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Mr. Heald:
New clause 1 would ensure a statutory basis for the conditions in clause 5, so that a decision to exempt an individual or body from the regulation to which claims farmers are subject would have statutory
form. The amendments give teeth to the code of conduct that the Minister proposes for those who are exempt from regulation.
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I agree that some bodies need to be exempted from part 2, and it is right that organisations that are covered by other regulators—for example, insurance companies, insurance brokers and their agents are covered by the Financial Services Authority—should be exempted, because there is no point in having duplicate regulations for one body. However, we should ensure that everyone plays by the same rules and is subject to similar standards. We need a clear set of conditions to follow when deciding on the issue of exemption; it should not just be the say-so of the Secretary of State.
In January, in a written answer, the Under-Secretary confirmed—and Baroness Ashton said the same—that the Government intend to exempt trade unions by means of secondary legislation. The Constitutional Affairs Committee criticised that decision in its report, “Compensation culture”. It said that it did not “see any benefit” in exempting trade unions, and I agree, but the Minister has said that the Government will not go down the route of regulating trade unions. There will be a different system for them—a code of conduct, which will be voluntary.
I accept that trade unions play an important part in society and that they have, like many who manage claims, helped numerous people to obtain the justice that they deserve. However, like some claims management organisations, some trade unions have abused their clients’ trust for their personal gain. I am not alone in thinking that. The hon. Member for Bassetlaw (John Mann) has referred to his constituent, Mrs. Beckett, who approached Raleys, a firm of solicitors. She was told:
“‘NUM funding is available only through this firm’”.
Mrs. Beckett had nothing to do with the National Union of Mineworkers. She had not gone through the NUM; she just contacted Raleys using the Yellow Pages. As we heard from the hon. Gentleman, she was told:
“‘You are of course at liberty to explore other types of funding arrangements, however we cannot guarantee that they will protect you from the need to pay any expenses or from the amount that your solicitor may recover from your compensation’”—
to which the hon. Gentleman said, “Not true!” He referred to another of his constituents, Mr. Dunstan, who was told:
“‘If you do not wish to take up the option of Union backing then it will be necessary for us to consider alternative funding arrangements. If you are not eligible for legal aid then it will be necessary to discuss funding your case by either private funding or through a conditional fee agreement.’”—[ Official Report, 8 June 2006; Vol. 447, c.482.]
We should not forget the other examples provided by the hon. Gentleman, who concluded that they showed that the scandal of the miners’ compensation continues.
The hon. Member for North Durham (Mr. Jones) was explicit about the problem. He agreed with me:
“The hon. Member for North-East Hertfordshire (Mr. Heald) asked whether trade unions should be covered by the Bill if they act as claims handlers. I believe wholeheartedly that they should be.” —[ Official Report, 8 June 2006; Vol. 447, c.495.]
Last November, The Times published an article that exposed the deceptive and disingenuous actions of the NUM and stated that
“elderly men suffering from chest diseases and a crippling hand condition were advised to allow the National Union of Mineworkers to fund their legal claims in return for paying part of their eventual compensation to the Union. But what the miners were never told was that in reality, the Government—and not the union—was paying the legal bills for successful claims.”
Mr. John Gummer (Suffolk, Coastal) (Con): The regulations from which the trade unions are exempt are not onerous, but they are necessary to protect the public and the individuals concerned. Why should the regulations not apply to trade unions, if they are suitable for everyone else?
Mr. Heald: I fully accept what my right hon. Friend says. The Select Committee took the view that everybody who acts as a claims handler should be treated in exactly the same way. However, we argued about the subject in Committee, and I lost the vote. The Government said, “No, we are not prepared to do that; we will exempt trade unions, on conditions.” That is what clause 5 allows: exemptions on conditions.
The Minister has told us that a code of conduct—of which I have seen a draft—will apply to trade unions, but the problem is that there is absolutely no method of enforcement, whereas under the regulation, criminal offences are created. The police could intervene, and there are powers of investigation, search and seizure, which are necessary to investigate a case in which money is taken from the most vulnerable people in our society. However, the code of conduct for trade unions, we have been told, is simply to be administered by the Trades Union Congress. If an allegation is made, it appears that Brendan Barber will investigate it. Whatever one thinks about Brendan Barber—I believe that he is a fine servant of the union movement—the fact is that he is not a skilled investigator, and he will not have any powers of investigation.
By all means let us have a code of conduct, but let us make it statutory. If there is a breach of the code, let us make it an offence. The Bill should say that an injunction can be passed to stop a union continuing to handle claims if it treats its claimants in an inappropriate or improper way. I believe that that is a fair response to the Minister’s point of view.
Mr. Kevan Jones (North Durham) (Lab): I agree with some of the hon. Gentleman’s points, and I have some criticisms to make of the draft code of conduct, because it is full of holes; I shall refer to that later. As I said to the hon. Gentleman in Committee, it will not just be left to Brendan Barber to enforce the code of conduct, because if people fall foul of the code of conduct to which they have signed up, they will be subject to regulation and the full force of the Bill. I agree with the hon. Gentleman that the code of conduct should say that specifically, because it does not do that at the moment.
