law as it stands, and it will not create any new legal defence. The clause will be read by people from one end of the country to the other, so it must be clear. It must be clear, too, as he has rightly suggested, in the lower courts. The Lord Chief Justice said that he did not know who was going to read clause 1:
“The average man in the street is unlikely to be reading clause 1. As far as the judges are concerned, and judges and lawyers are the ones likely to be reading statutes, and the clause sets out to define the position...not to change it”.
We should make the position clear so that cases related to the Pepper v. Hart case have regard to the fact that Ministers have said that the law is not changed by the provision. Litigation will, however, arise from measures such as the desirable activities provision.
There are two other dangers. Public authority staff are at a disadvantage, because they engage in desirable activities. The Government state that the clause is not intended to effect a change in the law, but there is a danger that that will give false comfort to voluntary organisations. My Committee took evidence from voluntary organisations, including the Scouts, whose evidence impressed us, not least because they have made efforts to ensure that risk management was built into their systems and training. The problems are greatest for small voluntary organisations that do not have the facilities or experience built up by larger organisations. If we are not careful, the clause will give them false comfort.
Turning to other issues, I am glad that the Minister gave me a clear, precise answer about who will regulate claims handlers. I sympathise with the Government’s position, as we must look at what emerges from the proposed regulation of lawyers before we decide where responsibility should reside. In the meantime, the Secretary of State should do the job, so that he has something to do now that all his other responsibilities have been taken away. As a result, my Committee
would have oversight responsibility for the claims handling process, and we look forward to making sure that it works.
Turning to the exemption provisions, anyone who, like me, represents a mining constituency will be concerned about the gross abuses of which claims handlers, trade unions and the Law Society, which failed to regulate lawyers, were guilty. Several firms of solicitors were deeply and disgracefully involved in that huge scandal, defrauding vulnerable people whom the Government had set out systematically to protect from any costs—indeed, they paid for that protection. The exemption provisions must be proof against such a scandal, while recognising that trade unions and voluntary bodies such as citizens advice bureaux do a great deal of work to direct claims and ensure that people receive appropriate legal advice. The Committee must look carefully at the exemption provisions so that they meet the objective of ensuring that people whose claims are dealt with by a trade union or a voluntary body are not at a disadvantage if they are defrauded or not provided for.
Most of the Bill is much needed, but clause 1 might prove to be a great deal more trouble than it is worth, as it might not satisfy genuine anxieties about participation in voluntary activity or the promotion of sports that involve an element of risk. Many of those anxieties are based on a misunderstanding of the law, on fears of prosecution by the Health and Safety Executive, on misunderstanding of the provisions required by the HSE and, indeed, on a series of things that the clause is not designed to address.
Mr. Brazier: I am grateful to the right hon. Gentleman for giving way once more. He took evidence in his Committee from Derek Twine of the Scout Association. The concerns of the Scout Association—we are dealing with the civil law here, not the HSE—are based on a series of court cases that it has lost, some of which, I know, were cited to the right hon. Gentleman in evidence, yet his report did not reflect that at all.
Mr. Beith: I am sure that the hon. Gentleman will refer later to one or two cases that do not even appear in the law reports. That will be helpful to us. If cases are not resolved satisfactorily in the lower courts on the basis of the law as we know it to be post-Tomlinson, it will be necessary for those cases to go to appeal and to go up the system to ensure that they are dealt with satisfactorily. If that places an unreasonable burden on some of the voluntary bodies involved, such as the Scout Association, we must address that. We will not necessarily help them if we put in a clause that they think provides them with a protection which, in fact, it does not.
I shall listen to the remainder of the debate with considerable interest, because I think that the hon. Member for Canterbury (Mr. Brazier) and my hon. Friend the Member for Montgomeryshire genuinely believe that this restatement of the law will provide an additional legal protection. It is not the Government’s view, as they have clearly stated, that the law is changed.
The Government are wrong, as the hon. Member for Hendon (Mr. Dismore) pointed out, on a different point. They are wrong that the Bill does not restate the
law, because in relation to employees it clearly has that effect, but in relation to the defence that can be advanced by an organisation engaged in providing a voluntary activity or a risky sport, it is not intended to change the law. If it does, the House should know that it does. The Government cannot rely on two Back-Bench Members insisting that it does. In a Pepper v. Hart judgment later in the day, it will not be their view that is considered, but that of Ministers. At this point I shall rest my case, as I want to hear other views.
Madam Deputy Speaker: Order. Mr. Speaker has imposed a 15-minute limit on Back-Bench speeches but if hon. Members could restrict their speeches to 10 minutes, more will be able to catch my eye.
3.36 pm
Paddy Tipping (Sherwood) (Lab): I am grateful for the opportunity to speak in support of the Bill. Claims handlers have been described as cowboys. If that is the case, coalfield communities such as north Nottinghamshire are the wild west. The activities of claims handlers have caused false hopes, false expectations and real concerns and financial difficulties, not just to people who work in the mining industry, but for the women in the textile industry who have been gullible enough to make deafness claims through claims handlers. I strongly support part 2. The regulation of claims handlers is long overdue.
My hon. Friend the Member for Hendon (Mr. Dismore) was hostile towards clause 1. I am agnostic. I would like to see the phrase “desirable activity” defined. It is not defined. In her opening remarks the Minister made it clear that there would be further court cases to test the scope of the phrase. Rather than clarifying the law, that may well lead to confusion and delay.
I am concerned about the position of public sector workers—people who work in difficult environments, such as the fire brigade or the ambulance service. They are undertaking desirable activities, but the level of protection that they have under the clause may be less than they have at present. I am with the right hon. Member for Berwick-upon-Tweed (Mr. Beith). His Select Committee has considered the matter. I am agnostic about the way forward. I do not think the clause moves us on, and I look forward to a rigorous debate on clause 1 and its significance.
Clause 1 is well balanced by clause 2. All bodies, particularly public bodies, ought to be prepared to apologise much more readily than they do. An apology is simply good practice. An early acknowledgement that things have gone wrong and that the institution is sorry could save a great deal of litigation later on.
Let me turn my remarks to part 2. As I said, claims handlers have ridden roughshod over coalfield communities, and the difficulties involving coal health claims are well documented. It is not only down to claims handlers but to solicitors and, I have to say, to trade unions. Hon. Members are right to question why trade unions should be exempted from the Bill by secondary legislation. I have come to support that view, but we must be very careful about what it says in the code of practice that the Government intend to introduce.
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