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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 754-v

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

constitutional affairs committee

 

 

compensation culture

 

 

Tuesday 31 January 2006

BARONESS ASHTON OF UPHOLLAND and RT HON JANE KENNEDY MP

Evidence heard in Public Questions 259 - 311

 

 

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Oral Evidence

Taken before the Constitutional Affairs Committee

on Tuesday 31 January 2006

Members present

Mr Alan Beith, in the Chair

David Howarth

Barbara Keeley

Mr Piara S. Khabra

Julie Morgan

Keith Vaz

Dr Alan Whitehead

Jeremy Wright

________________

Witnesses: Baroness Ashton of Upholland, a Member of the House of Lords, Under Secretary of State, Department for Constitutional Affairs and Rt Hon Jane Kennedy, a Member of the House, Minister of State for Quality and Patient Safety, Department of Health, gave evidence.

 

Chairman: Baroness Ashton, Jane Kennedy, Minister of State, we are delighted to have you both with us this afternoon, Baroness Ashton being no stranger to us, but it is good to have a Minister from the Department of Health with us, particularly, of course, in relation to the NHS Redress Bill. We have to declare any interests we might have around the table.

Jeremy Wright: I am a non-practising criminal barrister, though never did any negligence I am glad to say.

Chairman: I am a consultant to a company which owns holiday parks and therefore may have an interest in some of theses matters.

Barbara Keeley: I was involved in a car accident and the insurance claim is still unresolved.

Q259 Jeremy Wright: Can we start with the Compensation Bill and particularly clause 1 of the Bill. You may or may not know that we have taken a substantial amount of evidence on clause 1 in particular, the reasoning behind it and, of course, on the possible synergies or conflicts between clause 1 and the case of Tomlinson, of which I know you are well aware. In your view, is clause 1 entirely on all fours with Tomlinson? If it is not, is that going to cause problems? Having considered all of that, is it still the Government's view that clause 1 should stay in the Bill?

Baroness Ashton of Upholland: First of all, I have tried to read all of the evidence that we have received, so I am aware and, of course, as you would expect, Mr Wright, I have had quite a lot of representation in all directions on clause 1. If I start with the last question you asked me. It is our intention to keep clause 1 in the Bill. We do believe it is compatible with current case law, but because we believe there is a perception out there that somehow the law is not in the right place, we think it is appropriate, and, indeed, we are supported in this with our parliamentary counsel, to make sure that we make it clear on the face of legislation. If I can add, you will probably be aware that there are two different lobbies in a sense and I have described my role as being on a see-saw. There are those who feel very passionately that activities have declined in our nation because of people's fear of compensation, which is particularly true around Outward Bound, Scouts, Girl Guides and so on, the kind of adventure activities that people might have. They want to see something in the legislation that at least seeks to recognise that the courts have a role in making sure that these activities continue. At an equal other end of the see-saw, there are many of the lawyers involved who feel understandably that case law is perfectly adequate, therefore why are we, in this sense, putting this into statute. I hope I have sat with clause 1 in the middle of the see-saw. The Government has also said, and I have made it clear at the Committee Stage of the Bill, that I am not wedded to the wording and I am perfectly willing to look to see if we can make the clause more effective but not to change the law.

Q260 Jeremy Wright: Would I be right if I were to paraphrase you and say you are happy that clause 1 is consistent with case law but you do not think that case law is adequate? You would rather have the additional impact that primary legislation brings to this debate by setting it out in this clause?

Baroness Ashton of Upholland: I would not say case law is inadequate. I think there is a perception that somehow the law does not quite do what it does do and it is appropriate and proper within statute to seek to try and correct that perception.

Q261 Jeremy Wright: That brings me to my next question. You clearly concluded that it is necessary to have primary legislation to deal with that perception. What else did the Government consider? What else is the Government considering, perhaps on the basis of what you said in addition to primary legislation, to address that misconception?

Baroness Ashton of Upholland: We have got a ministerial steering group - which my colleague Jane Kennedy sits on, there are nine ministers involved - in order to look right across the Government and through Government through particularly the public and voluntary sectors to see how we can support organisations to deal with a particular problem of misperception which might be affecting the way in which, for example, activities take place or do not take place and the anxieties that particularly those involved in volunteering feel about the potential to be taken to court or have some kind of action taken against them. The Bill is a very small part of a much broader package of activity to seek to ensure that we do not get a compensation culture in this country but we tackle the perception that we already have one.

Q262 Chairman: Can I stop you for a moment before we go through the alternatives to establish what perception I might have if I was a school teacher or a Scout leader. Am I going to go scurrying to the statute and get out this law and say, "I have now read this law and it seems to me that if an activity is desirable then any negligence on my part, or any failure to take proper precautions, will not be counted so heavily because what I am doing is obviously desirable"? Is that the conclusion I am supposed to draw?

Baroness Ashton of Upholland: The conclusion you are supposed to draw is that we expect you to do proper assessments of risk and take appropriate action in so doing. That is pretty well laid out if you are a school teacher in terms of the advice you will get both from the Department for Education and Skills and your local education authority. Equally for most voluntary organisations, clearly they have very clear assessment rules and so on to give confidence to the participants, or the parents of the participants, that those individuals will be well cared for and looked after. In any activity there is a recognition that there is the potential for an accident to occur, there is the potential for things to go wrong and, therefore, it is about making sure that one understands the way in which risk is assessed and looked at. on the one hand and an understanding that there is a recognition that just because something has gone wrong or an accident has happened that there is an automatic claim to be made. That is what we are seeking to try and address. Of course, an average person is not going to be rushing out to read the statutes, I am not sure I would ever have done so had I not been doing this role, but we are hoping that through the work we are doing with organisations, and through our Members of Parliament in both Houses, we are able to get the message across that we do understand and take this issue quite seriously and have sought to address it not just with clause 1, by any means, but by the work we are doing generally.

Q263 Chairman: Mr Wright is going to come on and explore the alternatives, but I am still a bit puzzled. If the problem now is that people do not really understand what the law is, and I think that must be the case, then how likely is it that they will understand what the law is simply because an additional piece of wording has been put in clause 1 of the Compensation Bill?

