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17 July 2006 : Column 78

I am uniquely positioned to rebut the hon. Gentleman. In 1996, The Sunday Times described me as “the bagman” between the unions and the Labour party. The unions played a particularly valuable role in removing the hon. Gentleman’s party from office in 1997 by ensuring that union money, which is determined in statute by legislation on political levies and political ballots, was channelled into the choices of union members. I appreciate that he is sore about that, but it has nothing to do with the issues before us.

I want to refer to the draft regulations that the Minister has been considering. I appreciate that she has rightly spent her scarce but valuable time on new clause 13 on mesothelioma, which means that she has not had the opportunity to put time and effort into the draft. Hon. Members on both sides of the House are thankful that mesothelioma has been her priority, but it means that the draft contains some weaknesses.

There is one matter that the Minister can easily clarify, which would solve a core problem with the draft. The introduction discusses exempting trade unions in relation to services provided to their own members. If the definition of “members” is specified, many of the problems will disappear, because union members, as defined by law, have a series of forms of redress that are not available to other consumers. First, they have the certification officer, who is a regulator to whom they can go on matters that they are unhappy about. Secondly, they have the structures of their union and the ability to participate in decision making and democracy, which is unlike any other organisations that we have discussed and which, again, is covered by statute. Thirdly, they have a form of redress—the common law and an injunction—under the Employment Act 1992, if they feel that their union is acting outside its rules. The union member, as currently defined in statute, has a particular series of rights, which are not available to any other consumer. I put it to the House that the combination of those three factors is greater than any regulatory powers.

Mr. Kevan Jones: Does my hon. Friend agree that this is a crucial point, given that certain unions—for example, Durham NUM—have abused the system by inventing associate members, a category that has no legal definition in law, leaving people with no recourse under the trade union legislation?

John Mann: My hon. Friend is absolutely right. The scandal of what happened with miners’ compensation is that union members got the service for free but non-members, of whatever category, did not. UDM members, for example, got the service expressly for free. The people who had rights of redress got it for free, but the rest had to pay. The joining fee, under different guises, became the contribution that the UDM attempts to justify. By clarifying the question of membership, the Minister will make her life, the life of her Secretary of State, and the lives of their successors significantly easier. It is not true that there is a big problem with unions and union members in relation to the handling of industrial injury and industrial disease matters. There are not even small problems in relation to how other unions are handling it. We have to deal with this scandal and with another scandal—currently theoretical but potentially actual—that is important in this context.


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7 pm

Will the Minister clarify whether a regulator is to be appointed immediately? That would help us easily to define what falls inside self-regulation and what falls outside it. If that does not happen, the Minister will have a series of continuous problems.

We start, however, with the draft code. I am not sure who worded it, but paragraph 3(1) is interesting. It states:

What use is that? I have here a sheet of paper from a subsidiary company called Vendside that is wholly owned by a trade union—the UDM. In other words, as drafted, the code would legitimise the practices of the UDM and Vendside, because it is disclosed that the member will be going through Vendside and paying their fee to it. Disclosure is an issue, but it is not the key issue. The key issue is whether the money should be deducted. Paragraph 3.2 says:

That creates a catch-all whereby all relationships with solicitors, even beyond scandalous organisations such as the UDM and Vendside, can be hidden away. Why should not the member know what is going on? The catch-all of commercially sensitive information creates an enormous loophole in the draft code.

Let me give one example to show how bad it could get—that of the UDM. A third party that was never disclosed to the members as commercially sensitive, one might say, was a firm called Indiclaim. Money belonging to a swathe of UDM claims victims—non-members who have gone through the UDM—has gone from the solicitor to a firm called Indiclaim, but the victims knew nothing about it. The money was paid by the solicitor, but they might want to question what the marketing and vetting fee was. They might wonder about this firm, Indiclaim, which was vetting their claim. If they were to probe deeper they would find that it is owned by one of the employers—the manager of Vendside. If they had happened to stumble on various minutes meetings involving the UDM, Beresfords—the precursor to Indiclaim—and a company called Walker and Co., they would see a swathe of financial arrangements between the solicitor and UDM Vendside of which they were unaware, with money going in six separate ways. Again, that could be described as commercially sensitive information. That loophole needs to be removed.

