§ [Relevant documents: Fourth report from the Social Security Committee of Session 1994–95 (HC 196) on compensation recovery and the Government's response thereto (Cm 2997.]
§ Order for Second Reading read.4.39 pm
§ The Secretary of State for Social Security (Mr. Peter Lilley)
I beg to move, That the Bill be now read a Second time.
The purpose of the Bill is to ensure that victims get proper compensation, those responsible for causing injury pay that compensation and the taxpayer neither subsidises the negligence of others nor doubly compensates victims. The full package of reforms will save the taxpayer an extra £50 million a year.
The Bill deals with a less well-known part of the social security system. Nevertheless, it is an important reform because it brings the process of benefit recovery into line with a long-standing and widely agreed principle.
People suffering injury, accident or disease may sometimes receive compensation from a third party, such as an insurer. They may also, independently of that, receive social security benefits to meet their needs for lost income, or to meet extra care needs. So they could be entitled to two lots of money for the same needs. Benefit recovery prevents that, by recouping benefits paid from public funds. The policy is founded on the principle that an individual should not receive double provision to meet the same need.
Although that long-standing common law principle pre-dates the modern welfare state, Sir William Beveridge articulated it clearly in his historic report, "Social Insurance and Allied Services", published in 1942:An injured person should not have the same need met twice over. He should get benefit at once without prejudice to any alternative remedy, but if the remedy proves in fact to be available he should not in the end get more from two sources together than he would have got from one alone.From 1948, double compensation was prevented by recovering benefits from compensation, but compensation recovery was an inconsistent business. Compensation was reduced to recover benefits already paid, but the amount deducted differed from benefit to benefit. For some benefits, 50 per cent. was deductible. For others, the full amount paid was brought to account. Compensation could be reduced to reflect the payment of certain benefits for up to five years from the date of the incident. For other benefits, there was no time limit. That inconsistent approach disadvantaged some accident victims.
A key problem with the original rules was that the compensator kept the reduction on account of benefits paid. The taxpayer lost by subsidising the negligence of the person responsible for the accident, injury or disease. In a report produced in 1986, the National Audit Office concluded that it was wrong for public funds to be used to subsidise negligence.
The NAO recommended that the amounts deducted from compensation should be recovered for the taxpayer. Subsequently, the Public Accounts Committee urged the 171 Government to set up such a scheme. The Government commissioned a review of the relationship between compensation and benefit payments. Following the review, we decided to act.
In 1990, the Government shifted the advantage of recovery from the insurer to the taxpayer. That is the scheme we have now. The compensator deducts from the settlement an amount equal to the benefits that have been paid. He sends that amount to my Department and pays the balance to the victim. If the compensation is £2,500 or less, benefits are not recovered. It is straightforward and it keeps bureaucracy to a minimum. Compared with the previous system, it is also good value for money, and saved the taxpayer more than £130 million last year.
The Select Committee on Social Security played a part in focusing attention on the current scheme, and on ways by which it might be improved. At the beginning of 1995, the Select Committee decided toinquire into the policy and practice of the compensation recovery unit, and the legislation on which it is based".It took evidence from my Department and from a range of other interested parties and reported in July 1995. I pay tribute to the Select Committee and its Chairman, the hon. Member for Birkenhead (Mr. Field), who is in his place.
In its unanimous report, the Select Committee reached conclusions about the scheme that are of crucial importance. It stated:it was right for the Government to shift the advantage of recovery to the taxpayer who lost out to the insurer under the pre-1990 scheme.It added:the taxpayer should not be in the business of paying benefit for compensating individuals who have suffered injury or disease for which the courts would hold someone else responsible".The Government welcomed those conclusions, as they confirmed that we were right to introduce a scheme which has the protection of the taxpayer as one of its primary objectives.
The scheme also has two unintended consequences. The first is that some victims do not get to keep all or indeed any of the compensation intended for their pain and suffering. It arises because compensators pay for proven loss, whereas the state pays for needs. Compensators reduce the amount of compensation that they pay by the total benefit already paid, regardless of what the compensation is for. So the compensation a victim receives for pain and suffering may in some cases be eroded by the recovery of benefits paid for need. A typical scenario would involve someone who is already out of work, perhaps through redundancy, before the onset of a disease caused by his former employment.