Baroness Ashton of Upholland: They will not just because an additional piece of wording has been put in the Compensation Bill, that is the response to people feeling that they wanted to see this erroneous perception addressed. As I hope I have already said, but clearly not well enough, it is a tiny part of a much bigger picture which is about working with organisations, schools and so on through both the ministerial group and beyond it to make sure that people understand that we do want them to have good activities, we do want them to provide opportunities, particularly for our young people but not only for them, and we do recognise, within properly addressed risk assessment and properly worked out procedures, that we want people to have a good time and enjoy themselves and recognise that not everything in life is risk free.

Q264 Jeremy Wright: Of course there is also the issue of whether or not we have really brought any more certainty to the situation here because, as you will also appreciate, the concept of desirability is an extremely subjective one. We know, of course, that what will happen is the courts will define in their own way what is desirable and what is not and as we build up a further body of case law on the back of this Bill on this Act, if that is what it becomes, it will become even more obvious what is desirable and what is not. At the moment, you could argue, could you not, that saying, "We want it to be a desirable activity and we want the courts to take that into account" does not take us very much further until we know what the courts see as desirable?

Baroness Ashton of Upholland: First of all, of course it will become an Act, I noticed a sort of slight hesitation in your voice as to rather maybe it would not, so when it becomes an Act. We chose the words quite carefully because we wanted to use an expression which has got a lot of meaning but not to seek to define it precisely because we thought the courts should define it. I have already indicated, I think, at Committee stage and beyond to those who are interested in this that I am not particularly wedded to that form of word, if people can come up with another form of words which captures the essence of what we are seeking to do. What we are seeking to do is to say something about the kind of activities that we would all agree are good things to happen, particularly, as I have indicated, because I am conscious of those around the voluntary sector who provide opportunities or those in the leisure industry who feel very strongly about this, this is something which needs to be addressed. We think we have captured that without saying to the courts, "We are defining it". We think it is much better that they do and over time, of course, they can look at the definition in the context of what is happening as well.

Q265 Jeremy Wright: Can I invite you to deal with what else might have been done because certainly you will be aware, and as constituency Members of Parliament we are all aware that when people talk about the compensation culture or they talk about risk aversion, what they quite often say is, "The Health and Safety Executive will not let me do X" or "The Health and Safety Executive's attitude is unduly prescriptive in this regard". Did you consider, or are you still considering, asking the Health and Safety Executive to review their attitudes, their procedures, the communications that they have with the various institutions and bodies they supervise, to see whether or not they can change the perception of what they do so that people do not feel as risk averse as perhaps they do now blaming, perhaps unfairly, the attitude of the Health and Safety Executive?

Baroness Ashton of Upholland: I think the Health and Safety Executive would agree with you that there is a real issue about perception, as I think Jane from her previous existence would be aware.

Jane Kennedy: When I was their Minister.

Baroness Ashton of Upholland: Indeed. They are working with us very closely, in fact, they will be at the next ministerial group and, of course, the Department for Work and Pensions, in the shape of Lord Hunt who has responsibility in this area, is working very closely with them. They agree there is an issue that people assume it is them and people say it is them, when it is not, and they are trying to look at how best they can address that, both by explaining the issues that concern them, which are real issues and need to be addressed properly, but not allowing themselves to be used as the scapegoat, which we know happens on occasion, or we have been told anecdotally happens, people say, "We cannot do that because of the Health and Safety Executive" or "...the health and safety rules". They are very much part of this whole process, in a sense a much broader process, to try and tackle that for precisely the reasons you have quite rightly indicated.

Q266 David Howarth: Minister, I should apologise for not being here at the start of your remarks. Can I go through a number of points about clause 1 which have been bothering us as we have gone through the evidence session. The first is colleagues have already referred to the lack of any great benefit of clause 1, that is not many people will hear about it and it will not clarify the law very much. On the other side there is the cost of clause 1, which is that its very existence will produce satellite litigation, it will produce litigation to find out what it means. It will provide opportunities for lawyers to get to court to try to explore the different possibilities of the wording of the statute. How would you respond to the conclusion that some people come to hearing this evidence, that the benefits of the clause which exist are very small and the costs have been quite large and, therefore, it should not be part of the Bill at all?

Baroness Ashton of Upholland: I have considered the issue of satellite litigation and the advice I have is that we do not believe there will be satellite litigation in any real sense. Of course you are right that the courts will be seeking to define the term we have used, if that is the term that finally ends up in the Act. As I have already indicated, I am quite open to looking at other forms of words to capture what I think we would all agree we could probably find a way of describing but not defining because we think it is important that the courts have the ability to continue to define and work through these issues appropriately. I do not expect it to be costly. The difficulty - and I do not know if you were here for my see-saw analogy - is to try and recognise that there is a genuine problem of an erroneous perception that the law is not in the right place and that the courts are not doing their job effectively, which, in my view, they are. It needs to be addressed and we are fully aware, talking to many of your colleagues in the House of Commons, that there are a lot of MPs and organisations with whom those MPs are working who feel very strongly that they want to see something within this Bill that recognises the particular problem. It is always difficult to find a way of so doing that does not, in this particular instance, affect the law adversely or seek to change the way the law is working well but, in a sense, to try and tackle that erroneous perception. All the advice I have is that it is quite legitimate to try and do that within statute. It is a case, Mr Howarth, that I get run over in both directions because, on the one hand, there are those who say, "This does not go far enough, we want to see a much stronger clause which basically says that activities, such as Outward Bound, sporting and so on, should be considered to always be desirable and there should be a much stronger and further recognition of the risk involved in that". That unfortunately takes us, in my view, too far for the potential for people not to take the issue of addressing risk seriously and you would end up, in my view, seeing those activities potentially wither because parents or others may say, "I am not sure the risk assessments are being done properly and I am not sure they need to be done properly and, therefore, I am not prepared to let my child participate in those activities". That is one of my problems. On the other equal and opposite side are those obviously involved in the law who say, "The law is working perfectly well, what on earth are you doing fiddling around with it? You do not need clause 1 because all clause 1 does is reaffirm what we already know". What we have sought to do, by making this kind of affirmation and trying to tackle the perception, is to say, "We feel very strongly that it is important and the courts do take into account, as one of the factors they may take into account, the question of a desirable activity". It is a tiny part of a much bigger piece of work across Government, which I am privileged to chair, trying to tackle this more general issue about ensuring we do not get the compensation culture which we currently do not have but there is perception that we do.

