Mesothelioma Bill [Lords]
The Committee consisted of the following Members:
Fergus Reid, Committee Clerk
† attended the Committee
‘and is not eligible to receive a specified payment’.—(Kate Green.)
‘(f) save as provided in (g) below, the application is made within three years of being first diagnosed, and
(g) for those persons first diagnosed on or after 25 July 2012, but before this Act comes into force, the three year time limit in section 2(1)(f) shall commence on the date this Act is brought into force.’.
‘(e) save as provided in (f) below, the application is made within three years of the death of the person with the disease, and
(f) for those persons who died on or after 25 July 2012, but before this Act comes into force, the three year time limit in section 3(1)(e) shall commence on the date this Act is brought into force.’.
‘(3) In specifying circumstances in which a person is, or is not to be treated as, eligible to bring an action for the purposes of section 2(1)(d), or section 3(1)(c), the scheme shall ensure consistency with the definition of eligibility in section 2 and section 3.’.
“‘insurer” includes any entity which has succeeded to the liabilities of the insurer with whom a relevant employer maintained employers’ liability insurance at the time of a person’s exposure to asbestos;’.
‘and includes a successor in title to any such employer’.
“‘insurer” includes any entity which has succeeded to the liabilities of the insurer with whom a relevant employer maintained employers’ liability insurance at the time of a person’s exposure to asbestos;’.
Stephen Phillips: These amendments ought to be entirely uncontroversial. I hope that the Minister, even if he feels that he has to have a write round in due course, although it is difficult to see what the purpose of that would be, will indicate today that they are likely to be accepted on Report. Each amendment is concerned with the same issue, which is the fact that clauses 2 and 3 do not contain a definition of “insurer” at all or a definition of “employer” that is sufficiently broad for the purposes that the Bill is designed to deal with.
The amendments are important if the Bill is to work. Insurance companies are from time to time sold, and successor companies may or may not fall within the definition of “insurer” in the Bill as drafted. It would be a good thing, in my respectful submission to the Committee, to make that clear beyond doubt.
Insurers, as the Minister no doubt knows, periodically review the books of business that they are writing and they sometimes effect transfers of those books of business under part VII of the Financial Services and Markets Act 2000. As the Bill stands, there would be a good argument that an insurer that had succeeded by that mechanism to the liabilities of an insurer that had afforded employers liability insurance to a relevant employer within the definition in the Bill would not be caught. That would plainly be a lacuna in the Bill, and therefore the definition plainly needs to be inserted in clauses 2 and 3.
I can deal equally briefly with amendment 15, which would amend the definition of “employer”, by observing that, again, it is designed to put the matter beyond doubt, because a relevant employer ought, of course, to include any entity that has succeeded to the liabilities of a negligent relevant employer who cannot be traced but who would be liable to a claimant suffering from mesothelioma for the purposes of the scheme.
All three amendments are drafting amendments, and all of them are, without question, not only desirable but necessary. Given that, although I will withdraw them—with the leave of the Committee—if the Minister will not accept them today, I hope that he can indicate to the
The Minister of State, Department for Work and Pensions (Mike Penning): I thank my hon. and learned Friend for the tone in which he moved his amendment. We will look carefully at these amendments as we go forward. One of my concerns, particularly as this is a fund of last resort, is that we in no way put more onerous restrictions on those who we want to benefit from the fund, after they have already been through quite an exhaustive process and not found their employer or their employer’s insurer.
I am pleased that my hon. and learned Friend has indicated that he will withdraw the amendment. I do not believe at this stage that I will be able to support them, but I will look carefully at them again on Report.
Mr Nicholas Brown (Newcastle upon Tyne East) (Lab): I am now rather more uncertain than I was when the hon. and learned Member for Sleaford and North Hykeham moved his amendments. Is it his intention in amendment 14 to deal with the point about reinsurance? He is shaking his head, so I see that that is not his intention. In that case, why were the points that he has picked up, which he says are intended just to clarify the Bill, not picked up in the other place when the Bill was discussed there or by the public servants who are there to assist the Minister with the drafting of legislation? Why does the Minister not have in front of him a comprehensive set of statements that explain either why the amendments are not needed or that they touch on reasonable points and that he will take the arguments on board and return to these matters on Report? Surely, the answer to these points must be either one or the other.
Mr Brown: I am quite happy to bring my remarks to a conclusion, but I am sure that, if the Minister wanted to respond to them, the Committee would agree leave for him to do so—if it has to do that, which it probably does not.
Mike Penning: To clarify matters for the right hon. Gentleman and for my hon. and learned Friend the Member for Sleaford and North Hykeham, I do not think—it is set out in front of me—that these amendments would bring anything new to the Bill, but I do not want just to reject out of hand their comments and proposals, which were not suggested in the other place or during our drafting of the Bill. I do not want to be rude and reject them out of hand. On the basis of what I have in front of me, no, I cannot support the amendments, but I will generously—I hope—and in the right tone look at the proposals as we go forward.
Stephen Phillips: I am grateful to the right hon. Member for Newcastle upon Tyne East for what I think is his support and to the Minister for his comments. However, I have to say to the Minister that it does not
We will come to another drafting error in a moment, which is absolutely plain to see, but both points need to be addressed in the Bill either by the mechanism that I have suggested or by one that the Government prefer. If they are not addressed, the Bill will be defective for the purposes for which it is brought before the House. However, on the basis of what the Minister has said and taking it in good faith that the matter will be looked at—I am happy to meet his officials—I beg to ask leave to withdraw the amendment.
‘it is to be assumed’.
‘it is to be assumed’.
is not only that the drafting in the clause is inelegant, but that we simply do not use in statutory drafting—in this country or anywhere else—that form of imperative. It would make more sense and would be easier to apply if the words that I have suggested replace the word “assume” in subsections (2) and (4).
Mike Penning: I accept that not only in legalistic but in plain English terms, the amendments are valid. However, I feel that they would have no effect on the clause. I am sure my hon. and learned Friend will accept that, as I explained earlier, at this stage I cannot accept them. They would cause real issues, not least with ping-pong with the other House, and we need to get the Bill on to the statute book. The fund needs to be operating, so that compensation can be given to needy recipients by July, and I think that the amendments would affect the Bill’s progress. I therefore ask my hon. and learned Friend to withdraw his amendment.
Stephen Phillips: I agree with the Minister that there is no difference between the two amendments, but his job is not to protect the amour propre of officials or parliamentary draughtsmen; it is to put clear legislation in place. Given that the Minister has indicated there is no difference between the two and that my formulation is, I venture to suggest, better, and that there is absolutely no prospect of playing ping-pong with the other place and since there is no difference in reality, although I hope that he will come back on Report with these
“‘relevant employer” means an employer who, at the time of the person’s exposure to asbestos—
(a) was required by the compulsory insurance legislation to maintain insurance covering any liability arising because of the exposure to asbestos, or
(b) would have been required by the compulsory insurance legislation to maintain insurance covering any liability arising because of the exposure to asbestos if the legislation had been in force at that time; and
(c) includes a successor in title to any such employer.’.
The amendment is important and I shall trespass on the Committee’s patience by asking that the clause be examined. The Committee will no doubt have observed that in clause 3 there is a reference to “relevant employer”, as there is in clause 2. The Committee will also have observed that the definition of “relevant employer” is contained only in clause 2, where subsection (2) begins with the words “In this section”, and there then occurs a definition of “relevant employer”.
Given that there is no definition of “relevant employer” in clause 3, the interpretation of the legislation if it comes before the courts will be that Parliament intended—at least, this is one possible interpretation—the words “relevant employer” in clause 3 to have a different meaning from that in clause 2. That is plainly not the intention; it is plainly an oversight in the drafting of the Bill. It is plainly something that should have been picked up by the Minister and his officials or in the other place, but it has not been, and it is plainly something that needs to be addressed.
The definition that I suggest is exactly the same as the definition in clause 2. I do not see the difficulty in accepting the amendment. It is clarificatory, as it needs to be, of what Parliament intends if the Bill receives Royal Assent in due course.
Kate Green: I rise briefly to speak strongly in support of the amendment. It is absolutely clear in the minds of the Committee or anyone who has debated the Bill until now that the understanding of what is meant by a relevant employer in clause 3 should be no different from clause 2. It is imperative that we follow the hon. and learned Gentleman’s expert and excellent advice and get the drafting right.
Mike Penning: My hon. and learned Friend the Member for Sleaford and North Hykeham has demonstrated thoroughness in his examination of the Bill, especially in introducing the amendment. He might have introduced it not least because he is worried about eligible dependants who do not immediately appear to meet the eligibility criteria in the Bill. However, I can assure him that in clause 3(1)(a), the eligibility criteria outlined in clause 2 are brought to bear. I understand his points, but my legal team does not agree with his learned opinion.
Mr Brown: Surely the point of the amendment is that it puts the matter beyond any doubt whatever. I must say that until the hon. and learned Gentleman put it into my mind, it had not occurred to me that we would use different definitions in different clauses, but now that he has explained it, I can see how somebody might argue in front of a court that that was not only arguable, but could be inferred from Parliament’s intentions. That is not what is intended—my hon. Friend the Member for Stretford and Urmston made the view clear, and the Minister has not contradicted it—so why do we not just agree to the amendment and put the matter on the record and clearly beyond doubt once and for all, since it is what the Minister intends?
