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4.58 pm

Dr. Roberta Blackman-Woods (City of Durham) (Lab): I welcome the Bill, as it tries to stem the development of a compensation culture and deal with risk aversion. It seeks, too, to discourage and resist bad or unwarranted claims while improving the system for people with a valid compensation claim.

I welcome the fact that the Bill will establish a regulatory scheme to control runaway claims management companies, but I share concerns with the TUC about clauses 1 and 2. I thank the Government for their recent statements acknowledging those issues, and I congratulate the Minister on her opening speech, which addressed some of my concerns. The TUC is worried that the wording of clause 1 requires a worker injured in a “desirable activity” to prove a higher degree of negligence than a worker who suffers the same injury in a different activity, leading to the creation of a two-tier system in which workers engaged in desirable activities receive one standard of care while other workers receive a different one. The Government have said that the clause will not alter the standard of care required of employers, and I should be grateful if the Minister confirmed that. As other hon. Members have mentioned, there are also concerns that it is not entirely clear what constitutes a desirable activity. It would be helpful if that could be clarified in Committee.

I support the measures to restrict the compensation culture. Over the past five years there have been many abuses by claims farmers. Many of those companies actively encourage frivolous claims, combined with misleading advertisements targeted at certain parts of the country—areas where there was heavy industry. I represent a constituency in Durham where such companies have targeted their activities at former miners. Still, even though we acknowledge that, we cannot and must not compromise the protections afforded to our workers.

I share the concern of the TUC that in clause 2 it would be wrong to group trade unions with the ferocious claims management companies. I declare an interest. I am a member of the GMB and have been very active in the union for some time. I wish to put that interest on record.

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I have recently been reading some of the speeches from the first parliamentary Labour party a century ago. It is interesting that those early speeches in the House were in defence of trade unions. They also reminded Conservative Members of the advantages of belonging to a trade union. It is extraordinary that we have to do that today.

Mr. David Anderson (Blaydon) (Lab): Does my hon. Friend agree that the main drive from trade unions is against a compensation culture? What we want is a culture at work in which people do not get killed, maimed or damaged for life. Trade unions want to stop that happening, which is the opposite of claims farmers, whose purpose is to prey on people who have been through those experiences.

Dr. Blackman-Woods: I thank my hon. Friend and agree that, of course, the primary activity of trade unions is to provide services for their members, not to pursue frivolous claims.

Mr. Heald: We all agree that trade unions do a useful job, but is the hon. Lady seriously trying to justify what the NUM was doing in the example given a moment ago by the hon. Member for Bassetlaw (John Mann) and in the example that I gave? The union was doing exactly what claims farmers do and taking a cut of the miners’ money. Is the hon. Lady saying that that is fine and that we should not regulate trade unions?

Dr. Blackman-Woods: I shall deal with that point in a moment. We should not forget that unions are constantly working to prevent the injuries that lead to claims in the first place. That is a very important distinction between trade unions and claims farmers. Whereas such companies choose to maximise profits, trade unions seek to maximise protection for their members and my constituents.

Trade unions represent more people making personal injury claims than any other body, so it is important that unions are not undermined in the eyes of their members by being lumped together with disreputable claims companies. Trade unions do need regulation, and I shall deal with that. The TUC has outlined a number of reasons why union legal services are usually completely different from claims farmers. First, unions are already heavily regulated. Secondly, when a member makes a claim, the union will work for a fair settlement, often to keep medical and legal costs to a minimum. Thirdly, as my hon. Friend the Member for Blaydon (Mr. Anderson) said, unions’ primary task is to protect their members. Fourthly, unions link the work that they do on compensation with work on prevention. Fifthly, unions do not automatically steer their members towards claiming compensation from their employer: many union claims are made to state compensation funds, which is an entirely legitimate task.

It is for those reasons that unions and certain not-for-profits need a specific exemption in the Bill. I applaud the Government’s statement that they will be afforded an exemption in regulations, but it is important that in drawing those up it is clear that trade unions have to
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operate within a code of practice, and that if they act like claims farmers, they must be treated as such. I am sure that all hon. Members would accept that.