Q267 David Howarth: I think the problem we have is seeing any causal link between passing clause 1 and changing public perceptions at all. Members of the public do not read statutes and do not read books on tort, sadly; that is the problem we have there. On the other side, the problem with the drafting is that I started out with a view that this could be drafted better and solved that way and perhaps you should put in "for the avoidance of doubt" because that is what normally appears in statutes which are reaffirming the law rather than changing it, and that is not there, and you should use the words "social utility", which are the words used by the courts and the academic commentators on this part of the law. I thought that would be a better way forward, but then the evidence we had from lawyers was that even that would cause some confusion and would lead to further litigation. I still cannot see why we need this clause in terms of its marginal cost and its marginal benefits?

Baroness Ashton of Upholland: To take your first point, if I was expecting people to read statute or, indeed, books on tort, though I cannot claim to have ever read one myself, then I would agree with you completely, but we are not relying on that because, as you quite rightly say, that would be ludicrous in that sense. Because this Bill is a small part of a much bigger picture, then the ambition is that by doing something about clause 1 and working with all the organisations, not least because, as you will appreciate, there are many, many conversations I have had with those who say it is not far enough or it is too far and so on, the debate about trying to address this has been wider than it would otherwise. What we want to do is work with all the organisations, particularly those who work with volunteers who they say that volunteers are worried in this area particularly, but also my colleagues in Health, the Home Office, in the Department for Education, and so on, the nine ministers involved, to be able to get the messages out. It is no more than seeking to say, "There is a perception" and, Mr Howarth, you will probably know from colleagues in the House of Commons, there are many MPs who when you say, "but the law does a good job" will say, "That is not what I hear, I hear there is a real problem with the courts" and so and so forth, it is to try and tackle that. If it was the only thing we were doing then of course it would be of itself inadequate, it is not, it is part of a much broader picture. The ambition is that it seeks to do something small but positive without damaging the way the law and the courts operate but to send a message out. I am not wedded to the wording. I take on board lots and lots of suggestions on a daily basis, more or less, about the use of the wording. You will know that when you take that wording and look at it with parliamentary counsel sometimes there are unintended consequences or there are particular meanings that the courts have given to particular phrases or there are organisations that say, "That is not what we are. We want you to think about us because we are sporting and because we are this..." and so on. We came up with desirable activity because we thought it had a pretty clear plain English feel to it but allowed the courts to define it; I am not wedded to it. If there is a better phrase or there are others things we could add in, I am perfectly willing to look at that. I have said that throughout the Committee, we will continue to do that and continue as it goes into the House of Commons too. The principle we are trying to establish is simply to try and tackle an erroneous perception in a small and simple way as part of a much bigger picture.

Chairman: Before I call Mr Howarth, I think you might need to declare an interest.

Q268 David Howarth: Yes, I will declare an interest, I do write books on tort. Can I raise one final point on the Health and Safety Executive. I accept, as we all do, that there are examples of other organisations using health and safety, as it is called, as an excuse to do something that they want to do for other reasons. One problem did arise in the evidence that was put to us about the operation of the HSE. They started by telling us that their aim was to make sure that people acted reasonably, that people did not undertake disproportionate risk assessments and did not pay too much attention to small risks. The trouble was when we got on to the subject of the targets that they were being set, in fact, the targets they had agreed for themselves, those targets were not in terms of reasonable behaviour, as you might expect, they were in terms of the absolute number of accidents. I think there is some concern that the HSE, in following an absolute target of always reducing the number of accidents, is, in fact, following a policy of reducing the number of accidents even where people have behaved reasonably. I heard you talk about this as I came in, and I would fully agree with you that accidents can happen even where no one is to blame, where everyone has acted reasonably, but that the target structure the HSE has imposed on itself was accepted seems to go against that very reasonable point.

Baroness Ashton of Upholland: It is an interesting point and one that obviously is part of the discussions which the HSE is thinking around, making sure that it is tackling these issues appropriately. I do not see it in that way. Apart from anything else, I think it is absolutely right that the HSE has a view on thinking through how does it measure success, and obviously one of the measures of success is that there are fewer accidents. I do not think that is contradictory to saying when people behave reasonably in lots of really good circumstances, nonetheless an accident could happen. I do not see them as contradictory. I do not think the HSE would see itself as being so focused on that target that it could not work, and does work, as I know Jane would say, with employers to make sure that people are behaving reasonably and to eliminate unnecessary risk where that is appropriate but not, as you heard me say, to do anything other that recognise that things will go wrong and things will happen. I think one of the great advantages of having the Health and Safety Executive is their ability to go in and look at what happened and to see what could have been done differently, or what could be done differently in the future, to tackle particular problems which arise from time to time that you cannot necessarily predict, though sometimes you can, where we can do something to prevent them happening in the future.

Q269 David Howarth: Perhaps the target should be to reduce the number of accidents where someone had acted unreasonably as opposed to simply to reduce the number of accidents and that might capture what they are trying to do better.

Baroness Ashton of Upholland: I do not disagree with you except to say that even when everybody acts reasonably and something happens it is always worth looking at whether you could prevent that happening again.

Q270 David Howarth: You always can but the trouble is can that only happen at excessive cost, especially cost to other people's activities, like people enjoying a day out in a royal park, which was one of the examples that we heard?