Mr. Kevan Jones: Does my hon. Friend agree that that could also extend to the relationship between trade unions and solicitors in terms of payment of referral fees and other inducements for a trade union to put work with a particular solicitor, thereby negating the whole idea of a code, which would be the openness, honesty and transparency of the relationship between a recognised trade union and a solicitor?

John Mann: My hon. Friend is correct. Indeed, transparency is in the interests of the trade union and the solicitor. The whole idea of a loophole as regards commercially sensitive information is a non-starter—there is no rationale for it whatsoever.


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Paragraph 5 of the code refers to a third party. Who determines the identity of the third party, who appoints the third party, and who pays the third party? That would create a problem for any decent trade union, never mind a rogue trade union. Who would the UDM appoint as the third party to look after consumer complaints? One could come up with various suggestions. I suspect that if a union is doing something fundamentally wrong—in this case, ripping off tens of thousands of elderly miners and widows—it is unlikely to appoint a third party to handle complaints that is anything other than particularly well connected and sympathetic to it and to its aims. The ability to appoint a third party without further definition is a weakness.

I remind Members that, whether we like it or not, the UDM is a certificated trade union and falls within this definition. We therefore need to ensure that the Bill and the codes of practice that go with it will fit the bad apple as well as the other 98 per cent. with whom there is nothing wrong. That is the dilemma that we face. We cannot afford to allow a renegade union such as the UDM, which has systematically been robbing my constituents and others, to get away with it—and even potentially to be able to justify it, and to have their expensive solicitors justify it—because of a lack of tightness in the wording of the draft code.

The next problem with the code concerns redress. I have here the solicitors practice rules from 1990, with 38 pages of detail. Labour Members, and perhaps others, have been critical of the Law Society. I have seen a significant improvement in how it has handled complaints over the past year, particularly since I had to refer it and certain cases to the legal ombudsman, who produced a very critical special report. I made a whole series of complaints on behalf of my constituents about a firm of solicitors called Moss—one of the UDM solicitors. We not only need details about the regulations but about rights of redress. There is no point in having regulation without a clear right of redress. If, under the new regulatory regime, with self-regulation built in through the code, someone wants to challenge deductions that were wrongly made, it is essential, especially for people falling within self-regulation, that the regulations are watertight. That means having the right of redress, which is a basic consumer right. The Law Society learned that over the years and now specifies the amount of redress and how it should be funded.

These cases are unusual. The volume of cases going to the Law Society is, to be fair, very unusual and the sheer volume has caused great problems. There will not be a great volume, however, in respect of ordinary, decent trade unions, which do not have many such complaints. Few complaints are made to the certification officer in the first place, irrespective of whether they are listened to and acted on. Other than the scandal of miners’ compensation, we are not talking about a large volume. That should be borne in mind when we are deciding whether to go for self-regulation or to impose regulation. A consensus should emerge within the House that unnecessary regulation and too much Government regulation do not represent the way forward.

As I have argued on several occasions in the past and certainly in respect of an organisation such as the UDM, the definition of membership should provide the ability to ensure that claims handling is regulated by the regulator and that whatever is done for the real
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members defined by law is covered by self-regulation. I would be satisfied with that. My definition of claims handling for trade unions would arise where they go beyond their existing members and start to scout out, as the UDM and Vendside did, for further people—perhaps for ex-members or members of a former union or widows. Straightforward definitions help to solve many of the problems that lie within a code of conduct, however it is worded.

Mr. Heald: Is the hon. Gentleman arguing that where membership does not include associate members, all the abuses that we have heard about—including the £20 associate members—would be perfectly okay and would not require any regulation at all?

John Mann: No, the issue is very straightforward. The UDM charged a fee. Let me explain how it worked, as it is very interesting. As it was challenged, that union tried to twist its way into getting additional legal advice. I have with me a form from one of my constituents. It says that if the claim is successful,

and it then spells out the fee rates. Yet Vendside Ltd and the UDM were not paying anything towards the costs. They dealt with the cases under the claims handling agreement and registered automatically. For reasons that have never been explained to me, they even had their own claims handling agreements: one for vibration white finger from January 1999 and one for chronic obstructive pulmonary disease from September 1999. No one has ever explained at all—let alone to my satisfaction or even my dissatisfaction—why that union should have had separate claims handling agreements and why a Minister chose to sign them. I do not even know which Minister signed them. Nevertheless, I shall keep burrowing away with questions on the issue; who knows, one day I might get to the truth of the matter.

