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The noble Viscount also asked what representations had been made with regard to the penal code. The points made in the September 2006 monitoring report do not concern the application of the asylum law. Concerns have been raised regarding corruption and organised crime but those are not covered by that report. We have not made independent representations on those issues.

It is not possible to make precise predictions regarding the future, but if a state’s processes and structures began to deteriorate to a point where, in general, international obligations were no longer being met, of course we would want to take steps and make representations. However, we would expect that steps would have been taken in any event to address any concerns expressed at Community level, given that the countries concerned would not have met EU standards. All members of the EU have to be bound by EU asylum instruments.

The noble Earl, Lord Sandwich, raised the issue of people who are trafficked and retrafficked. Again, the order concerns asylum seekers, not victims of trafficking. We are concerned about this issue and the noble Earl has taken part in debates on it with myself and others representing the Government on a number of occasions. We clearly need to work with our EU partners on this issue. We believe that both Bulgaria and Romania are safe for refugee convention purposes but that such issues could be raised in human rights claims and considered in the normal way. I thank the noble Earl for raising the issue, but this is not the most appropriate forum to discuss it.

The Earl of Sandwich: My Lords, I am sorry to press the point, but I emphasised that the order affects those from third countries who happen to be in those two countries.

Lord Bassam of Brighton: My Lords, I shall reflect on what the noble Earl has said and if there are some relevant points of detail, I shall write to him and share that information with other noble Lords who have spoken.

The arrangements regarding the Accession (Immigration and Worker Authorisation) Regulations are in the best interests of the United Kingdom because we believe that migration is of benefit to us economically. There is consensus on that issue. We need there to be confidence in the system that we respond properly to concerns raised by the public about the impact of these measures. If we did not do that, the public might expect more drastic action that would not be in the best interests of the UK.

We are welcoming highly skilled migrants who will have free access to our labour market. We welcome skilled workers, too, but we need to be satisfied that

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they will not displace resident labour—and that is the explanation of the way that the order will work. We welcome low-skilled labour if we are satisfied that there is a real need for it and that there are insufficient workers from other EU states; and of course we welcome working students, provided that they operate within the rules.

These proposals are in tune with our broader policies on immigration and migration where they are in the interests of the United Kingdom, but we act to control and tackle abuse. We must ensure that migration is used to strengthen our economy, but we need to balance that by paying attention to its social impact, sharing responsibility for migration with people such as employers who benefit from it, but also working with employers to ensure that they benefit from the new system.

The noble Viscount, Lord Bridgeman, asked for an estimate of how many A2 nationals might come to the United Kingdom within the terms of the order. Perhaps with the benefit of hindsight, we believe that it would be inappropriate for the Government to make precise predictions. The number of skilled A2 workers who will come will depend on the skills gaps in the economy. As I made clear in my opening remarks, we will apply a quota of 19,750 A2 nationals who can access our schemes for lower-skilled migrants. For what it is worth, the 2001 census revealed that some 7,500 Romanians and 5,350 Bulgarians already lived in Britain and that suggests that we are entering a stage where we are right to have set out a more managed approach to issues of migration from accession states.

The noble Viscount raised the issue of contractors. To ensure compliance, we intend to make workplace-based checks. Revenue and Customs will co-operate and assist us with that work. On low-skilled workers generally, the answer to the noble Viscount’s point is that, yes, they can leave and come back, but coming for six months in one year and six months in the following year would break the continuity of residence.

I think that I have answered most of the points raised by noble Lords. If I have not, I will study Hansard closely, try to respond to their points in writing and share that information, as I usually do.

Viscount Bridgeman: My Lords, I am well aware that the points raised in the report on preparedness covered departments that are outwith the scope of the order, but they nevertheless form a background of concern to the House in respect of the preparedness of the whole governmental system, particularly in Bulgaria. Will the Minister write to me on those points, on the Government’s response to the report and on whether they are satisfied that the necessary requirements have been met?

Lord Bassam of Brighton: My Lords, I thought that I had responded to that point in reference to the Commission report. I shall study the noble Viscount’s point and happily write to him on any of the issues that perhaps we may not have adequately covered in this limited exchange.

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Lord Dholakia: My Lords, perhaps the Minister might send me a copy, too, because I shall be interested in his response.

Lord Bassam of Brighton: My Lords, it should be taken as read that I shall share that information with other noble Lords who have been involved in this discussion.

On Question, Motion agreed to.

Accession (Immigration and Worker Authorisation) Regulations 2006

7.19 pm

Lord Bassam of Brighton: My Lords, I beg to move the Motion standing in my name on the Order Paper.

Moved, That the draft regulations laid before the House on 21 November be approved. Second Report from the Statutory Instruments Committee.—(Lord Bassam of Brighton.)

On Question, Motion agreed to.

Compensation Act 2006 (Contribution for Mesothelioma Claims) Regulations 2006

7.20 pm

Lord McKenzie of Luton rose to move, That the draft regulations laid before the House on 2 November be approved. First Report from the Statutory Instruments Committee.