While the person is out of work, his income needs are met by state benefits. After a time, a compensation settlement from the former employer is agreed. It might be £15,000, intended to cover his pain and suffering. There would be no compensation for loss of earnings, because the victim was already unemployed, even though the illness would have made continued unemployment likely. The amount paid out in state benefits might have built up to £10,000, so £10,000 of benefit would have to be paid back to the state. The victim would be left with only £5,000—a fraction of the amount intended to cover 172 his pain and suffering. To any reasonable person, that must seem unfair. The Government agree with the observation in the Social Security Committee's report on benefit recovery:We cannot accept that the general taxpayer should be reimbursed out of damages awarded for an individual's pain and suffering.The other unintended consequence concerns the operation of the small payments limit of £2,500. For compensation payments below that limit, benefits are not currently recovered. The intention of the limit is a sensible one: it is to avoid the disproportionate administrative costs of recovering small amounts of benefit from large numbers of small claims. However it also unintentionally creates a loophole, providing incentives for insurers and victims to agree compensation at or below the small payments limit.
One effect is that both the victim and the insurer may gain at the expense of the taxpayer. I can best demonstrate that if hon. Members allow me to lead them through a simple example. Let us suppose that a victim has received £3,000 in state benefits as a consequence of an accident at work. If the compensation agreed were £5,000, the insurer would pay £3,000 to the Department of Social Security and £2,000 to the victim. It would cost the compensator a total of £5,000. If instead the parties agree to compensation of only £2,500, however, the Department gets nothing and the victim gets the full £2,500. So the victim gets £500 more while it costs the compensator £2,500 less than if the settlement had been twice that sum.
Another effect is that the insurer may gain at the expense of both the taxpayer and the victim. A disproportionate number of compensation settlements seem to be pitched at or around the small payments limit of £2,500. That suggests that many victims settle for compensation at less than the true value. We cannot let either of those circumstances continue. The Select Committee concluded thatit was right for the Government to shift the advantage of recovery to the taxpayer who lost out to the insurer under the pre-1990 scheme.Furthermore, the Select Committee suggested that the Government should recover 100 per cent. of benefits in every claim. To recover all benefits means removing the small payments limit.
The Government published our formal response to the Select Committee report on 2 October 1995. As part of that response, I launched an extensive consultation exercise on the implications of reform along the lines proposed by the Select Committee, which was completed in November 1995. The compliance cost assessment of the Select Committee's proposals was published on 14 February 1996. A further consultation exercise to assess the implications of that assessment followed. The closing date for responses was in April 1996.
All the key interested parties, including insurers, victims' representatives and the Trades Union Congress, were involved. A variety of organisations and individuals responded to the consultation exercise, including those who are now taking a keen interest in the Bill's progress. I am grateful for the constructive approach taken by respondents, particularly the Association of British 173 Insurers, the Law Society, the TUC, the Association of Personal Injury Lawyers, and Clydeside Action on Asbestos.
§ Mr. Lilley
I do not often get that sort of response from the Opposition Benches, but I welcome it. I had a helpful meeting with John Monks of the TUC. I hope that he, too, found it fruitful.
The consultation revealed a wide consensus for the reform of the scheme, in particular the protection of damages for pain and suffering, although there were differences on the details of how that could best be achieved.
Our proposals offer a full and workable solution. They strike a balance between the views of practitioners and the protection of taxpayers. They place liability on the compensator to repay 100 per cent. of the benefits paid to an injured person in respect of accident, injury or disease. They allow the compensator to reduce compensation payments pound for pound only in respect of corresponding benefits repaid to the Department. That will enable victims of accident, injury or disease to receive full compensation for pain or suffering. Those changes are in the Bill.
I also propose to remove the small payments limit, which is set in regulations as part of the current scheme. However, I intend to retain the power to set a limit in case it should be needed in future. Other measures in the Bill will simplify the appeals system, while still protecting the rights of parties to settlements to challenge benefit recovery decisions.
The anticipated cost to insurers of implementing the new arrangements will be marginal. This area of the Department's work is specialised, and is set against the background of the insurance industry in which premiums for insurance against the sectors concerned exceed £8 billion a year. That is why we commissioned independent consultants to produce a compliance cost assessment. Fifteen major insurers were closely involved, and I should like to place on record our gratitude for their support and for the valuable assistance that they provided.