Baroness Ashton of Upholland: That would not be, obviously. Again, you are into the issue for the organisations who are providing activities to be able to give people the comfort and security that they have done proper risk assessments and that risk has been reduced. Inevitably in some activities there is an element of risk, that is what you are doing, but it has got to be risk that you have got a real sense of what you have taken on as opposed to it being risk that has been forced upon you or put upon you because somebody has not thought through the implications of the activity. That is particularly true with children who cannot make those assessments and judgments for themselves. Anyone who has ever, as I have, taken a group of school children on a trip will know there is always an element that one is conscious of what could happen. What matters in circumstances even where there has been good risk assessment, people have behaved reasonably, is it is always worth trying to see whether more could be done without detracting from the activity which has taken place, but recognising that certain circumstances you simply did not know about can affect the activity, whether that is weather if it is an outdoor activity or other issues that you simply could not take into account. Finding out what happened can help you make sure the risk is avoided without detracting from the activity. I think that is always worth it.

Q271 David Howarth: That is right with respect to the next accident, but it implies not making a judgment of blame for the previous accident. I think the problem with the test that the HSE is following is that it does that, by reducing the number of accidents even where no one was to blame does have that problem.

Jane Kennedy: When I had the privilege of working with the Health and Safety Executive as their Minister in the Department for Work and Pensions they would have, and I would have agreed with them, strongly resisted the idea you are suggesting that you should only look at risk avoidance where somebody has patently not done it. It would prevent them doing the really good work they are doing to get employers, sometimes as a group of employers, sometimes as a business group, to examine the process of work, whether it be in manufacturing or whatever, to look at the whole process from end to end to see if just because at this moment in time there is a certain number of accidents taking place and they are taking all the reasonable steps within their workplaces at the time to reduce accidents. Notwithstanding that, are there not ways within which the working process or the manufacturing process can be improved both to the benefit of the business and to the benefit of the working environment that the people they are employing are having to live and work in? I think it would really reduce the scope that the Health and Safety Executive feel they can work in at the moment. Sometimes that is one of the most productive areas within which they work. They are not just an accident investigation and prosecution service, they are actively engaged with employers to reduce the overall number of accidents, because if an employer is thinking about how many accidents occur and where they occur, even if they are doing everything that at that time appears to be reasonable, then you would never have improvements in working practice.

David Howarth: This is probably a question of separating two aspects of their work, is it not? It is the blame aspect, the legal aspect, of bringing prosecutions, which is what we have been talking about in this Committee, and the further research, improving standards over all work, which I think really should be seen as a separate activity. Perhaps the problem is that sometimes the two get confused.

Q272 Chairman: It does impinge in just that way. If the builder says, "I cannot remove that overhanging coping stone which may any minute fall on somebody because I need scaffolding to do that under the Health and Safety Executive' rules, based on previous accidents, so I have got to leave it hanging there until I can get another builder to come who has got the scaffolding equipment to enable me to do it", you are not balancing risk against desirable activity, you are balancing one risk against another risk. The capacity to make those judgments is what the system seems to lack. The clause does not help you with that because the clause simply puts together risk on the one hand and desirable activity on the other, not one risk and another risk.

Baroness Ashton of Upholland: No, and it does not claim to. With the coping stone, you would have somebody standing underneath it saying, "Watch out, this stone might fall at any minute". You can avoid both risks, in that sense, until the builder arrives with the scaffolding.

Q273 Chairman: It is based on plain common sense. The anxiety that people have is that the application of common sense is not what is now being asked of.

Baroness Ashton of Upholland: Common sense is a critical part in all of this.

Q274 Dr Whitehead: If we can go to part two of the Compensation Bill. That predominately deals with the regulation of claims management services but does not appear to say very much other than creating a regulator and ensuring that people do not practise claims management without being regulated. It does not say what those regulations might consist of practically. What does the Government have in mind in terms of practical applications of regulation?

Baroness Ashton of Upholland: The purpose of this Bill, as you know, is to create quite a lot of the regulation through secondary legislation.

The Committee suspended from 4.46 pm to 4.55 pm for a division in the House

Chairman: As everybody is back we will resume. Mr Vaz has an interest to declare.

Keith Vaz: I am a non-practising barrister and my wife holds a part-time judicial appointment.

Q275 Dr Whitehead: Baroness Ashton, I had just asked you a very well crafted and exact question.

Baroness Ashton of Upholland: I will seek to address it. You were asking about the regulation. I have indicated that, of course, one of the great joys of this particular piece of legislation is our ability to use it to capture other areas in the future. For example, had we already had it endowment mis-selling might well have been captured by it, but I say that as an aside. That is why so much of it is set out in regulation and we will be preparing draft regulations very shortly. The kinds of areas we want to cover, of course, are ensuring that there are proper systems in place for handling clients' money, for the way in which individuals are approached, for the way in which cold calling is done, for advertising. Those are the kinds of areas that we want to seek to address when we have decided how best we move forward on finding the appropriate regulator.

Q276 Dr Whitehead: Do you think your regulations might include some form of restrictions on advertising and, if so, how far might that go?

Baroness Ashton of Upholland: We are looking at advertising in a number of ways. The particular piece of work that is going on between ourselves and the Advertising Standards Authority, which is a jointly funded piece of work which I think I will get first sight of towards the end of February, is looking to ensure that the advertisements that exist fit within the ASA's rules and procedures and for them then to consider whether there is anything further that needs to be done to ensure that those who advertise do so appropriately. That is the first piece of work and that is very much us working closely with the ASA to make sure that the rules they have fit the bill while recognising the legitimacy of advertising, of course. The other piece of work on advertising is done with our colleagues in the other departments looking at advertisements within the public sector. The principle behind that is that where somebody sees an advertisement, perhaps in a hospital, as Jane can talk further about, or in a police station or in a local authority building, there may be a question that somehow we have given it an additional credibility that perhaps does not really fit the bill in terms of that particular advertisement. What we have been doing is working with colleagues across Government to see whether there is appropriate advice that can go out, for example, in the case of the Department of Health to hospitals, in the case of the Home Office through the Association of Chief Police Officers to police stations and so on to remind them about the key questions about advertisements and how they might be perceived. The final thing I would say on that is that it is very important to make the public get to know that they can make legitimate claims. Part of the work we are doing is ensuring that legitimate claims are pursued and we are trying to streamline the process (and work is just beginning on that) to make sure that can happen. We do not want to stop people getting information but we want to make sure that it is appropriate information.