Stephen Phillips: I am extremely troubled by what I just heard from the Minister. I cannot be any clearer. It has nothing to do with clause 3(1)(a). In line 25, on page 2 of the Bill, occur the words “relevant employer”. I am asking the Minister to look at that now. In clause 3 of the Bill, there is no definition of the term “relevant employer”. If he goes back in the Bill to line 8 on page 2, for the purposes of clause 2, there is a definition of “relevant employer”, but if he looks at line 5 on page 2, he will see that it is solely for the purposes of clause 2. I think that I heard the Minister say that his legal advice differs from the opinion that I am urging on the Committee. I cannot see how it possibly could.
Mike Penning: I do not intend in any way to discredit my hon. and learned Friend. I have considered the amendment in the Committee’s presence. I will consider it again between now and Report and, if he is right, I will table the amendment then to alleviate the situation, but I will seek advice between now and then. I will seek his help with my officials in doing so, because we probably cannot afford his services in any other way. [ Laughter. ] That was not meant in a derogatory way; it is the skills that he brings to the Committee that I would use.
Stephen Phillips: That is normally a joke that I use against myself. The Minister has said that if I am right, the Government will make the amendment. As right hon. and hon. Members will know from newspaper reports, I am paid a great deal outside this place to be right. On this occasion, I am right. I look forward to the Government bringing forward the amendment on Report. I beg to ask leave to withdraw the amendment.
‘but shall not be less than 90 per cent of the average civil compensation recovered by mesothelioma claimants.’.
‘( ) The Secretary of State shall provide for there to be an annual independent assessment of the average amount of civil compensation recovered by mesothelioma claimants, and of payments made under the scheme, and for there to be a report thereon laid before each House of Parliament.’.
‘but shall not be less than 100 per cent of the average civil compensation recovered by mesothelioma claimants.’.
‘but shall not be less than 100 per cent of the average damages recovered in civil mesothelioma cases.’.
‘but shall not be less than 110 per cent of the average damages recovered in civil mesothelioma cases.’.
‘but shall not be less than the average damages which a person diagnosed with diffuse mesothelioma would recover against a relevant employer who had negligently or in breach of statutory duty caused or permitted that person to be exposed to asbestos.’.
‘but shall not be less than 80 per cent of the average damages which a person diagnosed with diffuse mesothelioma would recover against a relevant employer who had negligently or in breach of statutory duty caused or permitted that person to be exposed to asbestos.’.
Kate Green: These amendments go to the heart of the Bill and the generosity of the scheme for sufferers of mesothelioma and their families. Amendment 7 in my name and that of my hon. Friend the Member for Rhondda seeks to increase the rate of payment from the currently proposed 75% of average civil compensation to 90%. My hon. Friend the Member for Wansbeck has proposed a rate of 100%; my right hon. Friend the Member for Newcastle upon Tyne East has suggested 110% and the hon. and learned Member for Sleaford and North Hykeham has suggested 80%. It is clear that every amendment tabled about the rate indicates the unacceptability to the Committee of the current proposal.
I recognise that the rate of payment is not specified in the Bill; we assume we will see it in regulations. It is important to have the debate about rates in Committee where we have the opportunity to influence—indeed dictate—what appears in the regulations. If possible, it is important to include a rate in the Bill in order to provide certainty to mesothelioma victims.
A number of factors could affect the level of average civil compensation. Amendment 9, to which I will speak later, suggests an annual review and report of that level to Parliament. That would ensure that, if the scenarios envisaged in the impact assessments are wildly different from what transpires, Parliament would be able to act quickly to ensure sufferers are properly protected. It is the common will of all in the House to have as generous a scheme as possible.
Kate Green: Our priorities for the legislation are to ensure that the scheme is as generous as possible for sufferers and their families; that the money in the scheme is protected; and that account is taken of anything that might change the context in which payments under the scheme are set if the level of average civil compensation were to change. Parliament will want to keep a close watch on that, which is why in amendment 9 I have proposed the annual review and reporting to Parliament of the average civil compensation.
Colleagues have proposed a range of compensation levels stretching between the Minister’s proposition of 75% all the way through to a level of 110%, which was suggested by my right hon. Friend the Member for Newcastle upon Tyne East. My hon. Friend the Member for Wansbeck suggested 100% and the hon. and learned Member for Sleaford and North Hykeham suggested 80%. Those are all an improvement on the Government’s proposed 75%. It is important to remember that 75% represents an uplift from what was originally proposed in the House of Lords. The original proposition was that the level of payment would be set at 70% of average civil compensation.
It is worth noting that in early impact assessments, the figure of 75% was being used, so it has always seemed that 70% to 75% has been pretty much a settled case from the outset for the insurance industry. Although I sympathise with the Minister’s characterisation of negotiations with the industry having been in the context of their having to be dragged into the meeting room, it does seem that they pretty much got the level of payment that they were always entirely comfortable with. As legislators, we should be unwilling to simply roll over and accept the level of payment that seems to suit the industry, but which is not in the best interests of victims.
It is also worth recognising that the imperative on the industry to pay as generously as possible has to be seen, as was said this morning, in the context of its collecting employers’ liability insurance premiums for many decades. It has been a highly profitable market for insurers. For many years, as victims have reported, the industry has been reluctant to pay out, to put it mildly. Indeed, victims talk of an industry that has done everything it can to wriggle out of payments. It has been absolutely determined to avoid paying a single penny, so I think it is right that we should seek redress now from that industry to an extent that is both just for victims and, I contend, comfortably affordable for a multi-billion-pound industry. That is what the amendments in this group seek to achieve.
It is also worth looking at the affordability of the scheme over different time scales. The Government are extremely keen to use the four-year time frame to test the affordability of the scheme for the industry. It is not obvious why that four-year time frame has been set, except that it happens to come up with the right answer—from the industry’s point of view—of 75%. However, helpfully, the impact assessment provides information on the cost of the scheme to the industry over a 10-year time frame, and we know that the industry itself does not see this as a four-year or a 10-year scheme.
The Association of British Insurers acknowledges that the scheme is expected to last for 30 or 40 years, so I do not think we should feel constrained by the four-year time frame when thinking about the right level of payment for mesothelioma sufferers. I think there is considerable merit in the argument that I expect my hon. Friend the Member for Wansbeck will be advancing shortly, which is that there should be no difference for sufferers accessing this scheme, in the level of payment that they receive, from those who are able to find their employer and their employer’s insurer, because the fact that sufferers are not able to do so is absolutely no fault of their own. I understand that the Minister will say that this is a scheme of last resort, it should not be too easy for people to come to it and if a valid insurer can be traced, that company should pay out. We will hear an argument from my right hon. Friend the Member for Newcastle upon Tyne East on other ways to square that circle that would not penalise victims who make perfectly legitimate claims on the scheme because they cannot find their insurer, but would also ensure that the scheme is incentive-based and to be used as a last resort. All insurers would therefore not be obliged to share in the costs of one company that can be identified.
It is difficult to make any moral case that victims accessing the scheme should receive a lower payment than those who can trace their employer’s insurer. It is particularly invidious that they should lose 25% of the compensation that would be available if they were able to pursue the civil route, as it is not their responsibility that the insurer cannot be traced. One in eight employers’ liability records are untraceable, so a substantial number of victims will be forced to rely on the scheme, and a substantial proportion will receive less than they otherwise would have done.
The difficulty in tracing those employers’ liability insurance records could be because they have been lost. We recognise that these are long-tailed claims, often relating to several employments several decades ago, but victims and people campaigning on behalf of victims hold firm views that the insurance industry has in some cases set out deliberately to suppress or destroy records at certain times in its history. If that occurred, it would be wrong for the individual victims to bear the consequences. In any event, even when the documentation was unintentionally lost or mislaid, because of the passage of time or other reasons, the fact that that will be cause for discrimination against those victims bears little moral weight. That is particularly the case because of the scheme design, with a technical committee assessing objectively whether insurance existed, albeit that the documentation is no longer available. Prima facie, to access the scheme there will be acceptance that an insurance policy was in place at the relevant time. It is therefore difficult to say that those victims should receive less.
For that reason, I take some exception to the assertion by the Association of British Insurers that lower than 100% compensation levels are necessary to maintain an incentive for people to trace a relevant insurer to claim against, which was its response to the Bill’s publication. Victims are far from shopping around for the best deal they can get in what are the most appalling circumstances for them. The ABI’s assertion ignores the full process
It is also worth drawing comparisons with the level of payment available in other schemes. The Minister was reluctant to allow me to compare this scheme with the Motor Insurers’ Bureau scheme, but the original DWP consultation published in February 2010 did exactly that. It drew an absolute comparison between the Motor Insurers’ Bureau’s scheme and what is now proposed. So it is not illegitimate to suggest that we use that scheme as a model for what might be right in this scheme.
The Motor Insurers’ Bureau’s scheme was the only scheme described in the Government’s 2010 consultation. It has two relevant schemes that we should look at in this context: the uninsured drivers scheme and the untraced drivers agreement scheme. The uninsured drivers scheme covers compensation claims arising from accidents caused or contributed to by an uninsured driver. When it is shown that no insurance policy exists to cover the responsible party’s vehicle, the MIB will consider a claim from the victim for compensation. Liability must be assessed, but because the negligent and uninsured party has been formally identified, the MIB recognises that the innocent victim has rights of full legal redress when fault is proven.
When the claim is proven, full compensation is offered to cover the cost of replacing or repairing the vehicle, hire charges, loss of use, property damage, personal injury damages and legal costs in full. That is exactly analogous with the situation when it is confirmed that a policy of employers’ liability insurance was in place. It seems to me that when that confirmation has been received by the technical committee, the same argument can be made about the level of compensation.
time lapse and the fact that they could not trace the original insurance claim. Nowhere in the document is it suggested that 100% of the premiums were not paid by the employers involved? Does that not lead to the irresistible logic that in negotiations with insurance companies we should always hold out for 100%, given that they received 100% of the cash in the first place?