The cost of operating the new arrangements is likely to be between only £3 million and £7 million a year. The compliance cost assessment estimated that insurers would face increased claims costing between £52 million and £72 million in each year following reform. If passed on to policyholders, the increase in costs is likely to produce only moderate increases in premium rates. The assessment concluded that employers' liability insurance premiums could rise by around 5 per cent. and public liability premiums by around 3 per cent. Motor insurance premiums are expected to rise by no more than 0.5 per cent. We believe that such a rise in premiums will be seen as acceptable, given the protection that the Bill offers to victims and to the taxpayer.
The change that we are making is relatively straightforward, but the Bill may appear long and somewhat complicated. Rather than making piecemeal amendments to the existing statute, the parliamentary draftsman has restated the relevant part of the Social 174 Security Administration Act 1992 in its entirety. That will make it easier to see the proposed new scheme in the round without constantly having to refer back to a previous Act. Furthermore, if enacted in this form, it should prove easier for practitioners to absorb the changes that we are making. It should also help the scheme to run smoothly in the years following the reform.
Naturally, the Bill contains the necessary amendments to effect an important shift in responsibility for the repayment of benefit, but we have thought it right to disturb as little of the detail of the present scheme as possible. I believe that there is widespread consensus that it works well, and we do not want to put that at risk.
Subject to parliamentary approval, reform of the scheme will take effect from October 1997. Insurers will by then have had a year to prepare. The reforms will apply to cases settled from the date of implementation, including those in the pipe line. That is fair to accident victims. Otherwise, two accident victims in similar circumstances could receive different compensation on the same day simply because their claims were not initiated at the same time.
The Bill will achieve three important objectives. First, it will be fair to victims, allowing them to keep all compensation for pain and suffering. Secondly, it will maintain the principle that individuals do not receive two lots of money to meet the same need. Thirdly, it will be fair to the taxpayer. I commend the Bill to the House.
§ Ms Harriet Harman (Peckham)
The Bill was introduced in another place and was the subject of thorough discussion there for more than seven hours. I pay tribute to our noble Friends for their effort in scrutinising the Bill. Important issues were raised and questions answered, so I do not need to go through them again. I shall merely point out that the matters considered included the relevant period for the recovery of benefit, issues of certificates of recoverable benefit, heads of compensation and appeal.
We support the Bill and look forward to seeing it on the statute book. It involves issues of principle and practicalities. If someone is injured and cannot work, the social security system must protect that person, but it is also right that those who are negligent should pay compensation. The state should not be required to pay instead of, or indemnify, an individual or organisation that, through negligence, injures another.
The triangle of the taxpayer, the victim of negligence and the perpetrator of the negligence—or their insurance company—has presented us with problems. The system in operation since 1989 has been confusing and inconsistent, has been unfair to individuals and has discouraged them from making claims. The problem arises when, as a result of an injury, the social security system supports the victim—as is right—but then, sometimes many years later, the victim obtains a sum in compensation from the person who was negligent.
The compensation, or a large part of it, will already have been paid out in social security benefits, so much of the money is owed to the social security system, not the individual. The current system claws back benefits from the total amount of compensation above the limit of £2,500—not only the money awarded for loss of earnings, but that awarded for pain and suffering. The whole of a 175 compensation payment can be clawed back, and individuals can feel that they have taken on a case for nothing. The Social Security Select Committee, to which I also pay tribute, pointed out that that is revolting to any sense of justice. It is a disincentive to claiming—if the victims end up with nothing, why should they bother to sue?
We should remember that taking legal action is quite an undertaking: it might involve many meetings with lawyers; it might take many years; it might mean being subjected to an allegation of contributory negligence; it might involve having to give evidence in court and having that evidence criticised and challenged; and, without legal aid or the backing of a trade union, it might cost a great deal in legal fees. Many victims of negligence would rather stay away from the whole business, particularly if they stand to gain little from it. However, if they do not sue, the state gets no money back and the perpetrator of the negligence gets off scot free.
It is in the state's interest that the individual should sue. By allowing the individual to keep the compensation for pain and suffering, the Bill goes some way towards ensuring that the victim has an incentive to sue, because that person will keep some of the money won in damages.
That is right in principle. As the Secretary of State said, of course benefits do not compensate for pain and suffering and therefore any sum awarded in compensation for pain and suffering should rightly belong to the individual who has suffered and should not be clawed back by social security.