I want to say a few words about the Barker ruling on mesothelioma victims, which has acted very much against their interests. The Government have called it “disappointing” and pledged to consider a response to it. I urge them to respond soon. In my opinion, the judgment fails to recognise the realities of the problems that the victims are facing. It is often impossible for them to show which employer caused the disease, so several previous employers are thrown into the frame. The former Association of British Insurers scheme dealt with that complexity, but that is no longer possible. It is impractical for the claimant to trace everyone concerned, especially because, as my hon. Friend the Member for Hendon (Mr. Dismore) observed, they often have only a short time to live after the disease has been identified.

It is important that the Barker ruling does not influence the judgment that we are awaiting on pleural plaques. Like many MPs who represent ex-mining areas, several people who come to my surgeries suffer from such diseases, and we must ensure that they are protected. I urge my hon. Friend the Minister to take action as soon as possible.

5.7 pm

David Howarth (Cambridge) (LD): I should start by declaring an interest, in that I still receive the occasional royalty for the books on this subject that I wrote several years ago. However, I am not a member of the Law Society or a barrister. I completely agree with the speeches by my fellow Constitutional Affairs Committee members, my right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) and the hon. Member for Rugby and Kenilworth (Jeremy Wright). Perhaps my speech will be seen as a technical footnote to theirs.

I want to concentrate on my worries about clause 1. Part 2 has been entirely justified by the tales that we have heard today about the extraordinary cases of claims farming in the mining areas. The problem with clause 1 concerns the perception that there is a high risk of being sued when it is not justified. I hope that the people on the other side of the debate who support clause 1 will accept that there are circumstances in which it is justified for one person to be sued by another. When one person is injured and it is another person’s fault, there should be a high risk of the person who did the injuring having to pay compensation. That is just and right; it also serves the social purpose of reducing the risk of unreasonable action causing harm.

The perception arises from two sources—legal error and excessive litigation. I will deal with legal error in a moment, but everyone now seems to accept that there is no compensation culture in the sense that the number of claims being made in any part of society is rising fast—it is not. In fact, in most parts of the legal world the number of tort claims is falling.

Interestingly, there is evidence that the number of claims must have risen rather dramatically between the late 1970s and the mid-1990s, when the figures became more widely available—between the Pearson report and the time when national figures became available
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through the recovery unit. Oddly, during the period when the number of claims apparently increased, no one seemed to complain about the compensation culture, whereas in an era when the number of claims is falling, complaints about it are common.

Mr. Brazier: Again, the hon. Gentleman is confusing the issue of an overall compensation culture with the specific concern of the public that worthwhile voluntary and sporting activities are being hit. During that period of increase, there was not one of the bad cases to which we have referred. All the cases that have affected the public in a big way have arisen since the mid-1990s.

David Howarth: That is an interesting point, which would benefit from further research. It is difficult to know what was going on across the board during that intermediate period. I have a different view: I believe that what is really going on is that the insurance companies want an excuse, or an explanation, for the vast increase in premiums that they have been imposing during the more recent period. Instead of pointing to their own problems in managing their investments, they point to various claims and start talking about the compensation culture.

The question is whether clause 1 by itself can deal in any useful way with the perception of excessive litigation. The Government repeated today that they are not trying to change the law, which raises the issue of how the clause can make a difference. There is a particular problem in respect of “breach of statutory duty”, which was added by the House of Lords and which poses a grave danger that the Bill will change the law, accidentally. “Breach of statutory duty” is a very slippery phrase, covering a wide range of types of legal action. It covers types of liability that do not quite constitute negligence. Reference was made earlier to the test of reasonable practicability. We are talking about something that is not strict liability. I fear that clause 1 will accidentally apply to such actions, and will reduce liability.