Kate Green: My hon. Friend makes a valid and reasonable point. Indeed, the insurance company will have based those premiums on the expectation of risk, but its absolute purpose as an industry is to define and determine them so as to ensure that it can meet its obligations and deliver a profit to its shareholders. I do not think it has been suggested that those premiums were unnecessarily low to enable the insurance industry to meet those two requirements. My hon. Friend makes a valid point.
Employers will, of course, have paid their employers’ liability insurance premiums in the expectation that if claims were made against them, they would have been able to draw down in full against their own insurance policies. It is not clear why that would cease to be the case because an employer or insurer can no longer be traced by an employee.
The second scheme run by the Motor Insurers’ Bureau is the untraced drivers agreement scheme, which applies to victims of accidents involving hit-and-run drivers. I certainly do not want to suggest that insurance companies are hit-and-run agents, but the situation is again analogous with a victim not having information about an employer’s insurer. The scheme works so that when a driver who is deemed responsible for an accident leaves the scene and is not traced, the MIB will consider a claim for compensation for property and personal injury damages. Some restrictions are imposed, not least the fact that legal fees cannot be recovered in full. The MIB will pay only a fixed amount of £500 plus VAT in compensation towards a victim’s legal fees.
What both schemes have in common is that they offer full compensation in recognition that the victim was not at fault, but was in an accident caused or contributed to by an uninsured driver. There is no obvious reason to treat claimants under the diffuse mesothelioma payments scheme any differently: in no sense is it their fault that an insurance policy is not available under which they could make a claim.
It has been helpful to have the Government’s assessment of the costs to the scheme of each of the different levels of payment, which range between 70% of civil compensation levels as originally proposed in the House of Lords right up to 100%—not, I regret, up to 110%, but we can assume that that would be a little more expensive. The figures the Minister has supplied are welcome and useful, but are for two periods that, arguably, have been picked somewhat randomly to suit the answer that the insurance industry wants. The information supplied by the Minister indicates the level that the levy set at 3% of gross written premium will achieve, first over a four-year period and then over a 10-year period. It also assesses what in practice the proportion of gross written premium would be for each level of payout from 70% to 100%, increasing in increments of 5%.
Interestingly, and perhaps not surprisingly, over a four-year period 75% payouts are the level at which the levy is just within 3% of gross written premium—it is 2.99% at that level. That falls very significantly if we look over the 10-year period for which the Minister has kindly supplied information: a levy at 2.46% of gross written premium would be needed to meet 75% payouts. For payouts at 80%, we tip over the 3% of gross written premium over a four-year period, but over a 10-year period the levy is 2.61%. For payouts at 90%—the subject of amendment 7—we are at 3.56% over the four-year time frame, but even at 90% over 10 years we are still within the 3% of gross written premium, at 2.9%. It is only when the payout is at 95% that even over a 10-year period the percentage of gross written premium tips over the 3% mark to 3.05%.
The impact assessment issued by the Government in November varies from the one available earlier this year. In July, for payouts at 80% over a four-year period the levy was predicted to be within the 3% of gross written premium, at 2.98%. Indeed, over a 10-year period
“Following consultation with APIL”—
“and the Forum of Insurance Lawyers…on the likely required legal resource to prepare an application to the scheme, our best estimate of the scheme’s contribution to legal costs is between £5,000 and £7,000. Fixing costs allows us to promote the fair and appropriate charging of legal costs. Fixed costs will also introduce an element of competition amongst solicitors, meaning that people with Mesothelioma or eligible dependants will not be forced to pay more than they should have to in legal fees. The Diffuse Mesothelioma Payment Scheme is being funded through a levy imposed on insurers active in the Employers’ Liability market. It is right”—
The £7,000 figure now reflected in the November 2013 impact assessment, however, is considerably higher than the £2,000 figure assumed for legal costs in the July impact assessment. Perhaps coincidentally, when the legal costs were raised from £2,000 to £7,000, suddenly the maximum level of payment that could be afforded within the 3% of gross written premium was 75%. That is, as it were, the answer that was first thought of, and we have now been able to work our way back around to achieving the same results. The Minister will say that industry and personal injury lawyers suggested the £7,000 figure as a truer view of the level of costs, in which case, why was £2,000 ever on the table? What was the basis for the suggestion that £2,000 might be a reasonable calculation of the likely level of legal costs?
I suspect that the Minister will also say that it is important to think about the first four years of the scheme, because that will be its most expensive part. I understand that we expect a spike in claims early on, in particular because people will become eligible to access the scheme from the date of the regulations, as the Minister helpfully pointed out, and from up to three years before that date. So we expect a surge in cases in those early days.
To us, however, it seems that during that initial four-year period the industry is benefiting from a helpful smoothing gift worth £17 million from the Government. In addition, it will be receiving substantial loan moneys of £30 million, also from the Government, to help manage the smoothing over the early years. That seems to be exceptionally generous to a multi-billion-pound industry when the effect is to depress the rate at which sufferers will receive payment.
It is particularly troubling that the Government have chosen to give £17 million to the industry to enable it to manage its cash flow, rather than to use money that is
It would also be helpful to understand whether the reference in the impact assessment to sufferers receiving a fixed amount for legal costs means that, regardless of the amount spent on legal fees, claimants will automatically receive a payment of £7,000, even if they have spent less. If so, it might be preferable simply to keep that money as properly available for pay-outs and to get the level of legal costs correct.
Stephen Phillips: I will speak about this in due course as well, but I wonder whether the hon. Lady shares my concern about the payment to be made to lawyers in connection with a claim to the scheme having gone from £2,000 to £7,000. Lawyers will simply charge that as a flat fee, come what may, even if only 20 minutes of work is involved. By raising the legal fees from £2,000 to £7,000, we might simply be creating another cottage industry of the sort that we have seen in the past, depriving those who have suffered as a result of the industrial circumstances in which they worked from the compensation to which they are plainly entitled.
Kate Green: I cannot agree more. The hon. Gentleman makes exactly the point that, in effect, the fixed costs become the tariff—that amount becomes what is always charged. There is no incentive for lawyers to ensure that they work as efficiently in the interests of victims as they might otherwise seek to do. I absolutely share his concerns about that.
Paul Goggins (Wythenshawe and Sale East) (Lab): My hon. Friend makes a powerful argument. Has she been able to find any explanation anywhere—from the Minister or any other source—for why the assumption went from £7,000 in legal costs to £2,000, and has now gone back to £7,000? Those are precise, round figures. Has my hon. Friend found any explanation for the rationale?
Kate Green: I regret I have not. Perhaps the Minister will be able to enlighten us as to why it went from £7,000 to £2,000 and back to £7,000 again. I remarked on the coincidence that, at £7,000, 75% becomes the absolute outside limit of what is affordable within the 3% of gross written premium. One can only speculate whether that has any bearing on the figure ultimately arrived at. I am aware that the Minister will say, quite correctly, that there has been discussion with experts in this field, but I cannot help but remark that they would say that, wouldn’t they?
Perhaps the Minister will be able to give us more details about how the £7,000 figure is made up; the nature of the work that lawyers would expect to undertake; how it would be costed; how long it would take; and at what level of seniority in a legal firm and so on. Detailed information from the Minister, which properly supports the £7,000, would be welcome, and more so since the hon. and learned Member for Sleaford and
We are concerned about the way in which the figures have been set and about the level of compensation that has been arrived at. We are concerned about the legal fees and the four-year time frame, which is really a self-defined threshold in the scheme—defined by the industry—but which so far does not appear to have any grounding in logic. We recognise that the pattern of claims will change over time. For example, the age profile of beneficiaries may change and older beneficiaries would expect to receive a lower level of payment to reflect their reduced life expectancy.
The industry has never really given any justification for its contributions to drop dramatically after the first four years. As I said, the ABI itself appears to be working on the assumption that the maximum possible contributions will be made over the full 40-year period that it expects the scheme to run. It stated:
“To put this new body [the Scheme] on a stable footing, we are proposing that these payments be funded by a levy of around £30-35m per year on insurers who currently offer employers’ liability insurance. We expect the scheme to run for around 40 years, until mesothelioma cases no longer arise”.
So if 3% has been defined as affordable by the insurance industry, and if we accept this limit as legitimate—both of those can be questioned during our debates—we must identify the maximum level of scheme payments possible within this limit. By the Government’s own calculations, that is 90%, not 75%.
I spoke about the Motor Insurers’ Bureau scheme, which makes 100% payouts to victims, but we also helpfully have a precedent for 90% payouts. The Financial Services Compensation Scheme, which offers a scheme of last resort, like this scheme, for all customers of financial services, pays 90% compensation, with no upper limit, in the event of the insolvency of an insurance provider.
Other amendments in this group have suggested not only higher levels than my proposed 90%, but there is also a proposal for a payment at a level of 80%, which I suggest is eminently affordable when one takes account of the Government’s own figures. It would put an estimated extra £6,200 in the pockets of victims and their families. We are not talking about small sums of money for families who face real anxiety about the future. We regularly hear reports of sufferers concerned about who will provide for their dependants after their deaths.