Q277 Dr Whitehead: On the face of the Bill it is strongly implied, for example, that there are penalties for people pretending to be claims managers because they are not within the regulated conditions. That seems to imply that there will be some form of compulsory training or minimum standards to be met in order for people to ply their trade as claims managers. Is that in the mind of the Government as well?

Baroness Ashton of Upholland: Indeed. We want the regulator to be very clear about the standards to be followed. I am quite sure that, as we get the regulator in place and as time goes on, looking at the whole question of training will be an important part of that to make sure that not only do we have the right standards but that we keep them right across this whole sector.

Q278 Dr Whitehead: Will there be a code of practice along with that?

Baroness Ashton of Upholland: Indeed. The ambition is that we have the regulations and that the regulator will have his or her rules and code of practice which will enable those involved in this area to be completely clear about what the requirements are, but appropriately for Government in a sense to set the overview of that and then for the regulator to be clear about what is expected in a more narrowly defined way of those involved in claims management in order to make sure that they do comply.

Q279 Mr Khabra: May I draw your attention to a proposal in the Bill? The Bill establishes a statutory framework for the regulation of claims management companies and the Government has indicated at this stage that the regulation of claims management services will in due course be integrated into the proposed new regulatory framework for legal services. Given that the Government is proposing less self-regulation for lawyers, is it reasonable to expect the Claims Standards Council to look after both the interests of consumers and claims management companies? If not, who should regulate claims management companies?

Baroness Ashton of Upholland: We are looking at a number of options for the regulator at the present time. The Claims Standards Council is one possibility. We have a report done by a consultant, Mr Boleat, to see whether that would be appropriate and I am waiting presently for the Claims Standards Council to respond to that report. When they have responded I propose to put much of the report and the response in the public domain so that members of the committee in the House of Lords currently looking at the legislation but, as importantly, those who have an interest more broadly can see what is being suggested. There are other possibilities that we also want to look at. One is the potential for the Lord Chancellor through some form of delegation to be the regulator himself, and the third option is to give it to an existing regulator. The criteria that I am looking at include the cost of setting up and maintaining regulation based on experience in other fields, a recognition that, though we think there are about 500 companies presently in this field, there could potentially be quite a drop or a change in the number of companies once regulation comes in, and experience in areas like, for example, gangmasters has been that many fewer have registered than we thought would happen to begin with. I am trying to balance the need to make sure that we have good flexible regulation in place where Government supports the setting up but ultimately is seeking to have a self-funding body with the question of whether the numbers would drop which would have an impact in terms of the ability to have something freestanding, and indeed whether, in discussion, organisations which have a good track record in this area would be willing and interested in taking it up. We anticipate getting to a conclusion on that over the next few weeks, which we will, of course, bring forward as part of the Bill so that people can see very clearly what we propose to do.

Q280 Mr Khabra: In each of the regulations for the management companies what sorts of sanctions will be imposed?

Baroness Ashton of Upholland: Ultimately the ambition is that those who are regulated, if they fail to obey that regulation, will be prevented from being a claims management company, which is about the best sanction you can have. Of course, we are looking as well at what else might happen. One of the areas that we are beginning to explore, although it is very early days, is the whole question of compensation too for those who might be treated badly and how we might address that.

Q281 Chairman: What is going to be the position of trade unions and voluntary organisations which do claims handling and which may feel that they ought to be treated differently from commercial claims management companies? You have to remember that we have major cases going on at the moment about the handling by trade unions of the miners' compensation scheme. Very serious issues are raised by that. What is your thinking on that?

Baroness Ashton of Upholland: The approach the Bill takes is to seek to capture everybody and then to exempt people. That enables us to make sure that we exempt appropriately but also to recognise that as things change we might want in a sense to recapture later on, perhaps because the legislation is used to capture other areas, or because shifting and changing activities by organisations may result in them wanting to pick up a particular aspect of claims management which would then require them to be taken forward. Our plan at the moment, because I do recognise the cases that you have identified, Chairman, is to exempt trade unions but we want to listen to the views of both Houses of Parliament. Our current consideration is whether we should expect them to have regard to the code of practice. The legislation does allow that we could bring organisations back in if there was a need to do so and, of course, the current cases the police are investigating at the moment, and it is difficult to know precisely what will then happen. Claims management companies set up by any other organisation would be subject to the regulations.

Chairman: They would automatically fall within the legislation.

Q282 Julie Morgan: I would like to go on to the NHS Redress Bill. One of the main issues raised with us in evidence on the Bill is whether the scheme would be sufficiently independent and I would therefore like to ask some questions about independence under the scheme. The NHS Litigation Authority indicated that independent medical reports would be available under the redress process. How will you ensure the independence of the medical advice?

Jane Kennedy: In the same way that they would be commissioned for any other claim for redress that an individual might be making against the Health Service, we are not anticipating doing anything particularly new. Medical reports are always regarded as independent.

Q283 Julie Morgan: So would there be a list of accredited advisers?

Jane Kennedy: There are already lists of people who are prepared to provide medical reports in the event of a claim for redress, and I anticipate that the normal practice would apply.

Q284 Julie Morgan: So it would be a list that exists already?

Jane Kennedy: Yes.

Q285 Julie Morgan: Has the Department had any discussion with the Law Society or any legal professionals to ensure that there is legal professional support for the scheme?