The clause attempts to bring statutory form to the law after Tomlinson. It came as no great surprise to most lawyers that the Tomlinson case went the way that it did. The law with which we are dealing dates back to 1946—to the Daborn case, which involved the use of a left-hand-drive ambulance during the war. I think that this answers the points made by the hon. Member for Canterbury (Mr. Brazier). The ambulance was involved in an accident, and the question that arose was whether the fact that we were at war and needed all the ambulances we could get, including American ambulances, could be taken into account in determination of whether the way in which the ambulance had been driven was negligent.

The Court of Appeal decided that there was no liability, because what could be taken into account was what Lord Justice Asquith called

That has been the law for 60 years.

When judging whether a precaution is required by the law of negligence, we must judge whether the benefits of the extra precaution that it is claimed should have been taken—including the social benefits—outweigh the costs. There has been no change in the law in that regard. It
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seems to me that the case raised by the hon. Member for Canterbury is simply a case in which the established rule has been badly applied. The problem is that there is no way in which an extra law can be passed to stop judges from getting the existing law wrong in its application. We cannot make laws about the application of the law. That is trying to do too much; it is expecting too much out of statutes. The legal system is peopled by human beings, who make mistakes. Error is inevitable, which is why there are appeals. Error is inherent in a system where someone is allowed sometimes successfully to sue somebody else for damage caused by their fault. Occasionally the system will go wrong, and a case will get through in which damages are unjustifiably paid. The only way to prevent that is by having no liability at all.

Mr. Brazier: The fact is that these cases do not occur only occasionally—they keep on arising. The Scouts is one of the few voluntary organisations that have the resources to fight such cases. If clause 1 is strengthened, as I and others have argued, so that it states “shall” rather than “may”, and it is clear that Parliament wants to point specifically to sport and adventure training and related activities such as educational trips, that will at least send a signal to judges of the relevant calibre.

David Howarth: I was about to come to the point about signals. The claimed benefit of the clause is that it sends a signal, but the question is: to whom? Who reads statutes? Not members of the general public, but only lawyers and judges. If lots of lower court judges have been ignoring the course of the law for the past 60 years, including the most recent judgments of the highest court in the land, what extra benefit will we get by passing a statute? Such people are just as likely to ignore a statute as they are to ignore the House of Lords.

The other supposed benefit is that the clause will fix the law.

Mr. Heald: Does the hon. Gentleman not agree that combining the new declaration in clause 1 with the provision of educational leaflets to the entire public sector would be a useful way of proceeding?

David Howarth: I agree that leaflets would be very useful, but I cannot see what extra good having a new clause provides, apart from its being a starting point for a press release. My main problem with the Bill is that it seems to use statute as a press release; I would rather use a press release than a statute.

Clause 1 makes the law less flexible. The idea that there is a benefit in fixing the law is the opposite of the truth. The fundamental benefit of the common law is that it uses ideas, rather than specific formulae of words. Formulae can become out of date but ideas do not; putting things in statute can make matters worse, not better.

The risk on the other side of the equation is that there will be further litigation. The hon. Member for Canterbury asked: how can that be, given that this is supposed to be a protective clause? The answer is that there will be more appeals, and more cases will be fought in court in the first place, rather than settled, because the law will be unclear. It must be made absolutely clear why that is the case.

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The phrase “desirable activity”, as contained in clause 1, is ambiguous. Because of how the law currently works, there are two ways in which an activity can be desirable. It can be desirable privately—people pay for it and therefore want it—and publicly, in the sense that it gives benefits to society as a whole that are not captured by individuals. The crucial question will be: does the new phrase include either or both those types of benefit? It will take a long time for that very basic point to get through the courts. The benefits of the new clause, which are very minor, are outweighed by its risks and costs. In terms of the law of negligence, putting forward this new clause is itself negligent in the classic sense.

I want to finish by making three points, the first of which has already been made but needs to be re-emphasised. The Health and Safety Executive is the bigger part of the problem of the perception of a compensation culture, and of the fear of organising voluntary events, than is the civil law. I do not know whether the Bill is the right place in which to deal with that problem, but it must be dealt with.

