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Baroness Finlay of Llandaff: I have spoken to this group of amendments but perhaps I may add a couple of points and comment on matters raised.

The noble Lord, Lord Goodhart, rightly highlights how damaging delays are for patients, in particular if that is on the premise that, "We'll see what is going to happen". I understand that for a small number there is an argument for an interim settlement followed by a rapid review. There is a danger that the patient will feel in a state almost of suspended animation from the time of the interim settlement until the review. The benefits are very small. On balance, unsettled issues for patients can be psychologically damaging.

As the noble Lord, Lord Hunt of Wirral, said, uncertainty hangs over patients. It is like a sword of Damacles. Patients are terrified that they will be watched, with any recovery going against them. Uncertainty works against them in clinical care. Perhaps I may outline the reality of a patient currently going through litigation. Everyone is frightened of looking after him. The patient goes into hospital because he is ill or into another part of healthcare because he has something wrong with him and needs treatment. However, because there is ongoing litigation all clinicians are scared of dealing with the problem. It is a natural response. There is a huge tendency towards defensive medicine. Defensive medicine is not good medicine. With good medicine, one is always undertaking risk assessment and going for management which is of least risk and most benefit to the patient. But there are no absolutes. It is always a matter of professional judgment on behalf of the clinicians.

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When one is being defensive in one's practice, that balance and clinical acuity is often impaired. I have seen patients who have gone back for repeated operations, offered to them in good will and with the best of intentions. They have been accepted by the patients in the false hope that they will be a magic answer to their problems but they have only compounded the problems. I had one patient in my care who was operated on 30 times. It all began when he was reoperated on when in the process of a complaint—a litigation—against someone from a previous operation. A downward spiral can occur in clinical care.

The other problem is rehabilitation. I declare an interest, because I run a chronic pain management programme for patients who have chronic intractable pain that has not responded to any interventions when all interventions and investigations have been exhausted. I know from first-hand experience that patients do not do well who undergo litigation and have not achieved closure. They are always worried that someone will say that it is all in their minds, as a way of getting out of financial or care liabilities. Such patients cannot move on in the rehabilitative process, and it becomes almost a waste of expensive resources in pursuing a rehabilitative programme when, psychologically, they and their families are not ready for it.

Such patients come under huge pressure from those around them, who love them. Everything that happens to them is blamed on the original problem. Whenever they get a headache or a backache, which we all get from time to time, it is blamed on the original problem. People tell them that it must be because of what happened to them, which reinforces their inability to rehabilitate and move on. To put it in simple words, it impairs their ability to look at the bits that still work well and maximise them, and to learn to live with the bits that are damaged.

For those reasons, and because of my genuine fear that the clinical care of these patients will be seriously compromised if it is known that they are in the process of litigation that may go on to be revisited, I do not believe that the process of review of structured periodical payments or any other type of settlement would do any patient a service. In fact, I fear that it would do patients a great disservice.

6.15 p.m.

Lord Renton: Unlike the noble Baroness and the two noble Lords who spoke before her, I cannot claim to have had any experience or expertise in the working of this matter. I retired from the Bar when I was 66, which was 28 years ago. However, as a parliamentarian who happens to be a lawyer, I like to see any legislation dealing with the administration of the law put into workable and simple phraseology and practice.

Amendment No. 140ZC would remove from the Bill a system that would cause delays and unnecessary confusion. Surely, the aim of obtaining necessary flexibility should be achieved in ways that do not cause delay. On page 46, in new Section 2B, under the

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heading, "Variation of orders and settlements", we find a most elaborate scheme. The Lord Chancellor is given wide powers to cause variation without, it seems, much consultation on his part.

Under subsection (6) we find:

"An order under this section . . . shall be made by statutory instrument".

It cannot be made,

"unless the Lord Chancellor has consulted such persons as he thinks appropriate".

But who are they? Are they the parties to the action which perhaps took place long before? The order may not be made,

"unless a draft has been laid before and approved by resolution of each House of Parliament".

Of course it is right for Parliament to lay down what the law should be and endeavour to achieve justice, but it is extraordinary to suggest that the variation of an order should become the responsibility of Parliament, requiring that a draft be laid and approved by resolution of each House of Parliament.

The provision goes into further complication when it states that the statutory instrument,

"may include transitional, consequential or incidental provision".

We are anxious to achieve justice. Indeed, as I understand it, although it is so many years since I practised, the Supreme Court Act 1991 and the Damages Act 1996 have caused justice to be further obtained. However, I sympathise with the views put forward by my noble friend Lord Hunt of Wirral when he criticises the whole scheme of new Section 2B. I most earnestly hope that the noble Baroness, on behalf of the Government, will think twice about it.

Lord Donaldson of Lymington: I have just one small point. The noble Lord, Lord Renton, was speaking, as I understood it, in contemplation of the Lord Chancellor making an order with regard to a specific case. I certainly had not so read it. I had thought that this was a power to create categories of case in which the court can take that action. Perhaps the Minister will tell me whether I am right about that.