Mr. Heald:
Yes, the penalty on which the Minister relied was the notion that if there were breaches of the code of conduct, Ministers could act and subject the trade unions to regulation. Of course, the problem is: how does one uncover the breaches if there are no teeth and no regulatory powers? May I ask the hon. Member
for Bassetlaw how easy he found it to obtain information, documents and things that he needed when he was investigating Vendside and the Union of Democratic Mineworkers?
John Mann (Bassetlaw) (Lab): When reading the code of conduct, it is always good to put in the words “Union of Democratic Mineworkers/Vendside” instead of “union” and see how it reads. The hon. Gentleman said that the regulator would be the TUC and Mr. Brendan Barber. In the draft code that I have seen, far from the TUC regulating, unions such as the Union of Democratic Mineworkers would appoint or even pay their own self-regulator.
Mr. Heald: The hon. Gentleman is right. I was simply quoting what the Minister told us about the TUC in Committee. It is not even as good as that, as the hon. Gentleman says. Inspector Barber is not the answer. If one looks at the sort of cases that have come before the Solicitors Disciplinary Tribunal, where we have seen the NUM banking £10 million from the compensation scheme on the basis that solicitors had been representing that it was funding actions which it was not, one can see that there is a real problem that needs addressing.
Geoffrey Williams QC, who represented the Law Society, told the tribunal:
“It is not accepted that the only way in which these men could be represented as they were was by union agreement. They may have chosen to do so, but I say that was not an informed decision.”
“The claims documents triggered the retainer and there was complete failure to explain at the outset why the arrangement with the union was either necessary, which I say it was not, or for their benefit, in which case the benefits were not explained.”
The right hon. Member for Rother Valley (Mr. Barron) has described that as
“a scam from day one.”
He is a former senior NUM official, and he said:
“The NUM has not put a penny into fighting these cases”.
There is no justification for unions not to be properly regulated. The Minister acknowledged that trade unions have abused their position. She said:
“I know of and agree with the genuine concerns about the activities of a small number of trade unions”—[ Official Report, 8 June 2006; Vol. 447, c. 428.]
If that is the case, is it satisfactory to have an unenforceable code of conduct with the arrangements left to the trade unions, when others who are in exactly the same position will be faced with the full panoply of the law, proper investigators, the police, charges, powers of entry—all the things that I have mentioned?
New clause 2, the second of my new clauses in the group, would make it a criminal offence to breach the conditions for exemption, or the code of conduct, for an exempted body. If a body breaches the code of conduct, those involved would face penalties similar to those faced by a regulated claims management company. In Committee the hon. Member for Sherwood (Paddy Tipping) admitted that the trade unions had acted immorally. He said:
“I make no apology for UDM/Vendside, or for some sections of the NUM. I think that other trade unions have acted irresponsibly as well.”—[ Official Report, Standing Committee E, 27 June 2006; c. 118.]
As I mentioned, the Minister acknowledged that the trade unions had acted irregularly. The hon. Member for North Durham made a passionate and persuasive speech outlining the numerous cases of abuse. Many Members from all parts of the House accepted that the manner in which the trade unions had conducted themselves was, at least, disappointing.
It is wrong to refuse to face the facts and to argue that the trade unions should be exempted simply because there are a small number involved. If I, as a lawyer, said, “Very few firms of solicitors misbehave. They should not be regulated at all, and we would not have any of the disciplinary powers that the Minister is pressing upon the legal profession in her draft Legal Services Bill”, I would be laughed out of court. It is risible. Are we to be able to say one thing of lawyers and another of trade unions? If these are responsible organisations, surely they ought to be regulated in a responsible and sensible way.
Mr. Kevan Jones: Some would suggest that the Law Society has been the best trade union in history in terms of looking after its members and avoiding people being brought to book when they should be. Does the hon. Gentleman agree that the scandal that has gone on in Durham and other places could not have gone on had it not been for the collusion of the people in his profession to whom he is referring?
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Mr. Heald: It is true. To its credit, the Solicitors Disciplinary Tribunal has heard those cases and made those findings, and there are more to come. Given that that system exists for solicitors and is to be tightened up, which we all accept is necessary, is it right to argue that nothing of that sort should apply to the trade unions? One union has trousered £10 million through just one firm of solicitors.
John Mann: The hon. Gentleman mentioned decisions of the Solicitors Disciplinary Tribunal. Does that not highlight the need to strengthen the law whereby a consumer complaint can go through a caseworker, to an adjudication panel, to a solicitors disciplinary tribunal, as is the case with Raleys—and now it has the option of appealing to the High Court—whereas the consumer has no option but to appeal to the legal ombudsman at the very first stage? Should there not be more powers to allow the Law Society immediately to strike off solicitors such as Raleys, who refuse to abide by the Solicitors Disciplinary Tribunal’s decisions?
Mr. Heald: The hon. Gentleman and I do not have much of a dispute. We agree that there should be firm punishment, but I think it needs to apply to everybody who is involved in the business of claims management services.