Mr. Clapham: Does my hon. Friend agree that the signing of that separate agreement was the basis of many of the problems that arose under the coal claims handling scheme?

John Mann: If one were always the optimist, one would say that signing that agreement led directly to the Compensation Bill, so there is some light at the end of the tunnel—except perhaps if one is running Vendside. I would certainly expect my constituents to bring in many claims. Just as a policy decision allowed the backdating to 1999 of complaints for double charging against solicitors under the miners’ scheme and made complaints admissible to the Law Society, so it is important to clarify whether the regulator, in setting a regime for claims handling, would be expected to take cognisance of comparable bodies—in this case, the Law Society. I would be grateful if the Minister clarified that.

7.15 pm

The Vendside case is particularly important. About 15 to 20 per cent. of the people involved, because of the agreement that the Government signed, never went through a solicitor. Uniquely, the claims handler, Vendside, took the claims forward, so the only remedy has been civil law. There has been no Law Society remedy, even though it was beginning to work very
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satisfactorily for all other cases. I do not envisage further civil actions against anyone other than the UDM and Vendside, but 15 to 20 per cent. of people did not have access to justice or consumer rights.

The Bill becoming an Act is fundamental to allow those 20,000 to 30,000 people the same access to justice and consumer rights as would have applied if their cases had been handed to a solicitor. As far as cases dealt with by Moss, Ashton Morton Slack and Beresford solicitors are concerned, no one can move in my office for all the cheques arriving from companies to pay my constituents who had paid the Vendside fee in circumstances where it was wrongly and deliberately suggested to them in writing that the UDM was paying costs of their claims. Those people are now getting justice and I want the Bill to provide an exact parallel for the minority of people whose consumer rights have been denied and who have had only the remedy of civil action.

Where an organisation is more than happy to spend large amounts of money on expensive lawyers, it is important to remember the small man or woman. We may be talking about a retired miner in his 80s or a miner’s widow in her 90s who have wrongly had money deducted and who have to fight against the might of Vendside, with all the money it acquired. Vendside is quite happy to throw its money away to try to stop the individual. What Vendside actually did—following legal advice, I suspect, but who knows; perhaps it will write and tell us—is change the forms. In fact, the forms changed five times; I have seen five variations. At some stage, it became a fee in lieu of membership.

That is where the question of membership is fundamental. My constituents who were not members of the UDM, who worked in another trade or had retired or who were not classified legally as members got stung in different ways, but the principle is the same. The point was to put money into that organisation for nothing. The Bill must immediately resolve that sort of consumer complaint and allow people a remedy so that they can pursue justice for themselves.

Mining cases are not the only ones. We are talking theoreticals, but this is not an absolutely theoretical, because a political party—the British National party—has attempted to jump on the back of industrial injury claims. In this case, we are talking about ceramic industry claims from the Potteries. Other hon. Members may have more up-to-date information than I have, but I understand that there is an intention to form a trade union. Whether it gets certified is out of our hands, because it will be determined by a certification officer. It is probably theoretically possible for the BNP to set up a trade union that could be certified. The BNP attempted with Beresfords solicitors to take claims and act as a claims handler in order to recruit through the union rather than straightforwardly to the BNP, as it had tried before. That is a real danger and we need to ensure that we do not fall into it. That is particularly the case in respect of a letter from Beresfords about what had happened in Committee. Beresfords immediately wrote to me to spell out that it had


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That actually makes matters worse, because Beresfords had obviously been hoodwinked by the BNP: the BNP was advertising its name, and it did not even realise that that was happening, as it spells out in the letter. That could happen in the context of the BNP setting up a trade union and attempting to get it certified, so defining what are claims handlers and what are not is vital, as is defining membership.

I also want to make some remarks about all the people who had money deducted in miners’ compensation claims, because there are many of them. Tens of thousands of people have had money deducted—certainly more than 50,000 and, although it is hard to give an accurate estimate above that, there are probably many more. Let us take the example of my own constituents. I have already had money paid back by solicitors to more than 600 of them, and that number is increasing rapidly week in, week out. The list of solicitors who have been forced to pay back money—some, certain people would say, as a voluntary good-will gesture, others following Law Society adjudications—is phenomenally long. Almost 40 firms of solicitors have now had to pay back money.

