EMPLOYERS EXEMPTED FROM INSURANCE (Hansard, 11 July 1969)

§ Mr. Deputy Speaker
The next Amendment selected is Amendment No. 14, with which we may discuss Amendment No. 15, in page 2, line 25, after 'control', insert: (c) all corporate bodies for whom the register of companies issues for the current year a certificate certifying that their net assets exceed £250,000.

§ Mr. David Mitchell
I beg to move Amendment No. 14, in page 2, line 25, after 'control', insert: (c) such public or private companies whose auditors certify that they have net realisable assets in excess of £250,000. The Amendment will fall into its natural place for those hon. Members who served on the Committee.
The Bill relieves certain bodies of a liability to effect insurance cover against various eventualities set out in it, and the list includes nationalised industries. I have no desire for a party dogfight on this, or to be dogmatic about it. Clearly, they have the funds to meet a claim for employers' liability without having to insure, and, therefore, I do not quarrel with their being included in the list of exemptions.
But nationalised industries are often in competition with private enterprise, particularly in the fringe activities of selling and servicing things like electric and gas equipment. If they are to be exempted from paying the premiums there should also be provision that those private enterprise industries equally able to pay any foreseeable claim out of their own funds should also be exempted.
In Committee, I sought to assist the hon. Member for Consett (Mr. David Watkins) by suggesting a form of words which could cover a large section of private enterprise, and so achieve a balance in the Bill in the treatment of nationalised and private enterprise industry. I suggested that companies listed on the Stock Exchange as trustee investments should be exempted. The Minister argued that that would not give anything like the right and proper cover, and having looked very carefully at what he said I think that he was right.
1797 Therefore, I have tabled Amendments Nos. 14 and 15, and I hope that the sponsor will take his choice from them. He does not have to accept both. If he accepts either I shall be happy that the balance that should be in the Bill is restored, and that it is left without any prejudice.
Amendment No. 14 speaks of such public or private companies whose auditors certify that they have net realisable assets in excess of £250,000. The hon. Member for Consett said earlier today that the largest claim he had been able to discover was £200,000, and I know that he has done a great deal of research and taken a great deal of care and trouble in going into the matter. The Amendment takes us well over that sum. It is the normal practice of the Inland Revenue to accept that auditors are not paid servants of the companies, hut stand between them and the Inland Revenue.
The Inland Revenue accepts what they say as a fair and impartial assessment of a company's financial position for tax purposes. Therefore, I would have thought that it would be entirely acceptable to the sponsor and the Government to rely on the same auditors to issue a certificate stating that the assets are worth at least that substantial sum.
But if, for some reason which I do not foresee, he is not prepared to accept Amendment No. 14, he should bear in mind that all these companies must file their returns with the Registrar of Companies. It would not be difficult for the Registrar to issue, on request from a company, a certificate certifying that its accounts showed that it had assets exceeding £250,000.
I leave it to the sponsor of the Bill to decide which Amendment he accepts, though I believe that it would be simpler to deal with the matter under Amendment No. 14.

§ Mr. David Watkins
The words "nationalised industries" and "private enterprise" are emotive on both sides of the House. But the fundamental point at issue is not whether there is discrimination between publicly- and privately-owned industry but whether the resources of any employing organisation are sufficient for it to meet any claim which might be made against it or are 1798 not, in which case it must be compelled to take out insurance under the terms of the Bill.

§ Mr. Mitchell
indicated assent.

§ Mr. Waddington
indicated assent.

§ Mr. Watkins
I am glad to see that I have the agreement of both hon. Gentlemen on that.
Amendment No. 14 aims to provide automatic exemption from the scope of the Bill for certain employers other than local authorities and nationalised industries which could clearly meet employers' liability without insurance cover. I am not trying to make points against the hon. Gentleman, but I am advised that the drafting of the Amendment is defective. The term "public company" is technically a category not known in the Companies Act.
Moreover, it would be very difficult for an auditor to interpret the phrase "realisable assets". For instance, he would have to consider whether stock in hand was saleable and whether good will represented a realisable asset, which would be very difficult to define. It is not clear how often the auditors' certificate would be required; assets might well fluctuate regularly, possibly from day to day, in concerns handling the inflow and outflow of large quantities of goods, for example.
I am not just cavilling in saying that the Amendment is defective; I say it to underline the very real difficulty here. I have every sympathy with the hon. Gentleman's intention, but the acid test is whether the resources are sufficient to meet any claims against them. I sympathise with the manner in which the hon. Member has tried to define this question, but I do not accept that the Amendment is a good way of achieving his objective, for the reason that I have outlined. Although it may be disappointing to him, I feel that I must resist the Amendment.