Mr. Gummer:
Does my hon. Friend take the point made by the hon. Member for Bassetlaw (John Mann), which is a good one? If one substituted something else for the words “trade union”, what light would that throw on the legislation? If one put in the word “solicitors” or the names of particular trade unions, such as the NUM or the UDM, the whole sense becomes clear: a particular group is being exempted from even cursory coverage by the law when there is no
reason or rationale for that. It is not because they are subject to some other regulation; it is simply because the Government do not want to upset them. That worries me, and many other people, a great deal.
Mr. Heald: My hon. Friend and the hon. Gentleman make an important point. If we put any other class or category of organisation in that bracket, it would look extraordinary.
New clause 5 gives power to the regulator to apply to the court for an injunction against any exempted individual or body to stop it providing claims management services where it has broken the exemption conditions or the code of conduct. That would ensure speedy protection for the consumer and fits in with what would apply to a regulated body. I believe the approach that I am adopting fits in with the concept of rights and responsibilities that the Prime Minister so often talks about. If a body abuses its exempted position, it has clearly failed to act responsibly towards its consumers. If that is the case, the regulator should have the power to ask courts to issue an injunction.
Mr. David Hamilton: I have listened carefully to the hon. Gentleman. Can he give me an example of any other panhandlers or lawyers who raise cases on behalf of the work force that they represent? For example, it took a lot of money for the NUM to go to law on industrial deafness and vibration white finger cases. The NUM has raised £1.2 million in certain areas—remember, it is a federation of unions—and requires £2.4 million for new litigation. What organisations other than unions do that?
Mr. Heald: The hon. Gentleman should come with me to the annual awards for the Legal Aid Lawyer of the Year. There he would see some very inspiring, passionate lawyers who have taken on cases, often for free, to help people. That is a fine thing. Insofar as the trade unions help people, that is an excellent thing and nobody would dispute it. Many people do excellent things, but they are still regulated. That is what is wrong with the Bill—the idea that the unions are being let off.
The hon. Member for Hendon (Mr. Dismore) has suggested in new clause 10 that there should be a complete exemption for
“legal services offered or arranged by Trades Unions for the benefit of their members”.
Perhaps he did not realise that the Bill already contains such an exemption. He has worked for claimants’ solicitors for many years and knows about the matter. I understand that he worked for many years for one of the firms that has been most heavily criticised.
If one examines what has happened to those firms of solicitors, it is a sad story. A trade union solicitor in league with Durham NUM has argued in a briefing to Members of Parliament that such solicitors and trade unions should be exempt, but the hon. Member for North Durham, who knows the area and the circumstances, has explained that they are involved in worrying activities. Millions of pounds have been taken by unions and solicitors.
In an example provided by the hon. Member for North Durham, solicitors offered people the opportunity to pay £20 to become associate members of a union, which does not provide any of the rights of union
membership and simply allows people to be known as associate members. People then signed a form saying that 7.5 per cent. of their final settlement would go to the union; the money is not kept by the solicitors but is passed on to the union, which received £10 million in one case. The form stated that that was done to indemnify the individual against any costs, but the Government pay all the costs. The situation is extraordinary.
Why would the Government do that? We know that they have close relationships with the trade unions and at least one of those firms of solicitors, because in recent years the Labour party has received £90,000 in funding from the NUM and £75,000 from a firm of solicitors, Thompsons. Against that background, it is worrying that such people are being exempted.
Mr. Kevan Jones: May I clarify what the hon. Gentleman has said about £10 million? I suspect that in the case of Durham, the figure is about £3 million. If his point about donations to the Labour party is correct, that is very bad business on the part of any party, because that firm may have given the Labour party £75,000, but the Government have given it nearly £100 million in fees.
Mr. Heald: Perhaps I am too suspicious. I accept that the figure of £10 million relates to Raleys and the example in The Times. The hon. Gentleman is right: £3 million is the figure that he put on what happened in Durham—but that is still a lot of money. The way in which the matter is working out is extremely worrying.
I will be interested to hear the hon. Gentleman’s explanation for new clause 11, which is an important contribution. As I have said, it is not right to exempt anybody, but if one does so, it should involve a proper statutory scheme and proper enforcement—some teeth. The Government proposal does not include any enforcement, which I believe is quite deliberate.
Amendment No. 5 concerns the advertising code of practice. The Bill provides that there should be a code of practice to cover claims management services. Much of the advertising used by claims management companies is targeted at the less well-off, and the document, “Better Routes to Redress”, which was prepared by the Better Regulation Commission, includes examples. One advertisement featured a young women looking at a sports car and saying, “I’ve always wanted one of those, and now I’ve had an accident I can have one.” The document rightly concludes that such advertising is entirely inappropriate in personal injury cases, where damages are limited and aimed at putting clients back in the position in which they would have been if they had not suffered wrong. I can provide numerous other examples, and I hope that the Minister will assure us that the code of practice for claims management companies will cover the sort of appalling advertising to which I have referred.
John Mann: I shall start by rebutting the tongue in cheek but mischievous remarks made by the hon. Member for North-East Hertfordshire (Mr. Heald), who has tried to relate union money for the Labour party to this Bill and exemptions—good, bad or otherwise.
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