The noble Lord said: My Lords, I welcome the opportunity to present this debate on amending the Financial Services Compensation Scheme to help sufferers of mesothelioma to receive more timely access to compensation.

As the House will know, mesothelioma is a cancer of the lining of the lungs or abdomen, which is almost always caused by exposure to asbestos. The Government legislated in the Compensation Act 2006 to help claimants suffering from mesothelioma to obtain the compensation to which they are entitled as quickly as possible. This was achieved through reversing the effects of the House of Lords judgment in Barker v Corus UK and conjoined cases. The Government took the view that the practical effects of that decision would have made it more difficult and time-consuming for sufferers of mesothelioma to obtain full compensation in circumstances where sufferers and their families were already under considerable pain and stress.

The Compensation Act provides that, where a person has negligently or in breach of statutory duty caused or permitted another person to be exposed to asbestos, and as a result that person has contracted mesothelioma, the negligent person will be jointly and severally liable. This will enable the claimant to recover full compensation from any responsible person.

When the change was made in relation to mesothelioma liability through the Compensation Act, an issue arose concerning the Financial Services Compensation Scheme and direct improvements that

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could be made to speed up access to compensation. The FSCS is an industry-backed fund of last resort relating to financial services products—in this case, insurance. It provides a consumer safety net in relation to financial services and can pay out compensation if a firm is unable or likely to be unable to pay valid claims against it. It is an independent body set up under the Financial Services and Markets Act 2000. The rationale behind the scheme is that it gives people the confidence to invest in and use financial services. It is not a fund to provide general compensation—that would be a fundamentally different compensation scheme.

Following the Government’s decision to reverse the effects of the Barker judgment, the Treasury has laid legislation to allow the Financial Services Authority to make changes to the FSCS to help victims of mesothelioma to receive more timely access to compensation. Broadly speaking, under the proposed changes negligent employers and their insurers who have paid victims of the disease will now be able to claim a contribution from the FSCS in certain cases. This should help to avoid delay in compensation being paid to claimants while the FSCS’s liability is being established. It is also fairer to insurers and responsible persons who, without these changes, would not be able to pay the mesothelioma victim up front and subsequently recover a contribution funded by the FSCS. It is a process change that does not change the overall liability of the FSCS.

The proposals have retrospective effect and allow payment of compensation to a responsible person or their insurer notwithstanding that they have already made a payment to the victim where the application for payment is made on or after 25 July 2006. The Treasury’s powers under Section 3 of the Compensation Act 2006 and the regulations laid before Parliament, provided for in subsections (7) to (11) of that section, are part of the section on damages for mesothelioma. These subsections conferred a power on the Treasury to make regulations about the provision of compensation under the FSCS to a responsible person or an insurer of a responsible person in specified circumstances. Broadly speaking, these regulations include two additional powers to enable the Financial Services Authority to make various rules in relation to the FSCS.

Regulation 2 sets out a power that deals with claims involving insurers subject to insolvency and other defaults that took place before the commencement of the FSMA on 1 December 2001. The power applies where the following conditions are met. First, where a claimant could have claimed under the FSCS order where Section 3(1) of the Compensation Act applies. The power is therefore restricted to claims relating to mesothelioma, because Section 3(1) applies only where a responsible person has negligently or in breach of statutory duty caused or permitted a victim to be exposed to asbestos. Secondly, where the victim has contracted mesothelioma as a result of exposure; thirdly, where it is not possible, because of the nature of the disease and the state of medical science, to say whether this exposure caused the illness; and, finally, where the responsible person is liable in tort for the exposure in connection with the damage caused to the victim.

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Moreover, the power to make rules will apply only where and to the extent that a responsible person could claim a contribution from another person who is also responsible for causing damage to a mesothelioma victim under the Civil Liability (Contribution) Act 1978 but is unable or likely to be unable to get a contribution because an insurer of the other responsible person is unable or likely to be unable to satisfy the claim for a contribution.

The regulations also set out various specific situations that can expressly be covered by the FSA’s rules concerning the FSCS. These are that payment can be made under the new rules even though payment has been made to the victim; the value of the payment to a responsible person would not exceed what would have been available to the victim from the FSCS; payments could be made concerning applications made on or after 25 July 2006, which was the date of Royal Assent of the Compensation Act 2006, and, by virtue of Section 16(5) and (6) of the Compensation Act, can cover payments relating to a victim’s claim on or after 3 May 2006. The power also enables the rules to include payments to insurers of responsible persons.

Regulation 3 is in almost identical terms to Regulation 2. The power will allow the FSA to make rules concerning mesothelioma claims where insurers involved enter insolvency or default on their payment obligations on or after 1 December 2001. The only changes are to make the power work in the context of the FSMA generally.

The final provision in the regulations relieves the FSA of the statutory obligation to consult on its rules and any guidance that it publishes on this subject solely for the first time that this power is exercised. However, a joint consultation has in fact been carried out by HMT and the FSA, a summary of responses to which has been published on the Treasury’s website. The proposal was widely supported.

Once the Treasury’s regulations are made, the Financial Services Authority would put the proposed rule changes to its next available board meeting, which is scheduled to be later this month.