Jane Kennedy: I will certainly check who we have had discussions with if you like and I can provide that information to the committee but, with regard to the purpose of the scheme, I thought Steve Walker put it really succinctly and well when he said that this is a low value, fast track claims handling scheme. That is what he called it when he came to speak to you on 17 January. However, that does not really give you the full flavour of why we are doing the scheme. Why I am particularly pleased to be the sponsoring Minister for the Bill is that this scheme is not just about improving access to justice for people who believe that something has gone wrong with their treatment and therefore redress is necessary; it is also about providing a scheme which allows for determination of liability and assessment of a mistake to be made very early on at a local level. The reason why I am really pleased about that, wearing the hat that I have as Minister with responsibility for patient safety and quality, is that the process of this scheme will cause a change in culture in the Health Service; I am absolutely confident of that, and you will see a greater willingness of the Health Service at a local level to learn from mistakes that they have made. I know that is a long and roundabout answer but I cannot emphasise to you strongly enough how much I believe this scheme will enable healthcare professionals to stand up and say when a mistake has happened, to involve the patient in that mistake, to draw the attention of the patient to the scheme, to have the incident investigated by their own organisation and then for the outcome of that investigation to be referred to the Litigation Authority. I know the concerns and I have been following the debates in the Lords and I am aware of the concerns around the independence of the process, but I really do feel very strongly that what we need to get to is a system which delivers what patients tell us they want, which is an acknowledgement that something has gone wrong, an apology from the organisation and, where necessary, some redress (where that is appropriate), but one of the most often stated reasons for pursuing a complaint is to be reassured that the organisation has learnt from the mistake so that future patients should not have the same experience. We believe therefore that having a totally independent process that allowed an independent investigator, for example, to undertake it and independent processes that would lift the whole thing at quite an early stage out of the local organisation would stifle the sort of learning that we want to promote. This scheme is potentially very valuable to us in the Health Service and we want to promote that aspect of the scheme, whilst at the same time we do accept that those people who are taking a claim forward or who have made a complaint and for whom there has been a mistake or an accident need to have the best possible advice available to them. That is why we have been listening to the arguments that have been made in the Lords and we have, I think, reinforced the commitment to providing independent legal advice. When there is an offer of redress made it an offer will be made alongside the offer of redress for that to be independently assessed by a legal firm that has expertise in that field.

Q286 Julie Morgan: So the independent legal advice would be offered at the point you were offering redress?

Jane Kennedy: It will always be offered at that point but that is not to say that an individual who doubted what they were being told at an earlier point could not at that stage say, "Could I have an independent legal opinion on that?".

Q287 Julie Morgan: So you could have that earlier in the scheme?

Jane Kennedy: What we are looking for is flexibility in the way that we will be operating the scheme to allow individuals, if they need it, to seek that kind of reassurance, but the scheme itself is designed to give a very quick response to people who believe that something has gone wrong with the treatment that they have received.

Q288 Julie Morgan: Does the Department envisage that doctors and lawyers would have fixed fees?

Jane Kennedy: Yes. I have seen figures that we anticipate of between £200 and £500 for the cost of different reports. This is not a new field that we are operating in. There are already given costs but we expect that the operation of this scheme will reduce the amount of money paid in legal fees. We expect it will increase the amount paid in compensation but we anticipate there will be a reduction in the amount that we pay in fees.

Q289 Julie Morgan: What if, during the process, it was decided that the claim was worth more than £20,000? Will it be possible to extend the threshold in particular circumstances?

Jane Kennedy: If it becomes clear that this is a serious case that goes through the £20,000 ceiling the redress scheme will not deal with it. It will be dealt with as any other scheme of a greater amount would be. Anything that is estimated to be above the value of £20,000 would be taken out of the scheme and dealt with separately.

Q290 Julie Morgan: So if, during the process, it emerged that £20,000 was too low a limit it would then come out of the scheme completely?

Jane Kennedy: Yes. It would go through the normal route that applies at the moment.

Q291 Julie Morgan: Talking about the costings again, if you are paying for an independent medical report, independent legal advice and setting up a system to investigate claims, would there be any savings at all on the existing model?

Jane Kennedy: We did not go into this with the view that we were creating a cost saving scheme. We estimate that overall costs may increase. Because we anticipate there will be more cases dealt with under the scheme we think the costs may be around £48 million in the first year, which is a small increase in the context of the huge investment that we have seen in the Health Service over the past five years. As I have said, we think the scheme will result in higher costs overall but we think we will achieve a saving of around £7.6 million on claimant lawyer costs. There will be more spent but more of it will be going to patients.

Q292 Julie Morgan: So you do not anticipate any reduction in the amount of compensation to victims?

Jane Kennedy: No; not as a global figure, that is.

Q293 Julie Morgan: How much do the current non-legal complaints procedures cost that are in the Health Service at the moment and do you see them being affected by this scheme coming in?

Jane Kennedy: I have not got that figure. I will get that figure for you and write to the committee with it.

Q294 Julie Morgan: Would you see those complaints being scaled back when this comes in?

Jane Kennedy: If the scheme operates as I hope it will, the Healthcare Commission process, which is a complaint process at the moment, would, I hope, see fewer cases going to it. What we want to achieve is a scheme whereby the healthcare organisation itself, so the hospital trust or the service provider locally, will say, "Hands up. A mistake has been made. This should be referred. We will investigate it", and then it should be referred to the NHS Litigation Authority for the purposes of the scheme. I think that, because more cases will go that way and there will be, I hope, a greater openness and a willingness to give the apology that I referred to earlier, there ought to be fewer complaints failing to be resolved locally and ending up at the door of the Healthcare Commission, which is what happens at the moment.

Q295 Barbara Keeley: More questions really about the operation of the scheme. You have touched on, I think, the fact that you feel there would be an increase, so it is just another question about that. We heard from the NHS Litigation Authority that when they ran a pilot similar to the new scheme, most of the claimants were people who would not claim under existing processes, so in fact they were additional and new claimants. I think you said there would be more cases. Have there been estimates made of the number of additional claims which you think will be generated under the redress scheme?

Jane Kennedy: At the moment the number of claims is going down. I have not got a figure of estimates of the number of cases that we might get immediately in front of me, but if there are specific questions like that, that I have not been able to answer because I do not have the data, I will certainly get them for you. As I have said, we are trying to guesstimate what might happen. I have got some figures here that say we expect between 3,900 and 10,700 cases to be eligible. If you compare that with the current figures, which I think you have had - if you have not, again I can include those for you - the current numbers of claims that the NHS Litigation Authority is dealing with have come down from 7,798 in 2002 to 5,609 now, so we anticipate straddling that number.

Q296 Barbara Keeley: In fact, the next question links to it in a way. Do you intend to pilot the scheme so that you can assess its impact? Will you pilot it in part of the country perhaps?

Jane Kennedy: The NHSLA has been doing some piloting. We do not anticipate that we will further pilot the scheme. We are going to extend it to the whole of secondary level care, including some elements of secondary care that are moving out into the community. I suppose you could say we regard that as the pilot because we are then going to see how that works before we decide whether or not we should extend the scheme to primary care.