Research from June 2013 indicates that 80% is readily affordable within the industry-imposed limit of 3% of gross written premium, even in the first four years when applications for the scheme are predicted to peak. It is true that those figures were subsequently revised, so that 80% is not now deemed affordable within the first four years. It is highly affordable over the 10-year time frame of the scheme, equalling just 2.65% of gross written premium.
We strongly advocate the moral case for the most generous scheme possible. There is a moral case without question that victims who are forced to rely on the scheme because, through no fault of their own, they are unable to trace an employer’s insurer should not be discriminated against, compared with other victims. In our view, there is a strong case for the affordability of a
Amendment 9, in my name and that of my hon. Friend the Member for Rhondda, concerns the Secretary of State carrying out an annual independent assessment of the average amount of civil compensation recovered by mesothelioma claimants, and payments made under the scheme. It also calls for a report on the matter to be laid annually before each House of Parliament.
It is important to have that regular information and reporting to Parliament in order to track levels of civil compensation and how well the scheme reflects affordability for the industry as well as what is going on in a broader context.
There has been a lot of confusion about what may drive levels of civil compensation. I would not blame the Minister for that confusion, but quite a lot has come from work carried out by the Ministry of Justice, going back to the Legal Aid, Sentencing and Punishment of Offenders Act 2012. At that time it was determined, not least due to extensive pressure from my right hon. Friend the Member for Wythenshawe and Sale East and others, that mesothelioma cases would be left out of the arrangements brought in under that legislation to end the conditional fee arrangements that had enabled so many victims previously to obtain legal advice and pursue claims for compensation. I pay tribute to the work of my right hon. Friend and other colleagues on the matter. It was recognised that to remove access to justice for mesothelioma victims in that way would leave many of them particularly disadvantaged.
The Justice Secretary at the time undertook to go away and reconsider the position for mesothelioma victims. Since then we have had repeated stalling from the Ministry of Justice and very little coming forward. There have been repeated promises that something would come forward but little sign of it until—surprise, surprise—as we reach this point with this legislation, proposals begin to come forth. It seems that the Government’s view has been that this legislation and the Legal Aid, Sentencing and Punishment of Offenders Act are, in their words, “inextricably linked”.
As can be seen from the amendments, it is not the view of my right hon. Friend that the two matters are in any way linked. Nonetheless, it raises a question in our mind about what may be driving levels of civil compensation where an insurer can be traced.
Paul Goggins: I am grateful for the kind comments made by my hon. Friend. On this occasion it is not simply a matter of opinion but of fact that these two issues have nothing to do with each other. The Bill is about a fund of last resort for those who cannot find a former employer or an insurance company. The provisions in the Legal Aid, Sentencing and Punishment of Offenders Act 2012 were precisely in relation to civil claims where the employer and the insurance company were known. They have no relationship whatsoever.
It is quite difficult to assess the impact of the proposals from the Ministry of Justice. Only last week on 4 December, we were taken somewhat by surprise by a written ministerial statement informing us that the Government have apparently decided to abandon the pre-action protocol that would have speeded up those claims. Although the wording of the statement is a little ambiguous, the Government also seem to have abandoned their proposals for fixed costs for these cases. However, the Ministry of Justice has said that it will come forward with more details on what it intends to do, as opposed to what it does not intend to do. We have to maintain a certain scepticism until we see the full details of the scheme.
As a result, we are now in a situation where the impact of any changes to the treatment of civil cases going the normal route—and therefore the levels of compensation that may be secured through that route—has become completely uncertain. We now have no details on that level of civil compensation, and therefore the knock-on effects for those accessing the diffuse mesothelioma payment scheme are equally uncertain. At the very least, amendment 9 would provide the opportunity to ensure that Parliament can keep a very careful track of the amount of payment that will be delivered to beneficiaries under this scheme.
It is also worth noting that the Government have indicated that they will no longer leave the route of conditional fee agreements open to claimants who seek to pursue a civil claim in relation to mesothelioma. One consequence of the removal of the conditional fee arrangements may be that particularly complex or high-cost cases do not get taken forward, as the risks for the claimants are too great. Those most complicated cases, which could ultimately be the cases which secure the highest levels of civil damages, fall out of the system as a result of the changes which the Ministry of Justice has introduced. That would depress average civil compensation, and thus the level of payment received by victims in the diffuse mesothelioma scheme.
It may be that none of these things come to pass. It may be that there is nothing for us to be concerned about, but there is uncertainty at this stage, which is a cause of very deep concern. There is also a certain amount of uncertainty about the figures that the Government seem to think will be needed in relation to legal costs under the scheme. However, it is absolutely certain that the higher the legal costs, the less money will be available for payments to victims.
I hope that the Minister will be receptive to the proposal of an annual assessment and reporting mechanism to Parliament, so that we can keep careful track of exactly what levels of payment will in reality be afforded to victims, especially in the early years of the scheme. It is extremely important that we ensure that the scheme achieves what it is intended to achieve, which is to offer proper protection to victims and their dependants after
In conclusion, amendment 7 proposes to increase the level of payments under the scheme to 90% of average civil damages, which I contend is affordable within the 10-year time frame. Amendment 9 would ensure that we keep careful track of the level of average civil compensation to ensure that this scheme reflects a level of payment that is in the spirit of what is currently intended. I very much welcome other amendments in this group, and I look forward to debating them, and I strongly commend to the Minister the spirit of the whole group, which is that we believe the scheme can be more generous than it currently is.
Stephen Phillips: I shall address amendments 20 and 21, which raise similar issues to those raised by the hon. Member for Stretford and Urmston. I should point out that there is a mistake on the amendment paper because amendments 20 and 21 are, of course, amendments to clause 4. The amendments cannot both be accepted: one suggests 100%, the other 80%. It is the 80% to which I really want to speak, echoing, I hope as briefly as possible, many of the points made by the hon. Lady.
The reason for the 80% is very simple and straightforward. The position that the Government have negotiated—I have to say, I am sure that anyone in government would have negotiated with the insurance industry—is that if there is to be no increase to businesses in the costs of putting in place this very desirable compulsory insurance against employers’ liability, any levy must be kept within a cap of 3%. That is, subject to the points we will be discussing later in Committee, the band or constraint within which the Government are working. That is well understood and I think, from what the hon. Lady was saying a moment ago, that it is well understood by the Opposition.
As matters stood, however, when the Bill was in the other place, the impact assessment to which the hon. Lady has made reference indicated that the estimate of the legal costs which would be paid at that stage was £2,000. If that was right, the Government would be able to introduce a scheme that would accommodate within that 3% of gross written premium, which is the constraint under which they are operating, the ability to pay 80% to those who are able to successfully claim under this scheme and not the 75% which, as I understand it, is the intention.
I laboured long and hard on two evenings last week to find where these figures for fixed legal costs came from. As the right hon. Member for Wythenshawe and Sale East said in an intervention, when the Bill was originally introduced costs were estimated at £7,000. That dropped when the Bill was in the other place to £2,000 and now, without any justification at all in terms of explanation—it may well be right—the figure has gone back up to £7,000. With the greatest respect to the Minister, who is a thoroughly decent bloke, if I can put it in those terms, on Second Reading, when this point
My second point, which I have already raised in an intervention on the hon. Member for Stretford and Urmston, is about the legal fees. It is absolutely right that if we create an expectation on the part of those who will make claims on behalf of very vulnerable victims of mesothelioma that they will get £7,000 a claim that will essentially become the charge. Whether 20 minutes’ work or 10 hours’ work is involved, £7,000 will become what they get. The result will be—or, at least, runs the risk of being—that a cottage industry will be created that will ultimately end up taking money away from the people for whom the scheme exists and who ought to be compensated for the horrible diagnosis that they have had with this horrible disease.
I would like the Minister to address that point. Ultimately, he can perhaps best deal with it by giving an undertaking, having given an explanation of the fluctuating and flip-flopping of the fixed legal charges, which are still estimates, even in the latest impact assessment—there is still no number anywhere in the Bill, although there might be in the draft regulations—that he will take this away, not only on Report, but when the regulations are prepared, and make sure that he negotiates a proper scheme of costs with the Law Society or whoever it will be.
A proper scheme of costs is not just a fixed tariff of £7,000, but one where the cost is as low as possible for each case. Simple cases might have a lower figure, but it might creep up towards £7,000 in more complex cases. In those circumstances, the Minister would create an extra amount of money, which would enable him, when the scheme is formulated, to push the 75% figure upwards, even if it has to be constrained within the 3% of gross written premium, as far as 80%, we hope, and perhaps even beyond.
The Minister could give that undertaking today, and I would be content and, subject to the will of the Committee, would withdraw my amendment. I hope in a spirit of co-operation that if the Minister gives that undertaking today that will be enough for Opposition Members as well, because we should not be playing party politics with this.
Ian Lavery (Wansbeck) (Lab): I rise to speak to amendment 12 in my name and in the name of fairness and justice for the individual. We have heard lots about the insurance companies and what they can and cannot afford, but we have not heard too much about the individuals, the families and the friends who have suffered and the people who have died as a result of mesothelioma. I want to bring that back to the table for a short while, so that we can get to grips with this and understand what people have been suffering. It is terribly important to recognise what happens with mesothelioma victims.
“I think we can all agree that working people should have proper protection from personal injury or disease arising as a result of their work. When the principle is breached through negligence or a breach of statutory duty, it is obviously right that that person should be compensated by their employer or their employer’s insurer”.—[Official Report, 2 December 2013; Vol. 571, c. 659.]
That is right. We have been discussing insurance companies and the fact that they think they can afford only 3% for the levy, because over a period of say 10 years it would cost far too much money. Has anybody really thought about those people who are dying, the families who are caring for them and their friends as well?