Mr. Dismore: The problem is not so much the HSE but the health and safety industry, which perpetuates the myths about what is and is not required by the law as a self-justifying raison d’ĂȘtre. The problem is not so much the HSE; it is all the people who feed off the misinterpretations of the requirements.

David Howarth: That is right, but the HSE does do some rather odd things in terms of its targets.

The insurance industry has a vested interest in claiming that there is a compensation culture and in trying to reduce the scope of liability. If that happens in a sudden and unexpected way, the industry gets a windfall profit.

Finally, central to my doubts about clause 1 is my view on statutes being used as press releases. I do not think that the clause can do any good, but I suppose it does do some good for the Government, who can say that at least they are trying to do something about a real problem. However, it will not change the real world. We are passing a law and I think the law deserves more respect than that.

5.20 pm

Derek Wyatt (Sittingbourne and Sheppey) (Lab): I have sent my apologies for not being here for the Minister’s opening remarks. I want to register that I am a trustee of TimeBank, the largest volunteer organisation in Britain. Before 6 July last year, we were asked to do a volunteering exercise for the Olympics. We registered over 70,000 volunteers before 6 July, when we won the games. We have registered substantially more since. We will have approximately 85,000 to 100,000 volunteers in 2012. What correspondence has there been between the Minister, the Department for Culture, Media and Sport and Lord Coe on whether clause 1 will cover more than 100,000 volunteers? The Olympics will be a high security event and we will be asking volunteers to give up their time. I am not absolutely certain that, as it stands, they will be covered.

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I would also like to register that I am an ambassador for the Girl Guides—I shall return to the movement in a moment—and that I am co-chair, with the hon. Members for Canterbury (Mr. Brazier) and for Montgomeryshire (Lembit Öpik), of the all-party group on the matter. The noble Baroness Ashton has given the group exceptional time—more than four hours—to examine clause 1 in huge detail. The Minister also saw us recently and I thank her for that. We cannot complain about the time and access we have had, but we would like the Government to think about “will” and “shall”, which the hon. Member for Canterbury mentioned.

I want to mention the iceberg effect. A dear friend who gave evidence in confidence has a small castle. One particular American tourist went over a rough bridge in stiletto heels, and guess what? She twisted her ankle, and sued the owner of the castle. And guess what? Because the owner of the castle is a reasonably famous person, they did not want the law suit and settled out of court for £8,000. This is completely and utterly obscene.

The scouts, guides, yachtsmen and the Territorial Army are sick to death of going to court and spending £15,000 to £100,000 a case; that money is gone but they have had to spend it. The Chancellor has asked for a volunteer community; we want over 500,000 volunteers over the next 10 years. We have to secure the legal framework for these people.

When I went to Oxford as a very old man, a wonderful chap called Andy Widdowson broke his neck playing rugby. When he broke his neck, his parents did not sue the referee, the college, the rugby club or the Rugby Football Union; they were just concerned about the well-being of their son. We were, too, and we raised over £60,000 for him, in 1981 figures. In Wales recently, a boy aged 15 broke his neck playing rugby. Whom did the parents sue? Was it the Welsh Rugby Union? No; amazingly. Was it the Welsh Schools Rugby Union? No; extraordinarily. Was it the school? No. Was it the coach? No. It was the referee, and they won. This is ridiculous and absurd. We have to allow risk in life and we have to find a way in clause 1 to cover exercise.

We have all talked about obesity rates and there is 70 per cent. less activity among schoolchildren than there was 30 years ago. How on earth are we going to solve that if we do not solve the risk element of clause 1? That is fundamental.

The Girl Guides has 600,000 members, and there are 50,000 girls on the waiting list because it needs 8,000 more volunteers. There are not the volunteers to come forward for the Girl Guides, which is crackers—absolutely nuts. We must resolve this issue in clause 1.

Finally, the hon. Member for Canterbury and I have looked at the American states, Western Australia and so on. Philosophically, at some other stage, we must come back and redefine what we mean by national insurance. We established it in the 1940s, and it is inappropriate for a modern society not to take a legal position on insurance for covering volunteers.

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