Q297 Barbara Keeley: You have talked in terms of some aspects of what you would like to see in the scheme, but we are interested in how you would measure the success of the scheme. Will you have targets and what will they measure? One of the things you talked about which might be quite difficult to measure is whether or not an organisation learns from its mistakes.

Jane Kennedy: We would not set targets as such; however, the Healthcare Commission will have a role to play in this. As part of its annual health check that it will do with all health service organisations, it will consider claims against the organisation: where those claims have originated, what the organisation has done to respond to those claims and it will be part of the process by which healthcare organisations - and I keep using that phrase because we are not just talking about the NHS hospitals, we are talking about the whole range of organisations that provides secondary level services - the Healthcare Commission will consider whether or not the organisation has responded adequately to the claims made against it. We are not going to set them targets and say, "This number of cases should be had", I think that will stifle the operation of the scheme. We want to let the scheme run and let it be responsive to what patients experience at the local level. I said we are talking about between 3,910 and 10,000 cases roughly. That is in the context of a health service which has something like 1.6 million people receiving treatment every day from the Health Service. The figures are amazing: 44,000 people every day attend an A&E department in England and 120,000 attend outpatient appointments every day. The context of the claims and the incidents that are actually recorded seen against that are very small. What I would hope to see, and one of the reasons why in Government we are relatively relaxed about an increase in the number of cases, given that large scale of work the Health Service is engaged in, is the more people can say, "I think something has gone wrong" and an acknowledgement of that, the faster the services will improve and the better the experience the patients will have of the Health Service. I am absolutely convinced of that.

Q298 Barbara Keeley: On the last point I raised about whether or not there is a perception the organisation has learned from its mistakes, I know in my time as an MP that is very important to people if there has been some tragic mistake or something has gone wrong. Will the patient or the patient's family be involved in that?

Jane Kennedy: Very much. One of the benefits of the scheme will be instead of assuming the position, which is what happens at the moment, where you have a patient who believes something has gone wrong, they make a complaint, they are not satisfied with the complaint, they go to a lawyer, and within the organisation there is a closing of ranks and a defensive response, if instead of that, you have an organisation which says, "Something has gone wrong here, we need to learn from it. Before we apportion blame, let us see what lessons we can learn, acknowledge we have made a mistake", and give the apologies I have referred to which is very important, particularly if there has been a serious mistake in somebody's treatment, that will go a long way to improving patient experience, I am sure.

Q299 Barbara Keeley: Just a couple more things. You made the point that a claim of more than £20,000 would be taken out of the scheme. If the scheme proves to be successful, which clearly we hope it will do, do you expect that it will be extended at some point to cover claims of larger amounts over £20,000?

Jane Kennedy: One of the beauties of doing regulation by secondary level legislation which we do in Parliament - which when you are in government you love, when you are not in government, you get very frustrated by - is that you can quickly and relatively easily make amendments of that kind to legislation of this nature, so we think that we will be able to do that because of the way we set up the legislation.

Q300 Barbara Keeley: Finally, clearly there is a tension between the need for a culture of openness. The possibility that doctors whose actions have been complained of will feel vulnerable to professional discipline is a major tension of trying to arrive at the learning culture you talked about. How will the redress scheme deal with that?

Jane Kennedy: There will still be the normal rules and the normal procedures for dealing with medical competence. I would not anticipate that this scheme will in any way reduce the authority of various professional bodies which oversee the conduct of professionals. I think that as we run the scheme and confidence in the scheme grows, clinicians will feel less concerned about them becoming the scapegoat for a mistake having been made, a wrong procedure or a mistake with equipment having occurred. I think they will join with us, I know that there is an appetite out there amongst health professionals to make sure they say, "There is a mistake here. I have made a mistake and this is what has happened as a result. I have made a mistake because of these factors". Then I know there will be willingness to sign up to that on the part of the professionals.

Q301 Keith Vaz: Minister, I just have one question. I think the approach that you set out if something has gone wrong that the complaint is dealt with firstly at a local level must be the right one but in many cases - you must have this in your surgeries, and I have it when people come to see me with problems about the local health service - the letter that they get back, that initial letter from the health authority is not as transparent and helpful, as you have pointed out, that it should be. Is there any guidance coming from your Department to teach chief executives of hospitals how they should deal with the complaints in the open and transparent way that you have just described?

Jane Kennedy: There is already guidance on that and the Healthcare Commission would take an active interest, particularly if they were receiving a lot of referrals from a particular trust, in why that was happening, so there is already guidance in place. I feel as if I keep repeating myself in that I think that once this scheme is operating and we begin to see the benefits of it at a local level there will be a real enthusiasm for it that we have not seen before. The National Patient Safety Agency at the moment collects and counts referrals to it of adverse incidents in the Health Service. They do it on an anonymised basis and they gather the data and then look at areas of concern, procedures that are causing concern, and then can go back with advice to organisations through their safety alert process which can say, "There is something going wrong in this procedure. You need all to be aware of it". I think there are such a lot of benefits that can flow from a greater culture of openness. I understand the point you are making about the letter. I have been on the receiving end myself. If you have a process which is involving the patient much more closely at a local level in the process of resolution so you do not have just the cold, "We are investigating your complaint", and then a letter to say, "We have investigated your complaint. Yes, we failed to meet the high standards we would normally expect. We apologise for that and we are taking steps to redress it". You and I have seen those letters. It leaves the patient cold because they have to accept on trust that what the organisation is telling them has happened. This process should be much more open at a local level and would allow the patient greater assurance that not only has that been said but that it has actually happened.

Q302 Keith Vaz: Do you have any centrally held statistics as to how many complaints officers there are in local health authorities? If I give you an example, in Leicestershire, the authority of the Secretary of State, Leicester Royal Infirmary has seven press officers to deal with the press and I am not sure how many complaints officers they have. Do you have any of those statistics on a national basis?

Jane Kennedy: I do not have them with me. I can get them for you. An organisation may not have somebody who is solely designated as a complaints officer, depending on the size of the organisation, but certainly there will be people who are designated as such and if I can get that I will provide that to the committee.