All we have discussed this morning and again this afternoon are the hard facts of what people can afford and what things are worth. You know what? I might be totally different from many people, but I think that if the employer is 100% guilty—100% liable—they should pay 100% compensation. I have not yet heard any reasonable social answer to why it has been suggested that 75% is a good figure. It is not even a starting figure, because it started in the other place at 70% and went up to 75%.
I am not sure whether, as fair-minded politicians, we should accept this. I am not sure that we should be clapping our hands and thanking the insurance companies for their benevolence because they are proposing with a scheme that will pay 75% of the average of a civil claim. I tend to believe that we should not. I might be old-fashioned, but if somebody is 100% liable, there is no reason why the individual or the family should receive anything less than 100%.
With the scheme, individuals have had to meet the same standards of evidence and burden of proof that would apply in any civil case in the courtroom. It is exactly the same, but the difference is that in a civil case you get 100% of the compensation. That is right. It is logical. It is the way that fair-minded people would deal with such issues. I am at a loss, and I ask the Minister just to give me an idea why, on the social side of things, we should accept 75% or anything less than 100%. What we have come up with today and probably what has been on the table from the other place is that, if we were to pay 100%, the extra cost of the scheme would be £482 million over the first 10 years, and the levy costs would be 3.94% of GWP for employers’ liability insurance over the first four years of the scheme. That represents an increase in costs of more than £111 million over the 10 years. So what? Should we tell these individuals, people who are going to die in the next two or three months or in the next six months, “We are getting you compensation. However, the insurance will only pay three-quarters of what you are due.”?
Stephen Phillips: The hon. Gentleman makes an impassioned plea. Everyone in the Committee will probably agree that there is no moral case at all for anything less than 100%. The difficulty, however—I wonder whether
Ian Lavery: I thank the hon. and learned Gentleman for that intervention. He makes the point for me. I could not go and explain this to a woman who was about to become a widow, and there is no doubt about that by the way. There is no possibility of these individuals being cured. Once they are diagnosed with mesothelioma, they have between nine months and two years to live. I would find it extremely difficult to say to a woman who was about to become a widow, “Listen, we understand that you’re going to lose your husband, and by the way we understand that it’s the employer’s fault. There isn’t any doubt about that. It’s their fault that you are losing your husband and your kids are losing their father. And we understand that the insurers have lost the papers. It’s 100% their fault, but listen, you really should understand that we cannot give you what you are due. You have to understand, Mrs X, that the insurance companies don’t have lots of money nowadays and that they have come to the table, so really you should be happy that 75% of the compensation will be paid. You might be about to lose your husband, but if the insurance companies paid 80% or 90%, that would increase the 3% levy and that could mean the loss of jobs, Mrs X, in the insurance business.”
Of course I understand the point that the hon. and learned Gentleman makes, but I am trying to get people to see this issue from the victims’ side, not the insurance companies’ side. Clearly, it is not good enough—
Mike Penning: I think that everybody in the Committee is moved by the personal circumstances of the individuals who are suffering from this terrible disease and their loved ones and dependants. The point that I think my hon. and learned Friend the Member for Sleaford and North Hykeham was trying to make is twofold. Would we accept the costs being moved on to the business community if we went over the 3% threshold, or do the insurers walk away and we start this process all over again, with nobody getting anything, which is the position that we are in at the moment? I am desperate, as is the shadow Minister and, I think, everybody in this room, to do the best that we can, but this is the deal that is on the table. I know that this is a very long intervention and I apologise, but this is hugely important. It is not a case of us going in and bullying and saying, “You will do this.” They will walk away, and we will start all over again, which is why the previous Ministers had so much trouble over this and why the negotiations took so long. So although I fully understand how emotive this subject is, it is very important that the Committee understands how difficult—
Ian Lavery: I thank the Minister for the intervention and I fully understand it, but it does not make the situation any better that insurance companies are dictating to the Government—to the negotiating team—saying, “If you don’t accept what we’re giving you, perhaps we’ll walk away.” The Minister was described as—I wrote this down—a “thoroughly decent bloke”. [Interruption.] That is my accent.
Ian Lavery: The Minister was described as a thoroughly decent bloke, and I have no doubt that he is, but I am trying to put this issue into context. Why should ordinary people who are suffering and dying accept this? There are two views; well, obviously, there might be more than two views on this. The insurance companies—these businesses that are supposed to be feeling the pinch—are, in the main, making fortunes. I understand that the negotiations will be very difficult, because they have come to the table. I would suggest that they have probably been dragged to the table by the Government, and that is good. As I have said all along, I welcome the Bill, with the exception of three or four main points, and the main point concerns these insurance companies. In 2012, Lloyds made a profit of £2.7 billion; between January and June 2012, Royal Sun Alliance made £233 million; and between January and June 2013, Aviva made £605 million. These insurance companies are not hard-up. They have been described many times in my company as graveyard buggies. Hon. Members can take from that what they want, but under these circumstances, they have been to the table and they have made an offering. I do not think that offering is enough, for reasons that I will mention. The insurance companies have had the money. It is not a case of their having to scrap about for the money; they have had the money. They have had the money for the past 30, 40, 50 years. They have invested it, and now we are sitting around saying that they might find it difficult to pay anything above 75% of what people are due.
The regulatory impact assessment estimates that approximately 6,000 mesothelioma sufferers lost around £800 million in compensation due to an untraced insurance deal that was cooked up between the Government and their friends in the insurance industry. When looked at with other asbestos related diseases, it represents somewhere in the region of a £1 billion saving to the insurance companies. Somebody said this was mean-spirited; I think that is more of a Christmas type of word. I would not like to say what I think it was. [ Interruption. ] I really should not, and would not, because the tenor of the debate today from both sides has been very good and constructive, and I hope that people understand where I am coming from. It is something that I have seen in industry for many years.
In my past life, I have seen people lose their ears and eyes, I have seen somebody have their nose ripped off, I have seen people killed, I have seen people have their arms torn out, their hands ripped off, their fingers taken off, legs and feet amputated, chest disease, vibration white finger—[Interruption.] It is really not something to laugh at. It is probably something that the hon. Member for Spelthorne has not experienced himself because it is called the real world. To laugh at that is not acceptable, I really take exception to that. I expect nothing different from the hon. Gentleman , by the way.
I have seen this happen, and I have seen the way in which families react. I have been the one who has knocked on people’s door when someone has been killed, and I have discussed it with the widows. The most important thing when this sort of thing happens is that they ask whose fault it was: “It wasn’t his fault was it? He wasn’t to blame, was he?” I know it is completely different in terms of the 75% because it is not 75% apportioned liability; I know it is not that. However, if you tell families that they will get only 75% of the compensation due, they will naturally say, “Well, does that mean that he was 25% to blame for what happened to him?” That is something that I would find extremely difficult to explain to people.
I have represented people who have said, “I am not bothered about the compensation as long as I get 100% liability from the employer, because I wasn’t to blame for that”. In essence, there would not be an increase in any common-law damages, but one can usually arrange with the employer to give them 100% without any increase in damages whatever, but it made people feel as though they were being looked after in a proper fashion. Insurance companies are fairly wealthy organisations and will continue to be so. They have had the finances over decades. It is not the case that they have not had the money. They have been given £17 million by the Government for the scheme and I believe that they have also been able to borrow £30 million from the Government to smooth the passage. It is hard to believe that we are saying it is fair and equitable for people to accept 75% of what they are due. The Financial Services Compensation Scheme met claims for injured workers where the employer’s insurers were insolvent. They paid out 90% for asbestos claims. There are other schemes, such as that for coal workers with pneumoconiosis, that pay 100% liabilities.
There are set to be a further 2,500 people dying of this horrible disease over the next year or so. That will probably increase over the following years. I believe that paying people their rightful compensation and having an explanation for individuals and their families are the right things to do. Bringing the insurance companies to the table has been a mammoth task, on which I congratulate successive Governments. We have made huge strides forward. I would like to think that, for the sake of social justice and morality, we should give these people, not more than they deserve, but exactly what they deserve.
I will begin with the case for 100%, which is based simply on fairness. The not unreasonable argument from victims is that 100% of premiums were paid for the insurance. First, the premiums were demanded, and the people who paid them—the employers—were trying to do the right thing. They believed they were insured against this eventuality. All of us will have heard employers complaining bitterly that others operating were not covered by employers’ liability insurance because they were dodging it. That can make the difference between winning and losing a contract. The cost of insurance comes under the costs of operating the business. The people who have done the right thing have had to pay it at 100%. In the case of social security clawback, the Department is looking at 100%, as I understand it.
The argument for 75%—an increase on the original 70%—is that the victim should be incentivised to try harder, or at least try their very best, to see if there is not another route available. If there is another route available, whether victims avail themselves of it or not, they will be disqualified under this last resort arrangement.
The second argument is that it is a last resort arrangement, and not a substitute for the proper working of an employers’ liability insurance market. What it boils down to is that the key argument against putting the rate up is the one about affordability. The Minister in his intervention made the point fairly, and I understand the constraints that are upon him. However, it is worth exploring that argument.
To help inform the debate we have the House of Commons Library note, which has a table based on the Department’s figures and on some assumptions. The first assumption is whether we are calculating the scheme over a four-year or a 10-year period. Given the length of time that this issue has been in public life, it is legitimate to ask whether it is reasonable to take the shorter period. I understand why insurers want to, but that is not the same thing as saying that we ought to. If one takes the 10-year, rather than the four-year view, it seems more affordable. I will return to that issue, because there are some important caveats to it.
