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Lord McCarthy: We shall return to this point and I should like to get the Minister's position clear. He mentioned the SSAC. Is his position that the Government would not want to have anything on the face of the Bill because it leaves matters to the SSAC, so that even if the SSAC decided not to consult, it would be perfectly all right for the Government?
Lord Mackay of Ardbrecknish: I did not say that or mean that at all. Certainly, I did not intend to do so. If I did, it was a mistake on my part in wording my sentences. The SSAC does have the right to consult and these regulations under this Bill have to go to it. I also
said--I hope that I gave the assurance quite clearly--that we have a very good record of consultation. If we come to make any changes, we shall consult with those people who in our view have an interest in this matter, and then the SSAC will act as a backstop and perhaps introduce a further consultation process, if they feel it necessary.
Baroness Hollis of Heigham: Following the question of my noble friend Lord McCarthy, am I correct in understanding the Minister to say that, if the Social Security Advisory Committee does not feel the need to consult, the Government give an undertaking that it will?
Lord Mackay of Ardbrecknish: As the noble Baroness may know, things are done in a rather different order to the one she suggests. What I was saying--as I have said during the passage of a number of pieces of legislation that I have taken through your Lordships' Chamber--is that we fully intend to consult, and do consult, when we make up regulations. Indeed, I am in the middle of the most elaborate consultations in relation to the Pensions Act, where these arguments arose from time to time. So we fully intend to consult.
But it is after we have consulted and drawn up the regulations that they go to the Social Security Advisory Committee. We cannot do what the noble Baroness suggests, therefore; that is to say, allow the Social Security Advisory Committee to decide and, if it does not consult, neither would we. We would consult before sending any regulations to the committee.
Baroness Hollis of Heigham: Most of the provisions in this Bill will be welcomed by the Committee in an aura of sweetness and light. One of the few areas of sharp disagreement is over the issue of a small payments limit and therefore there is a high degree of potential controversy surrounding it should the Government, at some point in the future, be minded to make use of their permissive powers to introduce such a limit. Because it is the most controversial issue in the Bill, it would seem wise not merely for the Government to give a verbal undertaking that they expect to consult, but, on this issue at least, to put on the face of the Bill in the schedule that, should the Government be minded to go for a small payments limit in the future, they will consult about its level.
I repeat that this is probably one of the two most contentious issues in a Bill which otherwise will be widely welcomed. To avoid any acrimony, it would be helpful if the Minister could allay our fears on this. The insurance industry may also welcome the knowledge that it will be involved in the consultation.
Lord Mackay of Ardbrecknish: Having said that we were going to agree, I do not want to start disagreeing on the first amendment. I should like to think that, when the noble Baroness reads Hansard, she will be reassured that the assurances I have given are definite and answer the question she raised without the need to put the list of bodies we should consult on the face of the Bill. As your Lordships know, I usually successfully resist such a suggestion.
3.45 p.m.
Earl Russell: I agree with the noble Baroness about the importance of this issue in a generally welcome Bill. It is my impression that the negotiating process which is proper to the Committee stage is still capable of going a little further than it has. Therefore, while I warmly welcome some of the comments made by the Minister in his reply, perhaps I may take the opportunity to probe a few of the other points he made in order to understand a little better what the position behind them is.
The Minister said--this I warmly welcome--that the Government,
- "do not intend to set a small payments limit".
- "and it remains our firm intention now".
As it stands, the determination to keep a power in the Bill just because it might be needed at some time is the school of legislation which is analogous to the famous five reasons for drinking:
- "Good wine--a friend--or being dry--
Or lest we should be by and by--
Or any other reason why".
In reply to the noble Viscount, Lord Chelmsford, to whom I listened with great interest, there is an issue of cost involved. I was interested to hear the Minister say that the small payments limit has been used as a way of avoiding recoupment. That is also my understanding and the point is of some importance.
We on these Benches are a great deal more concerned than the Minister is sometimes aware to keep down the cost of government in ways we believe have a realistic chance of achieving that objective. I have received advice that a small payments limit could save the Government £40 million. Governments can find plenty of uses for £40 million. But the more important issue to these Benches is the great inequality between the contestants when an injured person is negotiating with an insurance company.
When it comes to reading technical documents, I am slightly more battle-hardened than some. But when I receive communications from my insurance company I read them with great care. I regret to confess that I do not always understand them. What is true of me may
perhaps be true on many occasions of others. Between a great institution and a small person perhaps of limited standards of literacy or perhaps with damaged eyesight, there is a real inequality of power. The pressure to settle low, if it comes from an insurance company, may therefore be hard to resist.At this point I take up the comment made by the noble Baroness, Lady Hollis of Heigham. I understand why the noble Baroness takes the line she does. I respect the decisions that she has taken, though I do not entirely agree with them. I understand the pain it may be, especially for people who have a disability, to go through a contest. My view is that they cannot avoid going through a contest. If it does not happen in the courts, it happens with the insurance company. The only question is with whom the contest will be and what the issue will be. If I thought the noble Baroness was correct in her premise that a contest could be avoided altogether, then her argument would have been entirely persuasive. I am not at present convinced that that is the case. We therefore have another argument why it might be better to do without the power to have a small payments limit altogether.
In relation to consultation I take the point about the Social Security Advisory Committee. I am extremely grateful for it. I have a great deal of confidence in that committee. However, I would welcome the proposal more warmly if the Government were to accept the advice of that committee a little more often than it does at present. Before we take this matter further, I should be grateful if the Minister could answer some of the questions I have been putting to him, because they are of importance.
Viscount Chelmsford: Before the Minister replies, I must rise to suggest that the existence of a small payments limit actually operates in a way opposite to that suggested by the noble Earl. If anything, it increases the amount of the settlement because of the administrative factor of arguing against it. Part of the whole case I am putting to the Committee is that, when there is a small payments limit, it is simpler in many cases for the insurer to accept the amount rather than to argue about it. That is why we are seeing what the Minister referred to as "clustering".
Lord Mackay of Ardbrecknish: Perhaps I may say a little more. The noble Earl is probing the need for the power and whether, deep down, I intend to use it. I hope I illustrated to him that, deep down, I have no intention of using it. Equally, I hope I explained that it is sensible to retain it in case, as the new scheme develops, it becomes obvious that it may be sensible to introduce a small payments limit. It is simply something that we may need to use in the light of experience once the new scheme beds down.
I believe I described the principal situation that might arise if we were to be convinced that we should use the power to institute a small payments limit; that is, if we could identity a limit--it would not be anything like £1,250--which would avoid unnecessary administrative effort and expense while at the same time affording sufficient protection to the taxpayer. That would stop a new cluster occurring which would be to the disadvantage of the victim, but the amount would be just below the level
at which the taxpayer was losing out. I hope the noble Earl can accept at face value what I am saying to him and accept from me that his suspicions that I may actually have some proposals in the back drawer which I will whip out in a year or two's time are quite unfounded. This really is a fail-safe, just in case, in the light of experience, we decide it would be sensible. I cannot help but notice that the, noble Baroness agrees with me. Dare I suggest that if the noble Baroness and I are on the same side, then it must be right.
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