Baroness Scotland of Asthal: I thank all noble Lords who have so far spoken. A number of themes are clear. First, there is general assent to the need for periodical payments and for them to be robust. Secondly, there is total agreement that closure—mentioned by the noble Baroness, Lady Finlay of Llandaff—for claimants who find themselves involved in this sort of litigation is absolutely critical. We hope that the way in which the Bill is currently phrased will enable such closure to take place, and the variation which is permitted within the Bill will not do violence to that principle. This group contains some very complex and detailed amendments and I want to do each of them justice. I think that they merit individual consideration.

These amendments, none of which is consequential on any other, all relate to the provisions in the Bill for the variation of periodical payments orders and settlements. Amendment No. 140ZC would remove Section 2B entirely. I am sure that the noble Lord, Lord Hunt, will

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not be surprised to hear that the Government cannot accept this amendment. The principal purpose of periodical payments is to meet as accurately as possible the actual needs of claimants as they arise. The provision of a power to allow scope for variation in defined circumstances is an important element in realising the full benefit of periodical payments. I say in passing that the comment of the noble and learned Lord, Lord Donaldson, was apposite.

Our recent consultation paper sought views on a number of options. The majority of respondents were in favour of some form of variation, with a significant number wanting something much wider that that which we are now proposing. However, I fully understand the views expressed by the insurance industry and medical defence organisations—and their desire for certainty regarding their outstanding liabilities, which were fully outlined by the noble Lord, Lord Hunt. For that reason, we have adopted a cautious approach to variation.

As stated in the Explanatory Notes, the order will, as far as practicable, adopt the mechanism currently applying to claims for provisional damages. The circumstances in which further damages may be requested shall be set out in the initial order of the court and relate only to the individual claimant's medical condition attributable to the original accident.

There are two small but important differences when compared with provisional damages: the rules on variation will allow defendants to apply, and the circumstances will include both deterioration and improvements. Circumstances sufficient to justify a variation will have to amount to a significant change, which will keep minor disputes away from the courts.

Our intention is that the power to vary awards of periodical payments will be tightly drafted and carefully controlled—including a requirement for the court's permission before any application can be made. Any future exercise of the Lord Chancellor's power to specify the circumstances in which an order can be varied would be subject to consultation and affirmative resolution by Parliament.

Such a restricted system of variation should not require additional compensation over and above that already payable. Insurers are already providing for such eventualities—usually by way of contingency payments—but because the amount of the award has to be calculated at the time of the original order, that can involve estimates of future need that may not be accurate. I am sure that your Lordships have known of many such instances.

In some cases, claimants might not receive the compensation to which they are justly entitled, resulting in their needs not being met or having to be funded by the taxpayer. In other cases, defendants and insurers may make substantial and unnecessary payments for events that never occur. That is clearly the worst of both worlds.

In cases where there are real difficulties in assessing the likelihood of a claimant developing a particular medical condition or overcoming a medical disability at the time when the periodical payments order is

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made, a variable order can provide the best solution. The Government recognise that in the majority of cases a non-variable award is likely to be more appropriate. Many foreseeable changes can be built into an annuity—and some are. The annuity can be used in a flexible way to reflect anticipated changes in the claimant's needs. There is no reason for that not to continue. The more creative that the insurance industry can be in providing flexible annuities to meet future change, the less likely that wider scope for variation will be needed. It will be less likely too that the order-making power will need to be used again.

I reassure the Committee that we have no plans to extend the scope of variation after the initial order. We want to see how the intended regime works. But that should not prevent us from keeping open the option of extending or limiting further the extent of variation in the light of experience and future developments in the insurance market, or making any minor adjustments should that prove necessary. I believe that an order-making power provides the flexibility to do so and is the best way of dealing with variation. The need for consultation and affirmative resolution will ensure that any future proposal—and, as I have indicated, none is planned—is subjected to rigorous scrutiny and debate. We believe that the greater use of periodical payments will have benefits not only for claimants but also for defendants and their insurers and that the power to vary is a necessary and important part of the new system.

I understand and have listened carefully to the anxieties expressed. I hope that now, as I respond to specific amendments in turn, I shall be able to allay those anxieties to noble Lords' satisfaction. Amendment No. 140C would limit the power to vary to circumstances where the original court order expressly permits it. We intend that the initial order will allow variation only where it is specifically provided for in the court order. This type of detail is more appropriate to the order-making power. We believe that it is unnecessary and unduly restrictive to include such a requirement in primary legislation.

Amendments Nos. 141ZA and 141ZB limit the provisions that may be included by the Lord Chancellor in an order enabling the upward variation of a court order for periodical payments. The limits they would introduce are based on the wording of Section 32A of the Supreme Court Act 1981 relating to the courts' existing power to award provisional damages, but are considerably more restrictive. Section 32A permits provisional damages to be awarded where there is proved or admitted to be a chance that, at some definite or indefinite time in the future, the claimant will develop some serious disease or suffer some serious deterioration in their physical or mental condition as a result of the defendant's act or omission.

The amendments would require proof or admission at the time of the original court order that the disease, deterioration, and, in the case of Amendment No. 141ZB, improvement, would occur.

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6.30 p.m.

Lord Goodhart: I must point out that Amendment No. 141ZA states that it has to be proved or admitted in the original hearing that,

"there was a chance that at some definite or indefinite time in the future".

I confess that in my original amendment I left out the words about chance, but it was replaced by the present version, which refers to "a chance" rather than to proof.

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