Mr. Kevan Jones: I concur with my hon. Friend’s comments that the Law Society is getting better, but is not one of the problems with it that many firms of solicitors only pay back money to people who complain, and there are possibly tens of thousands of people who do not know that they have been hoodwinked—robbed, in my opinion—by a firm of solicitors? They will never get that money back unless someone forces those cowboys to pay it back.

John Mann: My hon. Friend is right. The reason for that is that many people fear that, when they sign a contract, it is legally binding. Some such people are taking on large firms of solicitors who directly deducted money for themselves—we are not talking about third parties. Let me give some examples of those who directly deducted money for themselves: Thompsons solicitors took £285 from one of my constituents, and Richmonds solicitors took £500 from another. There is a whole range of others: Irwin Mitchell deducted £289. Those are major firms of solicitors. Many smaller firms of solicitors also stumbled into this, such as Frank Allen Pennington, Donne Mileham and Haddock, and Colemans. They were also deducting moneys, some for themselves, some for a third party such as other claims handlers, including PR and Associates, Union and General Services—which quickly went into liquidation, so it could not be pursued through the civil courts—and IDC. There is a plethora of such claims handlers.

People have to go through a process to get their money back. I will give an example of how that works, because I have today responded on behalf of a constituent to the Law Society. The complaint was put in two years ago. No assessment is made of the literacy, illness or other vulnerabilities of such people. Some of the people I am representing are in their 90s. Some have good literacy, others have very limited literacy, and they get sent large wodges of documents. Some get visits at home from solicitors when they make a complaint; some had visits from the managing partner of solicitors. Some have been taken to hotels for meals to discuss their complaint with a managing partner.
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Some are rung up and told, “You are liable, because you have signed,” and others get letters saying that. Those are the kind of people who are complaining.

The vast majority of those people have had no previous contact with solicitors. Many of them tell me that they regarded solicitors as people whom they would need only if they were on the wrong side of the law, and they are therefore delighted to have had no contact with solicitors. They say to me time and again, “We have had no contact with solicitors before.” Many of them are dealt with by their solicitors over the telephone rather than face to face, even for industrial hearing loss claims. Many are dealt with over a great distance, and the solicitors never see them—or see them only once.

How are such people to know, other than by MPs campaigning on the matter, that they have a genuine complaint that can be addressed by the Law Society in getting their money back when it should never have been deducted in the first place because, in this great scheme, the Government paid the solicitors’ fees? If they are getting £8,000 or £10,000 in compensation and a solicitor says, “The charge to you is £1,000”, they might think that to pay £1,000 to get £10,000 sounds reasonable. It sounds reasonable to me, and I know that it sounds reasonable to my constituents, because no one told them that the Government, through the scheme, were paying all the costs. These are the sums in respect of some of the solicitors involved: for Thompsons, more than £100 million; for Rayleighs, more than £55 million. The total is more than £500 million and increasing. The sum in respect of Beresfords is £80 million, and more than £100 million in potential claims costs are still to come. Those are phenomenal sums of money, and only now are people realising that those solicitors were being so appropriately generously—so to speak—paid by the Government. That was the deal that was done, and I have no criticism, as things can go in different ways. What I criticise is the fact that my constituents have to go through me one at a time to get their money back. Even with the Law Society, things have to be done one at a time.

Today, I dealt with a firm of solicitors called Wake Smith—again, one of the UDM solicitors. It is one of a small handful of firms that have failed to agree to pay people back. Only a few are still resisting, and Wake Smith is one of the worst. It puts standard responses in the post—20-page legal documents full of legalese that my constituents are meant to read and understand—and it keeps getting things wrong. In a case I addressed today, it gave a 20-page document about the UDM—defending the UDM and its right to take money, and then claiming that it had virtually no relationship with the UDM. In fact, the money in question had been deducted to IDC, but it had obviously just hit the computer button and printed that off; it had not given any care and attention to the fact that this was an individual complaint from a former client of theirs—a real person who had a consumer complaint.


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