A wider issue is the human and monetary price of accidents. It is unacceptable that, as we head towards the end of the 20th century, when we know so much about what causes injury and ill health and how to avoid it, accidents and ill health caused by work cost between £11 billion and £16 billion a year, according to the Health and Safety Executive. A number of my hon. Friends will raise issues concerning the shameful neglect of health and safety at work. It is unacceptable that there should be such high tolls of accidents at work and of personal injuries in road traffic accidents; the Department of Transport estimates that road accidents involving personal injury cost £9.5 billion a year.
On behalf of the taxpayer, the Department of Social Security claws back part of the bill for accidents. Even taking into account the £130 million clawed back in compensation for those admitting to or being found guilty of negligence, however, the Department still pays out millions of pounds to maintain those who have lost their income or suffered permanent disability, mostly through injury at work or on the roads.
Prevention is better than compensation. What is needed and is long overdue is a cross-departmental approach to accident prevention. Such issues are all profoundly affected by Government policy. If the Government take insufficient action to cut accidents at work or to make cars and roads safer, the individual suffers and the taxpayer picks up the Bill—yet many such accidents are preventable. It is in the interests of taxpayers and the Department of Social Security, as well as the individual concerned, to challenge other Departments to reach for yet higher safety standards and not simply talk about apportioning the bill for the cost of the accidents.
The Secretary of State should be taking action to ensure that people claim wherever there is good cause of action. Unlike cases of medical negligence, where there is a very 176 low success rate and it is very difficult to predict which cases are likely to be successful, cases of traffic and work accidents are often very clear. According to the Association of Personal Injury Lawyers, more than 90 per cent of such cases, where there has been advice that there is a good cause of action, succeed.
How can the Secretary of State encourage justified claims? As I have said, it is in the interests of the individual and the taxpayer—and it penalises those who have been negligent—that he should do so. I should like to ask some questions to which the Under-Secretary could respond in his winding-up speech.
Has the Secretary of State considered whether he could do more to provide information about making a claim for personal injury? What information do benefit offices have and what information do they give people about the possibility of claiming for personal injury? Has the Secretary of State considered ensuring that information on claiming is given to all those who suffer injury at work or in traffic accidents? Has he considered whether such information could be available in general practitioners' surgeries and hospitals, where it could be picked up by a relative?
Only one in three victims of accidents make a claim for compensation. Although, clearly, not all accidents are a result of negligence, it is clear that many more than one in three are the result of it. Clearly, good cases are being dropped because the individual feels that there is no incentive to sue. In fact, my hon. Friend the Member for Edinburgh, Central (Mr. Darling) wrote to the Secretary of State on 20 February about a constituent of his who has a very good case but is not bothering to sue because it is not felt to be worth while. A problem has clearly been identified. Encouraging claims contributes to public policy objectives in two ways: it holds to account and penalises those who have been negligent, and therefore acts as a deterrent; and it recoups money on behalf of the taxpayer.
As well as considering giving more information to claimants, have the Government ever considered piloting a system—I hope that, if he is bothering to listen, the Under-Secretary will respond on this point—in which legal aid rules have additional flexibility for people claiming where the DSS will be the ultimate beneficiary? The difficulty lies where there is a good claim and the DSS has a big interest in it being made but the person concerned is not eligible for legal aid.
As I have said, although many claims have a good chance of success, they are not proceeded with because the plaintiff does not qualify for legal aid or, in the case of injury at work, have the legal backing of a trade union, and is not prepared to use his or her own money for a case where he or she sees little benefit. In its compliance cost assessment, Price Waterhouse estimated that every 1 per cent. increase in successful claims for personal injury—bearing it in mind that there is a 90 per cent. success rate—would save £21 million for the DSS in recoverable benefits.
Although the measures in the Bill go some way towards solving the problem, how can further progress be made? How do we deal with a situation in which the one who stands to gain—the DSS—has no locus standi as the plaintiff, and the person with locus standi as the plaintiff does not stand to gain? The pain and suffering exemption goes only some way towards dealing with that problem. 177 There is a strong argument for the DSS looking for further action to ensure that claims that are likely to be successful are pursued.