There are also some important assumptions. The starkest is about the cost of the applicant’s legal fees and who will pay them. My understanding is that the applicant gets the settlement and the legal fees are paid on top, but that it comes out of the total cost of the scheme. The assumption when the table was compiled was of a £2,000 contribution towards legal fees. There is now an assumption of £7,000. I do not feel competent to discuss what the cost of lawyers is or ought to be, but I do not want to be guided by the hon. and learned Member for Sleaford and North Hykeham, because I think that that is beyond what the public purse can reasonably afford for a scheme of this kind.
We hope that the scheme will be relatively straightforward, and will be a simple, last-resort access to justice, but the devil is in the detail. It would be grotesquely unfair if applicants were given the run around when they applied for the scheme about whether there was another route open to them, and whether they had fully explored it. A simple, easily administered scheme with most of the points of contention laid out so there is not a lot of room for argument should not cost a lot of money in legal advice. It should be reasonably dealt with by a flat fee. I am not sure that £2,000 is the right figure, but £7,000 for what is supposed to be an agreed scheme is rather a lot of money. I am not sure the Committee would be advised to accept that it has to be £7,000. Later in the debate we may get an explanation of why it is £7,000 and not a lower figure, but for the Government to ask us take it at face value seems unreasonable.
It seems equally unreasonable to say that if we do not do a deal within the parameters that have been set by the industry, all bets are off. I though the Minister made his point as fairly as anyone in his position could. However, what we are discussing will emerge as an Act of Parliament. To give the obvious example, I have constituents who say they cannot afford the spare bedroom charge, and they are not going to get rehoused in a property in which they could afford to pay it. Nobody consulted them and said, “If you say you can’t afford it and won’t pay it, we won’t require you to do so.” They are required to obey the law. It is the same with insurance companies. Whatever the Act of Parliament says, they have to do. They have to comply with the law. Of course, it is reasonable in a pluralistic, democratic society that there are discussions, but ultimately if the industry wanted to solve this itself with a voluntary agreement it was open for it to do so. It has not been able to do so, for reasons that I understand, so it looks to Parliament. Once Parliament does it, it is the law of the land; it is an Act with which the industry must comply, not the next move in a negotiation.
I have said something about the cost of lawyers. I do not feel in a position to pronounce on that and I think it foolish to do so arbitrarily, but it is clearly an issue, as it affects the calculation in the table that the Library has helpfully produced to guide us. Other assumptions underpin the measures, and I am equally queasy about those. The Department has projections about the number of people who will come forward with mesothelioma in the next few years. The further away that we get from the present day, the more tenuous the projections become.
I think that some of the Department’s assumptions are essentially correct. It assumes that a different type of person will come through with that terrible condition than historically. Members of Parliament who represent heavy-industry communities will be familiar with the fate of those who worked in heavy industry with asbestos and were not protected from breathing it in. We all understand that if one breathes in a fibre that is too large, it does not go in; if one breathes in a fibre that is too small, it goes out again; if one breathes in a fibre that is exactly the right size, it lodges in the lung, it can form a pleural plaque and, for the unfortunate victim, it can go on separately to develop into mesothelioma. Just as with every other risky event in our lives, the more that it happens, the more likely one is to be a victim.
The Department’s assumptions—perhaps not so much about whom as about the total number of victims who come through—will underpin the numbers in this table. The assumption, as I understand it—it may have altered since my time—is that there will be a peak round about now or in a year or so and that the numbers will then come down again. The reason why that is believed is that assumptions are made about the effectiveness of the public protection measures that were put in place, with broad consent across the House, on the recommendations of the Health and Safety Executive and other Government advisers.
If the control measures have been undermined or honoured in the breach, have not been as effective a remedy as we hoped or have failed to protect people in completely different types of work with a risk of exposure, the figures might understate the case. That is an important point, but I can see that it tells more for the Minister’s
The period of time that the scheme could cover is also an issue. It is reasonable to argue for the 10-year view rather than the four-year view. That has an effect on the affordability of increasing the compensation.
I think that it is reasonable for people in our position, who are trying to make the legal framework in which the regulations will be made, to ask how robust the figure of 3% is as an industry threshold. I genuinely do not know. In debate, we have taken it as given, but I would like to look underneath the figure. Can the Minister say anything when he responds about the robustness of that 3% and the industry’s inflexibility in his discussions with it?
On that point, if I can have another sentence without detaining the Committee too long, in my dealings with the industry when I was the Minister, I found it reasonable, open to exploring different ways through what we all agreed was a difficult problem and rather more open-minded than one might have thought, although of course always with an eye to the costs. The broader situation is quite a problem for the industry anyway. The premiums have been taken, but one suspects they have not been held in reserve to pay out claims. I think that that is the case right across the piece. So that is the case for raising the threshold from 75% to , ideally, 100% if we take a long-term view, but in-between figures have been suggested. As a former trade union official, I am more than willing to vote on the 80%, the 90% and 100% until we get beaten—if we do.
My second proposition is that the level of compensation should be set at 110%. I tabled the amendment to get it on to the amendment paper before the Thursday deadline—just in case we managed to reach this point in the Bill—before I realised that there had been a debate in the other place along the same lines, although the figure in that debate was 130%. I was intrigued to see that in the House of Lords the case offered for the proposition that the compensation should be more than 100% was the very opposite to the case that I intended to advance here this afternoon. So let me briefly put both points of view.
First, it is unreasonable that it is the victim who should be incentivised to do all the hunting around and to see whether there is a legitimate route that they could follow to get compensation from an insurer, which does, after all, still exist and has an obligation to pay up. Let us remember that people are being expected to do this while they are dying slowly and painfully, because mesothelioma is a wasting condition. The argument in the House of Lords was that it would be more reasonable to incentivise the industry to see whether it was possible to find an insurer that still had the liability to pay out, or to find the policy, or whatever the missing bit of construction is.
It was argued, perfectly reasonably, that the industry collectively has taken the premiums and is probably better placed to do the chasing up. Industry administration arrangements are even more sophisticated now than they were, say, a decade ago, and the industry itself is better placed to do it, so why not incentivise it to do it? Thus the argument. If the compensation it had to pay out was at 100%—if it could find someone that had to pay—that would be better than the 110% that it would
My thought was the opposite. I thought it would be a good idea to explore with the industry—I accept that—whether a more generic scheme for the victims of asbestos-induced mesothelioma more generally would be a good way to proceed. The large number of cases, particularly the historical cases, are not so dissimilar; the fundamentals are the same. It is possible to argue about who was the cause, and test cases have been fought right the way up to the House of Lords, but, by and large, if a victim has the condition, they have the condition and there is not a great deal of difference.
I was intrigued by what my right hon. Friend the Member for Wythenshawe and Sale East said this morning about generic predisposition and the research into all that, but it is in its infancy. If the condition is generic, is it not logical that the compensation arrangements should be? That would have the huge advantage of enabling the industry to quantify its losses in a much clearer way than it can now. Drawing on my own experience of such discussions, there was not as much hostility from the industry to such a proposal as one might first have thought.
That argument is the opposite of the argument about incentivising the search for the liable insurer, but both are valid and give food for thought. I do not want to take the Minister beyond the narrow question that is in front of us, because that would be unreasonable, but I want to put in his mind this thought: discussing with the industry how the scheme could be expanded out to an easy, ordinary citizen’s route to a known quantum outcome is a path down which some might wish to travel and so is worth thinking about. Perhaps when all of this is over he can force somebody else to draft me a letter on that point, picking up where I left off some 10 years ago. I at least would be interested.
Paul Goggins: I do not wish to detain the Committee for much longer, but this group of amendments is important and I have a number of points to make. I want to express my personal thanks to my hon. Friend the Member for Wansbeck. He did something this afternoon that was done by the hon. and learned Member for Sleaford and North Hykeham this morning: he made sure that we do not forget the people we are talking about and the suffering they face. When we talk about percentages and decimal points, whether in Committee or in any other debate in the House, I naturally begin to feel rather uncomfortable, as we can begin to forget the human beings who are at the heart of our concerns. My hon. Friend did the Committee a great service by speaking as he did a short time ago.
I want to take up the thread of the remarks of my right hon. Friend the Member for Newcastle upon Tyne East. He made the point clearly and forcefully that the outcome depends entirely on the assumptions we make. He took us through a number of those and I want to reflect on one or two of his remarks and set out some thoughts of my own. First, on legal costs, clearly we
Amendment 20, tabled by the hon. and learned Member for Sleaford and North Hykeham, brings that particular assumption into focus. If we assume higher legal costs, under his amendment, which proposes payouts at the 80% level, we would have a level of 3.18% of gross written premium, but with lower legal costs that comes out at 2.98% of gross written premium. The assumptions make all the difference in the world when it comes to meeting the cost requirement of 3% of gross written premium—I know the hon. and learned Gentleman is keen to support the Minister on that requirement. The assumption about legal costs is crucial to the hon. and learned Gentleman’s amendment and so we need a persuasive answer from the Minister about that assumption.
My second point has been made very effectively by my right hon. Friend the Member for Newcastle upon Tyne East and my hon. Friend the Member for Stretford and Urmston—although it seems like some time ago now that she made this point. It is whether we should look at the first four years of the scheme or the first 10 years. Looking at the table of figures that has been provided, if we assume both lower legal costs and a 10-year time frame, every single level of payment, right up to and including 100%, falls below the ceiling of 3% of gross written premium that the Minister says we have to adhere to; for payouts at 100% the level of gross written premium is 2.99%. The assumptions that are made are essential to the outcomes. My hon. Friend also made the point that with higher legal costs, payouts of up to 90% still leave us with a level of gross written premium that is under 3%. There are a tremendous number of variables so we have to get the assumptions right.