In summary, we are making a minor change to the FSCS to allow the Financial Services Authority to make rules facilitating the faster payment of compensation to victims of mesothelioma. This step was required as a direct result of the Compensation Act 2006, but it is none the less an important step in helping victims of mesothelioma to receive timely access to compensation and to make sure that insurers and responsible persons are not prejudiced with regard to the operation of the FSCS. I beg to move.

Moved, That the draft regulations laid before the House on 2 November be approved. First Report from the Statutory Instruments Committee.—(Lord McKenzie of Luton.)

Baroness Noakes: My Lords, I should like at the outset to declare an interest as a director of Hanson plc. It is fairly well known—at least in financial markets—

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that Hanson has a significant exposure to asbestos litigation, including that involving mesothelioma. I assure the House that that litigation is all in the United States and, to the best of my knowledge, I have no interests that would in any way affect my ability to deal with the regulations. With that clarification of my position, I thank the Minister for introducing the regulations in his usual meticulous way.

The plight of mesothelioma victims is not a matter for party politics. The Compensation Act improved the ability of those victims to gain compensation. The regulations in effect deal with the consequences for responsible persons and their insurers. The approach taken by the regulations has been consulted on, albeit under a shortened period for consultation. However, it seems to us to be a sensible way forward and we will not oppose the regulations.

If I may, I have a couple of questions to ask the Minister. The first relates to the ability of mesothelioma victims to get compensation, depending on the existence of a responsible person. If the responsible person no longer exists or is insolvent, the compensation then potentially depends on the ability to find an insurance contract and, through that, to trace a trail to the Financial Services Compensation Scheme. But, as the Minister will be aware, comprehensive paperwork is not a hallmark of companies that become insolvent or have been wound up, and that may leave victims without compensation. I completely understand that such cases will not impact on the FSCS, which is the subject of the regulations, but can the Minister explain what the Government intend to do about those cases? The document issued at the conclusion of the consultation period referred to the matter being taken up by the Department for Work and Pensions. I was a little puzzled by that, and I hope that the Minister can explain what the Government intend to do for this category of mesothelioma victims.

My second point concerns the statement at paragraph 8.2 of the Explanatory Memorandum that the regulations mean that government departments or former nationalised industries will benefit from being able to claim a contribution from the FSCS. Will the Minister explain how many of the 1,800 or so new cases each year are expected to result in the Government or a former nationalised industry paying compensation that is then recouped ultimately from the FSCS? How much money are we talking about each year? Are the Government, in effect, picking up the ultimate liabilities of the former nationalised industries involved, or are they borne by the industry, which is now in the private sector? In sum, how much are these regulations worth to the Government?

Subject to those points, I repeat that we support the regulations.

Lord Addington: My Lords, I believe that I should step carefully when approaching these types of regulations because I feel as though I am going into quicksand. Having said that, I agree with the general thrust of the regulations. It seems that we are trying to ensure that those who have acquired an industrial injury over a long period of exposure receive compensation. However, as has been explained to me by the Minister and by

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those outside, this is a difficult issue involving an injury acquired over a long period of time and a variable number of employers, some of which may no longer exist. We have therefore had to turn to a special type of regulations to enable the Government to ascertain the chain of employers who are liable to pay compensation and the level of compensation that can be paid to the victims. I think that I more or less have that right—that is, we are enabling payments to be made to people. If I am not right, I will put my hands up.

Can the Government assure us that the element of retrospection required to get these regulations on to the statute book will be regarded as a one-off? If not, questions arise that go beyond this issue. Other than that, I can see no reason for objecting to the measure, as it seems to be a practical way of providing a solution. But, given that the conditions surrounding it are unusual, I should like the Minister to assure us that it will not be normal practice to rely on retrospection to enable something to happen.

Lord McKenzie of Luton: My Lords, I thank the noble Baroness, Lady Noakes, and the noble Lord, Lord Addington, for their broad support for the regulations, and I shall try to deal with the points raised. The noble Baroness asked what the Government are doing generally about claims and what work programme is under way. The Government are taking forward a programme of work led by the DWP to improve the handling of mesothelioma claims to ensure that claimants receive the compensation to which they are entitled as quickly as possible. On 20 July 2006, John Hutton announced a number of interim measures to ensure faster compensation payments to those with mesothelioma, as well as the intention to put in place a long-term solution to ensure that, wherever possible, sufferers of mesothelioma can receive compensation in life. He committed to consult stakeholders on a long-term solution.

The DWP launched a consultation exercise to discuss improving claims handling. That consultation closed on 23 November. The DWP is currently analysing the responses and will publish a summary shortly. The DWP is also organising a mesothelioma summit on 13 March 2007 at which stakeholders will discuss options for action following the consultation. Within that process, there will be an opportunity to address the issues raised by the noble Baroness. In a sense, those are outside the specific proposals in the regulations, which are to do with process.

The noble Baroness asked what the measure is worth to the Government. The purpose of the regulations is to put us back in the position that we were in when the Fairchild judgment was operating. Under that judgment, it was accepted that there was joint and several liability in respect of claims. Therefore, the Government are in neither an improved nor a disadvantaged position.

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