Q303 Chairman: There was a statement which was signed by 16 charities, including some of the patient groups, and certainly you are familiar with it, which expressed concern about the Bill and sought to get more assurance that, where there was a dispute, independent assessment was guaranteed and also referred to what you have just referred to, namely, learning from mistakes and having robust systems in place to do that. Have you delivered any sort of answer to that statement?

Jane Kennedy: We are considering very carefully, and I think Lord Warner may already have tabled a number of amendments in response to some of the concerns that have been raised. We want to respond to the concern in a way which preserves what I have said for such an important element of the Bill, which is the impetus to change or influence the culture in the Health Service. We need to provide those safeguards and I think the Bill does that, but we obviously need to work hard to make sure we explain that, not only in the Lords but in the Commons too when it comes to the Commons. We need to balance having the right safeguards for the individual who is making the complaint and ensure they get independent advice and guidance when they need it with the need to try and resolve it locally wherever possible.

Q304 Chairman: I would also like to ask a question about care contracts under the Bill, as to whether they could be used more widely, for example, in relation to elderly people, where the financial amount involved is not large but the care need may be significant, whether the private sector should not be an option that is available when care contracts are used to provide redress in these circumstances. Are you still working on that and are you ambitious to make more use of care contracts?

Jane Kennedy: I think so and we would not want to be prescriptive as to how that could be organised locally.

Q305 Chairman: Up to a quarter of NHS liability payments are spent on remedial care, so there clearly is scope for relating these things.

Jane Kennedy: And we want to look at it carefully.

Q306 Mr Khabra: Evidence which has been available to the committee suggests that since the introduction of conditional fee agreements there has not been a substantial increase in claims in spite of the funding mechanism. Is there any evidence as to whether lawyers are more prone to cherry-pick certain types of work?

Jane Kennedy: I am delighted to say that that is an area which I am completely in the dark about and Baroness Ashton is not.

Baroness Ashton of Upholland: There is no hard evidence that lawyers cherry-pick. Of course, from time to time there is anecdotal evidence and we are mindful of keeping an eye on this area, but there is nothing that would suggest that that is happening currently.

Q307 Mr Khabra: If the answer is yes, do you accept that if there has not been an increase in claims this means that certain claimants are being disadvantaged and will find it hard to get representation?

Baroness Ashton of Upholland: I do not necessarily accept that. I think that the way in which we have done this will enable a huge swathe of people who did not qualify for legal aid and were not wealthy enough to consider pursuing matters to do so, and I think that is the advantage of CFAs. As far as I can see, what the legal professions do and seem to do well is identify claims that have a chance of success and to enable those to go forward. I do not personally get - although I probably will as a result of saying this, of course, - issues being raised that suggest that there are people who are being disadvantaged in a particular way. There will, of course, be individual cases, I am sure, where people feel that that is the case, or indeed where, because of the way in which the legal profession approach it, they feel they would have had a better chance. Nonetheless, there is nothing to suggest that at the present time.

Q308 Mr Khabra: Has there been enough publicity given to these conditional fee agreements as far as the ordinary public is concerned? Are they aware that there are changes so that they can have the facility if they need to?

Baroness Ashton of Upholland: That is an interesting question to ask: has there been enough publicity? Certainly those who feel they wish to make a claim will be guided by this because if they go and see a legal representative or the Citizens' Advice Bureau or whoever they will be told about it. I cannot say that there has been a national campaign that I am aware of to try and identify that because it has not been perceived to be necessary.

Q309 Dr Whitehead: There has, however, been evidence of uplifts in court once CFAs came in and, as it were, lawyers seeking substantial uplifts in order to deal with the consequences of the new cost terrain of CFAs. Do you think the control of those uplifts can be sufficiently maintained within the power of case management that the courts presently have, and particularly, say, the objective of the Civil Procedure Rules, or do you think perhaps there are further things that ought to be looked at in that respect?

Baroness Ashton of Upholland: You mean success fees, which is the term that encapsulates what you are seeking to address, Dr Whitehead. Certainly the courts do have the power to look at costs and see whether costs are appropriate and proportionate, and they do. There are issues that have been raised with me about whether there is more to be done in assessing whether we have any impact that is adverse, and certainly media organisations, for example, have raised this as recently as today with me as to whether we ought to look at that and certainly the impact of that is something we need to consider. Generally, however, the courts do have the appropriate powers once a case has come to court to be able to look at it and do so if they feel that is appropriate.

Q310 Dr Whitehead: I think the Civil Procedure Rules relate to proportionality as far as those uplifts and success fees are concerned. Is that an area that perhaps might be pursued in terms of some of these issues where there is not protection against potential uplifts within the system at the moment?

Baroness Ashton of Upholland: The way the system works presently is that the courts will look at whether the costs involved are appropriate and they will also look at the level of the success fee. Those who feel very strongly that this needs to be addressed will argue that what the courts ought to do is add one to the other and then see whether it is proportionate and, of course, the courts can look at this if they wish to, but the way it is dealt with is to look at one and then look at the success fee. Of course, success fees are important in enabling the professionals to take on cases that may not be successful. There is an issue about access to justice within that. One of the areas that the Civil Justice Council might look at is the question of whether this needs to be looked at again, and certainly, again because of representation from media organisations, my officials will be meeting with the Master of the Rolls and Lord Justice Dyson to look at a number of issues that have been raised where it might be appropriate for them to consider it, as well as, of course, the House of Lords judgment in the Campbell case.

Q311 Chairman: I do not think we can let you out of the room without asking you in the most general terms whether you think there is a compensation culture in this country.

Baroness Ashton of Upholland: There is not a compensation culture. There is a perception that we have a compensation culture that has the potential to damage the kinds of activities and occupations that people participate in or potentially to affect the number of people who want to be involved in those activities or to support and help run them. Therefore, what we are seeking to do is to make sure we do not end up with a compensation culture. Statistically the evidence that we have is that we do not see growing numbers of claims, I am pleased to say, but I am much concerned in the work we do to make sure that we tackle the perception.

Chairman: Thank you very much indeed.