The smoothing gift, again, makes a huge difference to whether different levels of payout go over or under the 3% limit. If we discount the £17 million, even with the higher legal fees we come in at less than 3%. Again, my hon. Friend the Member for Wansbeck made the point that we are reflecting on and debating all these marginal differences in relation to an industry that, by any measure, is making handsome profits. I take on board what my right hon. Friend the Member for Newcastle upon Tyne East said before—that he always found people in that industry reasonable and decent with—and let us hope that that remains the case. I firmly believe that that is the case, and we should be able to make some progress.
In my view, it should be possible for the Minister to go away again, to talk to these insurance companies and to get a substantial uplift in terms of what can be paid out as a percentage. If it has to be lower than 100%—morally, there is no argument for it being less than 100%, and everybody who has spoken has made that point—and if we have to remain with this 3% figure, it is possible to go away, to look again at those assumptions, and still go in under 3% and have a substantial uplift in what is being offered at the moment.
The Minister needs to do a really good job to explain these assumptions and I hope that, if he is not persuasive in doing so, he will be prepared to go away and have some further discussions with the industry.
Mike Penning: We have had a really good debate around this group of amendments. Some of the commentary has been excellent, and as we look back on this debate the discussion on this particular area will be seen as quite a defining moment.
In a very long intervention—I apologise for that, Mr Davies—I tried to set out, probably in layman’s terms, that as a Minister I feel a little bit between a rock and a hard place, because from an emotive point of view I could not agree more with lots of the commentary that has been made about what the compensation should be, and because these people are victims. It is not their fault that often they cannot find their employer or the insurer. However, I am where I am and perhaps I could try to deal with some of the issues that have been raised.
Initially, I will speak about the legal fees. Before we went to the other place, £7,000 was where we were, and then it was dropped before we went to the other place, for the specific reason that my hon. and learned Friend the Member for Sleaford and North Hykeham alluded to—that we did not want this to be, if you wish, a big payday for the insurance industry. There needs to be a very simple set of policies and a very simple way of going to a fund of last resort.
However, in the other place—anybody who looks at the Hansard from the other place will see this—we were extensively questioned and pushed to say that the figure of £7,000 was too low, and that there would be an erosion of the compensation that people would be given from the fund. So we came away from the Lords and went to seek advice from the experts, for instance the Forum of Insurance Lawyers, and we said, “What do you think the natural costs would be?” There were others we went to, such as the Association of Personal Injury Lawyers. Of course, we have issued the commentary—the figure was between £3,000 and £7,000, and then between £5,000 and £7,000. The point that I would like to make is that of course we do not want it be anywhere near as high as that, because the individuals will be able to keep the difference and it is not part of the clawback side of the fund, either. If, for instance, they are receiving benefits, this is their money.
I do want to go and see the relevant legal representative bodies. I would like to go with not only my own legal team but perhaps with my hon. and learned Friend the Member for Sleaford and North Hykeham, if he can spare some time to come and negotiate on behalf of the Committee, perhaps. Of course, if that is not possible, perhaps we could push him for some more advice.
I think that we could negotiate a position where the perception is that people who have been given help from the fund are not then being ripped off, which I think is what we were talking about. That is really important. We have seen cases before—I think some cases were alluded to by hon. Members during the debate this afternoon—where people have been ripped off, and that is something that we desperately do not want to happen.
The figure of £7,000 is in the upper echelons of the figures that were given to us on advice. We gave it as a fixed figure so that there was an opportunity for individuals
Another undertaking I want to give to the Committee is about how the funding and the help is tracked. It is important for Parliament to understand how the funding is working, and I can assure the Committee that the Treasury also wants to know, because it has put a substantial amount of money in and will want to ensure that that is not only being spent correctly, but doing what is said on the tin and getting through. The hon. Member for Stretford and Urmston wants something in the Bill, but I will try to find a mechanism instead. I will come back to the issue. If I can get this into regulations, I will do so, but I hope to be able to use a parliamentary or Treasury mechanism of some description, so that Parliament is formally informed every year, especially as we come through the four-year smoothing period.
Many Members have commented that we are discussing a 10-year plan, but that the situation will almost certainly go on longer. That is absolutely true. We have made many assumptions, which has to be done, based on the evidence that we are given, but as there is a narrowing of the numbers of individuals from the heavy industries, as discussed, there will be other claims coming through where it will be quite difficult. One area that I have been looking at in particular is that of the self-employed. A self-employed plumber or electrician, as mentioned, might have been doing drilling, putting in adaptations, modernising or putting in new boilers. A lot of boilers used to have asbestos around them, in particular in council properties in the early days—ours did, when I lived in a council property. We need to ensure that we get and trace the insurers in the self-employed area as well.
Kate Green: I am interested in what the Minister says about the self-employed. My understanding is that the scheme would not apply to them, so increasing numbers of them becoming victims of mesothelioma would have no bearing on the cost of the scheme. If I am wrong, I would be delighted to hear that.
Mike Penning: No. I probably used the wrong terminology—again, I apologise. As I understand it, the liability for a subcontractor with a company sits with the company. If I am wrong, I will write to the hon. Lady. That is, though, an important area. I used to be self-employed in the construction industry and I had to be covered by public and employers’ liability insurance, in particular for if I made a mistake on site. I was in that scheme. Self-employment is crucial.
The most important thing is, where is this set? The figures that we have supplied to the House authorities and to colleagues on our assumptions sits at 75%, including the £7,000—it would be at 2.99%. I will make
We are conscious that we have a deal on the table, so then of course there is the issue of ping-pong. Although I am certain that there will be some degree of agreement in the Lords—I am not certain, but there is the possibility—if we send the Bill back to the other place, we have to find a slot, we have to get it through, we have to get it back and then we have to do it. Without any shadow of a doubt, that will delay implementation or compensation coming through from the fund for July of this year, and it will delay the regulations.
I fully understand the passions and everything, but I hope that the Committee understands the arrangement. Is it perfect? No, but it is the best deal on the table for people who have absolutely no compensation whatever and no other recourse to get money for their family and loved ones. I will oppose right hon. and hon. Members if they try to raise the figure above 75%. The big “but,” and I have spoken privately to the shadow Minister about this, is that the 3% is not going anywhere. The figure will be 3%, which is important. I hope that hon. Members have listened and understand my position and the Government’s position and will therefore not press their amendments.
Kate Green: I am grateful to the Minister for responding to the points raised in what I agree has been a very good debate. I am particularly struck by the remarks of my hon. Friend the Member for Wansbeck, who said that we should remember not only that the victims are the heart of what we are discussing this afternoon but that they may feel a sense of responsibility for their own fate if they receive less than 100% of the payment. In no way can it be right that, in addition to the physical distress and pain that they are suffering as they face a truly horrible death, they should be made to feel that, in some way, it is their own fault for being in that situation. That makes the moral case for 100% payouts more powerfully than any arguments about discrimination between those who can and those who cannot find their employer’s insurers, important though those points are.
It is absolutely right that my right hon. and hon. Friends have tabled amendments suggesting that the level of payments should be 100%. If we accept the many assumptions underpinning the figures presented to the Committee by the Minister in the impact assessment, 100% payments would breach the 3% of gross written premiums that the industry has said it would consider to be readily affordable. I take issue with what the impact of breaching that 3% figure would be. Although I am not suggesting that we can be certain about what will transpire, it is worth noting that it has been suggested in this debate that passing the costs on to other businesses
In other words, there seems to be scope at least to consider that, although 3% might be a convenient figure for the industry, it is not an absolutely set-in-stone indication of the point at which a scheme would become unaffordable, either directly for the insurance industry or indirectly through employers’ liability premiums.
The Minister spoke about the assessment of the legal costs, and his answer is helpful in explaining the history of how we have gone from £7,000 to £2,000 and back to £7,000 again. I particularly welcome his clarification that beneficiaries will receive the costs in addition to a payment under the scheme, not as part of their payment. Also, I understood him to have said that beneficiaries will receive the full £7,000, irrespective of the actual legal costs. In other words, any beneficiary under the scheme will receive the payment plus £7,000, which is certainly welcome, but it means that the victim is still paying one way or another. Either they receive a lower level of compensation plus £7,000, or their legal costs could eat into their level of compensation. It seems that it is not really the case that the victim will not ultimately be paying, because they will be paying one way or another.
I was struck by the argument of my right hon. Friend the Member for Newcastle upon Tyne East about the force of legislation passed by this Parliament. It is certainly my understanding that it would not be up to the insurance industry to walk away from what it appears to regard as a negotiated deal when it becomes a matter that has the force of law. I would be surprised were the industry, which, to some degree, has been reasonable and willing to find a good solution, to walk away. From my discussions with the Association of British Insurers, I have picked up a real sense that the industry is determined that a scheme should be put in place quickly. We should therefore not assume that there is no room for further negotiation around what are potentially quite marginal changes over the coming period.
I am also a little surprised that the Minister perceived a real risk of significant delay in getting the legislation on to the statute book. I note in passing that this legislation left the House of Lords in July. There have been several suitable slots in the Commons timetable since we started sitting again in the autumn, and it might have been possible to bring the Bill’s Committee stage forward. I am not aware of an extensive amount of work being done after the Bill left the House of Lords that would have significantly delayed it. Be that as it may, we are now considering the Bill in the last few days before Christmas, and I am pleased that we are doing so, but I would not have thought that a great deal of parliamentary time was necessary. We are not discussing an extensive number of amendments, and I suspect there will be strong agreement from their lordships regarding this afternoon’s amendments.
