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Lord Hunt of Wirral: I am very grateful to the noble Lord for his support in the idea of referring this matter to the Law Commission. In considering Clause 1, I think that there are a number of developments taking place—and this Bill has only just started its progress through this House. It has yet to reach the other place. A Select Committee is considering these issues and still has to report. It is going to be a matter of months before the Bill becomes an Act and receives Royal Assent, so there is time for the Law Commission to give us the benefit of its views; it is experienced in this area and has produced reports of some considerable detail in the past which have guided Parliament as to the right way forward. As the Minister has such an open mind and is genuinely seeking the right way forward, I think that I speak for all noble Lords when I say how useful it would be to be able to add to the advice that we receive the view of the Law Commission.

The Law Commission may say that the Minister is absolutely right and that the clause adds nothing, does not amend legislation and is a useful restatement of the
 
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law. Of course, that is a very helpful move with regard to the Government and the rest of us. But it may be that, in respect of the Minister's plea for those who criticise to come forward with an alternative solution, the Law Commission may have one in mind, as it is well experienced in resolving such problems. So I strongly welcome the support of the noble Lord, Lord Goodhart, in that regard.

I found myself to some extent in sympathy with several other points that he made, though not with all of them. There is no doubt that conditional fee agreements have added to the cost, and we must diagnose why that is. One of the problems was that CFAs were introduced without any research or pilot schemes; it almost seems as if it were an imperative overnight, as a result of Treasury pressure, to find some way in which to replace the civil legal aid system, with a very good sieve that was always there through local legal aid committees to decide whether claims should be supported. Now it is open season; the costs of dealing with these matters have gone up significantly and, as the evidence that the Select Committee has taken shows, even claimant lawyers admit the level of legal cost has now reached significant levels in comparatively small claims.

I am sure that the Minister has had an opportunity to read Care and Compensation, which the Association of British Insurers has produced. One point raised by the noble Lord was about the small claims track for personal injury claims; one recommendation of the ABI report was that the limit could easily and fairly be raised from £1,000 to £5,000, which would bring it in line with the small claims track for the majority of other claims, and remove substantial costs for a large number of straightforward and relatively low-value claims. That limit was set in 1991, 14 years ago, and has not been amended since.

I hope that the Minister will give us an indication of where she is with the consultation on amending the limit, which I understood was proposed, and, if there is to be consultation, when it is anticipated it will take place. Will she also give her reaction generally to the point being made that it is 14 years since that limit was raised? The situation and the landscape are different, and we are having to incur unnecessary legal costs which often fall on public bodies as well as on those who often have to deal with the claims on behalf of business, commerce and local authorities. I suppose that what I am particularly referring to are those many cases in which there is frequently no dispute about liability and no dispute about the right level of compensation.

We have to find ways of reducing the cost of litigation. I spoke in a debate earlier this week where I was able to quote the State of the Union address—and I know that the Prime Minister pays very close attention to what is said by the President of the United States. Since the Colgate summit—so named because both of them came out wearing such broad smiles that we could see their beautifully polished teeth—there has been much co-operation between the United States and the United Kingdom on a range of issues. In the State of the Union address, the President said that
 
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industry and enterprise are being held back by the compensation culture in the United States. I am not saying that the American system is here; I hope it never will be, with its problems of jury trial, contingency fees and joint and several liability, but the speech was a reminder that you can harm business and enterprise by allowing a compensation culture, or, at least, the perception of it, to gain strength. It would be very helpful to hear from the Minister how she proposes to deal with that.

Finally, I think we are all much of a mind that, although the Government have come forward with the best of intentions in Clause 1, before we could possibly agree that it stands part of the Bill, we need to get meaningful responses from the Minister on a range of issues that have been raised throughout this debate. There are more issues, and I hope we will have time for them in this sitting of the Committee. Answers are required to a whole range of questions. I pay tribute to the way in which the Minister has approached Clause 1 with such an open mind and such an open house. I warmly commend her for that, and I hope that she will be able to give us some further examples of that welcome attitude on the part of the Government.

The Earl of Erroll: I shall speak to this question, because I think it is essential that the clause stand part. I have to confess that I am a little lost in all the talk about conditional fee arrangements because I thought they were in Clause 2. I am not sure why we are jumping ahead of ourselves and talking about rates of compensation and things that we have not discussed in Clause 1. I thought that the point of Clause 1 was to prevent the growth of the compensation culture. I entirely agree with the noble Lord, Lord Hunt of Wirral, that that is the primary purpose of Clause 1. As he rightly said, if we do not reduce the compensation culture, business will suffer, as will education and children. More accidents will happen to people when they are older, because they will not have learned how to cope, they will be less able to travel and operate in the wider world and all sort of things like that. The consequences are quite large.

It is a nice idea to fire this off to the Law Commission, the Law Society and others to be debated even further, but at this moment schools are cancelling trips. I have heard of a school scuba diving trip to the Middle East, which has been happening for years, being cancelled because the school does not know how to assess the risks. It decided it is safer to cancel. We can go on with anecdotal evidence—genuine anecdotes, not just invented stories. If we do not do something about it, there will be no activities left. Small groups cannot fund the insurance. Insurance companies are ramping up insurance costs as a result of all this. Unless something is clearly stated, we will not put a break on the compensation culture. It is all very well for noble and learned Lords to say that there is no need to worry because the Tomlinson case has proved that it is okay. But that has not filtered through to the general public, nor, I suspect, to the legal profession at large, particularly to solicitors' firms where this is not their primary subject. Given the amount of legislation that pours out of Parliament
 
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every year and the amount of case law that changes how common law and statute law develop, how can they be expected to keep up?

5.30 pm

So I do not see any problem at all with having Clause 1. The misconception is real. It is out there with the general public, lawyers and insurance companies, whether you like it or not. Why not restate the law in a precise way so that lawyers can see in one brief clause exactly what it is? The other challenge, apart from the weight of legislation, arises from our adversarial system. Whether you win a case depends how good your lawyer is. That can completely change what Parliament intended. If the party who wants to prosecute the case lines up a QC against the other party's local county solicitor who has never come across such a case before, I know which side I would put my money on—except that I think it is probably illegal to bet on the outcome of cases.

The breach of statutory duty is a useful measure that should be inserted into Clause 1. If we combined it with some notion of physical risk, the point made by the noble Lord, Lord Goodhart, about meeting the standard duty of care means that you are not covering all the statutory duties in all the legislation out there but only those that refer to the standard of care that would be required for the particular activity that is risky or adventurous. Those proposals could usefully be incorporated in Clause 1. It would be a sad missed opportunity if this was to become a Bill merely about regulating ambulance chasers. We have a huge opportunity here to send out the message that we believe society and our children should have the chance to have some adventure and fun in life.

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