§ Mr. Waddington
We all know the objective of the Bill. It is to ensure that if a claim for damages is brought it will be met and will not be defeated because the claimant finds that the defendant has no means. Nationalised industries have been excluded because they are assumed 1799 to have the financial backing to meet any claim. Nevertheless, I am disappointd that the sponsor should raise drafting points. We raised these points in Committee.
I invite the Minister to give what help he can in this matter. It is not good enough to say that although it is conceded by the sponsor that there must be many companies which do not need to insure because they have the necessary financial resources they must nevertheless insure because no way of excluding them can be devised.
We are surely entitled to ask the Minister for his thoughts on the matter, and to be told whether the Government have considered ways of excluding certain categories of company. This seems to be an unnecessary imposition on companies which are well able to meet claims of any conceivable size. The nationalised industries are to be excluded because it is acknowledged that they can meet these claims. I have not gone into the legal technicalities of the matter, but I am disposed to agree that my hon. Friend's Amendment presents technical difficulties.
Surely it is not beyond the wit of man to find some way of excluding from the ambit of the Bill large companies who can meet any conceivable claim.

§ Mr. David Mitchell
I hope that the Minister will give us the benefit of his advice on the matter. It will be a little unfortunate if the sponsor shelters behind a quibble over the wording of the Amendment. I should be quite happy if he were to say that he was prepared to recommend that in the later stages of the Bill—in another place—Amendments would be brought forward with different phraseology but nevertheless embodying the principal which I have tried to put before the House—namely, that there are private companies and major firms which can pay any conceivable claim out of their own resources, and have no need to go to the expense which the Bill would place upon them.
For that reason, I hope that the sponsor will assist the House. If he will accept my suggestion I shall not press the Amendment. If he will agree to the principle and will try to frame an Amendment in the proper phraseology to carry out the principle which my hon. Friend 1800 and I have indicated I shall be happy to withdraw the Amendment.

§ Mr. Pentland
To clarify the position it may be as well for me to explain the Government's attitude. I take the point put forward by the hon. Member for Basingstoke (Mr. David Mitchell) and the hon. Member for Nelson and Colne (Mr. Waddington). As my hon. Friend has said, we have every sympathy with the intention of the Amendment. It would certainly be the intention of the Government, should the Bill become law, to provide for the exemption of employers whose financial position showed clearly that they need not be compelled to insure.
This matter was discussed at great length in Committee. However, there are difficulties in framing a satisfactory definition for the purposes of the Amendment, as I outlined in Committee. It is clear that considerable consultation will be necessary to produce a workable definition. It would be premature to adopt a hasty form of words at this stage. Adequate powers already exist to exempt other classes of employer, by Regulation. The Government undertake that there will be full consultation on the matter. I therefore support my hon. Friend in resisting the Amendment.

§ Mr. David Mitchell
rose—

§ Mr. Speaker
Order. I cannot prevent the hon. Member from speaking as many times as he wishes on the Amendment, but we are on the Report stage.

§ Mr. Mitchell
I am grateful to you for that guidance, Mr. Speaker. I rise only to beg to ask leave to withdraw the Amendment in the light of the assurance given by the Minister.

§ Mr. David Mitchell
I beg to move Amendment No. 13, in page 2, line 35, at end insert: 'and any successor local government authority whose liabilities are covered by the power to levy a rate'. I need not detain the House for any length of time on this Amendment. The Bill lists a series of local authorities—the Common Council of the City of London, the Greater London Council, the council of a London borough, the council of a county, county borough or county district in England or Wales, and so on.
1801 All these are forms of local government organisation which most hon. Members will appreciate as being—to put it at its lightest—at risk in terms of prospective legislation following the Redcliffe-Maud Report. Therefore, to ensure that no ambiguity or problem arises from exempting authorities which may not live for very much longer, I have adduced a form of words which I believe will be acceptable and will cover the point.

Mr. R. W. Brown
If my hon. Friend the Member for Consett (Mr. Watkins) will take it from me, having been through the exprience of London government reorganisation, I can tell him that it is normal form when such reorganisation takes place for the successor authority to accept the liabilities of its predecessor. That is common form. Therefore, I would have thought that if London were to go through another reorganisation the successor authorities would undertake the liabilities of their predecessors.

§ Mr. David Watkins
The hon. Member for Basingstoke (Mr. David Mitchell) has tried to anticipate the proposals contained in the Redcliffe-Maud Report. He is a little premature in that. The Amendment is not necessary. If local government reform is to be carried out there will have to be legislation, and that would be the appropriate vehicle for provisions transferring the functions of old local authorities to new ones. I therefore suggest that this is a superfluous Amendment.

§ Mr. David Mitchell
In the light of what has been said, I beg to ask leave to withdraw the Amendment.