On amendment 7, I am not persuaded that there is no room for manoeuvre and that we could not have a more generous level of payment under the scheme. It is my
‘(1) The Secretary of State shall prepare and lay before Parliament an annual report on the scheme.
(2) The report to which reference is made in subsection (1) shall include, in particular, an assessment of the extent to which the scheme has caused or contributed to any rise in premiums payable for employers’ liability insurance.’.
Kate Green: We may be able to make some progress on this amendment because the Minister offered, in passing during our earlier debate, some of the assurance that I seek. The purpose of the amendment is to ensure that the levy remains at not less than 3% of gross written premium, and the industry seems happy and confident that it can afford that.
During the first four years of the scheme, the insurers will meet the cost of payments and thereafter the Department for Work and Pensions will have to estimate the annual cost and levy the insurers on the basis of the estimate. If there is a shortfall, DWP will have to put in more funds, but if there is a surplus it will go into the Consolidated Fund. The Minister’s indication that there would be annual reviews of the payment level was welcome, and there will be opportunities to keep a close watch on how it stacks up against the levy.
According to the impact assessment, after the first four years, the cost of fulfilling claims will fall dramatically because of the expected spike in the early years as cases that have been waiting in the wings are gathered up following the cut-off date, which is currently 25 July 2012.
The amendment stipulates that, although the cost of fulfilling claims will fall and may continue to fall for many years, the levy would remain at 3% regardless of
Given the significant variations that we have been told about in recent months in the projected costs of the scheme, which are highlighted in the discrepancies between the impact assessment figures that we had in July and November, this may be the only way to underwrite the best possible deal for mesothelioma victims. As was made clear in an earlier debate this afternoon, the insurance industry seems to have indicated that a 3% levy is affordable for a much longer period than the four years that the Government have defined as critical. The ABI’s briefing states:
Nowhere in that ABI briefing is it said that the £30 million to £35 million will be time limited or that insurers can afford it only in the first four years or the first 10 years of the scheme. Indeed, the implication is that the industry seems to be prepared for the possibility of making the contribution over the full 40 years of the scheme’s envisaged lifetime, totalling £l.2 billion to £1.4 billion.
In our view, that is likely to be enough to provide payments equivalent to 100% of average civil compensation claims and to open the scheme to all mesothelioma sufferers going back to 1968, which it has been estimated would cost £1.1 billion. Any additional money left in the consolidated fund would then be available to pay for future expansion of the scheme. It could be used for research, as we discussed this morning, and of course, as a matter of priority, to increase payments up to at least 100% or perhaps more if we felt that that would impose a useful discipline on the insurance industry.
I understand from what the Minister said a few moments ago and when we spoke privately earlier that it is absolutely the Government’s intention that the 3% of gross written premium will be protected and that the Government do not expect it to be renegotiated downwards in the light of the level of claims and payments made. It would be welcome to have that assurance on the record. The figure is the bottom line—a backstop—to ensure that the scheme is never less generous than it could be, but the Opposition will continue to argue that there is already scope for it to be more generous than is currently proposed.
The amendment is important in setting the bottom line that the scheme will not, now or in future, be allowed to slip below. It would be welcome if the Minister put that specific assurance on the record in Committee this afternoon. If he is able to do so, and I hope he is, I will accept his assurance.
Stephen Phillips: I rise to speak about new clause 4, which has been grouped with the amendment tabled by the hon. Member for Stretford and Urmston. I do not intend to press the new clause when we come to deal with it on the final day of our proceedings, but I want to raise the issue that it encompasses with the Minister at this stage, because this is the stage when it is to be debated. The issue relates to the premiums charged for liability insurance to employers.
In the previous debate, the hon. Lady drew attention to what the impact assessment said about whether the costs of the scheme would be passed on by the insurance industry to employers. She suggested that the costs were not significant, and I respectfully suggest that she is wrong about that. In fact, in the passages subsequent to those she quoted, in paragraphs 97 and 98, the assessment of the economists who prepared the assessment is that passing the costs on to employers will lead to increases in premiums of something in the order of 2.24%. Every cost that businesses have to pay, including something that might be regarded as modest—even 2.24%—represents funds that businesses cannot use to grow, employ people and so on. If we add 2% here, 2% there and 2% or 5% in other places, those costs are detrimental to British business in the global economy in which we are now trying to compete.
The point raised by new clause 4 is that the last thing one wants to come out of the negotiations between the insurance industry and the Government, with the industry itself swallowing anything that falls within 3% of gross written premium, is premiums creeping up by the back door, whether now or during the life of the scheme, which, as the hon. Lady mentioned, might be as much as 40 years. It is for that reason that the new clause, which I tabled—as I indicated, I will not seek to press it—seeks an annual report, focusing in particular on the impact on premiums to employers of the scheme and its administration over the course of its life to be laid before Parliament annually.
From the Minister, I want not only to hear warm words that his Department, and no doubt the Treasury, will keep an eye on the cost of the scheme and the costs incurred by the insurance industry and ensure that, in accordance with the undertakings given, they are passed on to employers by the insurance industry. I also want some indication as to how that will be done, so that those costs, which the insurance industry said it will bear—perfectly properly and in a commendable fashion—will not now, or at any stage in the lifetime of the scheme, be passed on to employers. That is what the new clause would achieve, should someone else on the Committee press it successfully, and I urge the Minister to give some assurances on that point.
The hon. and learned Gentleman raises a specific and important topic. The significance of employers’ liability insurance, as opposed to other forms of insurance, is that it is a statutory requirement. I am sure that we have all heard from our constituents the allegation that, because it is a statutory requirement and the insurance industry knows that, those in that industry collective price up, rather than compete with each other to arrive at a market-driven price. I have no way of knowing whether that is correct.
Stephen Phillips: I would have had no idea either, but if the right hon. Gentleman looks at the impact assessment, he will see that that question is answered. Certainly, all the evidence given to those who prepared the impact assessment showed that the marked is highly competitive and that even if the industry has to swallow these costs in the absence of the agreement with the Government, it would be likely not to push up premiums to pay for the scheme. That is an argument that we could have deployed—I do not think that any of us did—in relation to the previous debate.
Mr Brown: I wish I had known that when we discussed the previous group of amendments—it is new to me. Since we are exchanging information, I may say that when we were in government and I was the Minister, the opposite point of view was put to me forcefully by those who explained to me how the market was working. The suggestion of keeping a regular eye on how employers’ liability insurance is working, the underlying pressures affecting it, and in particular whether anything in this scheme is driving up the costs, is a good one.
I suspect that costs would not be driven up, because of the scale of the thing, but we all stand to be proven wrong in our assumptions—and they can be no more than that. The new clause strikes me as good, but the objectives could be equally well served by the Minister keeping the matter under review and offering to report on a regular basis on these issues in a way that is consistent with the advice available to him.
I almost pre-empted myself in my previous comments. It is very important that the insurance companies know that the 3% is there. In Committee in the other place, Lord Freud committed to a review at the end of the smoothing period, after four years, to see exactly how things were going. There was certainly not a commitment to interfere. I will place that fact in regulations so that the Committee has confidence that a review will take place after the four-year smoothing period. At that point, we will have a much better idea of how much the levy collector is
In the meantime, it is important to know that the charge will not be passed on to new British businesses, because it has nothing to do with new businesses that take out compulsory insurance. We are working with Her Majesty’s Treasury, the Financial Conduct Authority and the levy collector. My view is that the levy collector should be able to produce a report, because they will fully understand the business and how it is moving. There is more work to be done, with BIS in particular, but I think that the levy collector will be placed to report on a regular basis, at least annually.
With that in mind, I hope that amendment 8 will be withdrawn, because I think have provided the back-stop that the hon. Member for Stretford and Urmston has referred to, and that I have also satisfied the requirements of new clause 4.
Kate Green: I listened with interest to the debate on new clause 4, in which a number of slightly contradictory points were made. We were told that the impact of the additional cost on businesses would be, to quote the impact assessment, “low”. That was not my assertion; it is the Government’s assessment. The hon. and learned Member for Sleaford and North Hykeham was concerned that premiums would be passed on to business customers, which would have a negative impact on businesses’ profitability, growth prospects and opportunities to create jobs. Having said that, he helpfully noted that the employers’ liability market is extremely competitive, which might be expected to keep premiums down. As my right hon. Friend the Member for Newcastle upon Tyne East has said, it is a pity that we did not think to apply that argument in the earlier debate. I must confess that I was aware of the comment in the impact assessment, but I did not think to apply that argument.
The industry cannot expect to have its cake and eat it in every possible way. If 3% of the gross written premium is, as the Minister has said, the very least that we can expect to see from the industry, that is a welcome back-stop. I think I understood him to say that the 3% will stick and that there is no intention to reduce it or water it down, but that it is less clear what might be done with any surplus, and that might be reviewed. If more than the envisaged 3% is collected from the industry, the scheme, as currently designed, will pay out to victims.
In the meantime, we look forward to discussing with the Minister in the years to come—I am sure that he is looking forward to the promotion that we all hope he will receive—or with his successors what might be done with surplus funds collected from a levy set at 3% of the gross written premium. On the basis of the assurances that he has given, I beg to ask leave to withdraw the amendment.