Has the Secretary of State considered, for example, that, with the agreement of the plaintiff, the DSS could step into the plaintiff's shoes? Has he considered that, in some cases, the DSS could indemnify individuals against costs? Those proposals would bear looking at. They would have to be evaluated, and might even need to be piloted, but cases are clearly being dropped and the exemption for pain and suffering goes only part of the way towards solving the problem.
In certain cases, the DSS could provide funding to support legal action; it could have its own fund to receive payments of compensation to provide further support for legal action. Those are only proposals, but they should be looked at, since we still have not found our way out of the triangle of different interests.
By abolishing the £2,500 limit and allowing victims to keep compensation for pain and suffering, the Bill makes a vast improvement. It brings greater fairness to individuals and the taxpayer—but it is only a start. Hundreds of millions of pounds of taxpayers' money could be saved by more imaginative and purposeful cross-departmental work to prevent accidents at work and on the road and by supporting those involved in accidents and encouraging them to pursue justified personal injury claims.
§ 5.7 pm
§ Mr. Eric Clarke (Midlothian)
Coming from a background of industry, especially the mining industry, as you do, Mr. Deputy Speaker—I spent 26 years underground—I do not consider people concerned with the Bill to be numbers. They are colleagues, friends, and even relations. Many have passed away. When such people come to my surgeries, the disgust and anger expressed—especially by friends and loved ones—about the clawback makes me very angry, too.
The effects of an industrial disease or injury, especially of pneumoconiosis, asbestosis and mesothelioma, on the victim and his family are astronomical. The loss of income as a result of injury in employment immediately affects not only the person but his family. The disabling effect on the individual is traumatic. Even an individual's character alters—sometimes not for the better—because he or she can no longer attend to many of the things that used to be done normally, such as pouring a cup of tea or going to the toilet.
Mental anxiety and guilt are felt when the victims blame themselves for their predicament. We cannot compensate those people or their families for the sadness caused. It is said that to give one's life for one's friend is the greatest sacrifice. To give one's life and health for industry is, in my opinion, never compensated for properly and never can be. However, as a society, we must make life tolerable for victims and compensate them financially at least.
My hon. Friend the Member for Peckham (Ms Harman) mentioned the difficulty of claiming compensation. An ill person faces the ordeal of clinical examinations and cross-examination in court—in other words, humiliation from start to finish. If, because of delays, all the 178 settlement is recovered by the Government, why bother? People ask me why they should go through the traumatic experience of appearing in court and being criticised and humiliated. As the Secretary of State admitted, if the settlement does not exceed the clawback amount, the taxpayer has to foot the bill, and the firm that is liable can walk away scot free. The limit of £2,500 has caused people to give up on their genuine claims, because they fear losing even that pittance. It is a pittance in comparison with a life.
There are exemptions to the £2,500 limit. The National Coal Board—later British Coal—had a pneumoconiosis scheme, which was exempt. The hearing loss agreement, the criminal justice compensation scheme and many others do not have the compensation awarded clawed back. Exemption has been sought for asbestos cases, especially mesothelioma. If the Bill comes into force with immediate effect, and the retrospectivity provisions are retained, asbestos cases may be more proactively pursued by the persons responsible for causing the diseases and their insurers, but that will not help mesothelioma sufferers.
Mesothelioma is a category of asbestos damage that is readily diagnosed and cannot be confused with other conditions. The mean time of survival is 44 weeks from the date of diagnosis, and earlier diagnosis is extremely difficult. It therefore has a clearly defined period from diagnosis to death. It is a virulent form of asbestos disease that causes the person to become grossly disabled and bedridden in a short time. It is also notoriously painful, needing substantial administration of pain-killing drugs, including morphine. Against that background, cases have to be progressed with all the difficulties referred to in the Social Security Committee report, in paragraph 54 and the quotation from the Minister.
The Government have recognised the urgency of cases of mesothelioma by dispensing with the period of 90 days for the award of industrial disablement benefit. They have therefore recognised the particular difficulties of the disease and the need for exemption. If the Government allow those responsible for such injuries to seek set-off under clause 8 or to apply for review and appeals—all of which cannot be determined within the mean time of survival—they will cause delays in progressing such cases.
Any obstacle to progressing the cases should be removed. Given the limited survival time, in some cases benefit is awarded only shortly before death, and the Government would be in the absurd and harsh situation of giving benefit and taking it away at the same time or shortly afterwards. The benefit would invariably be taken away from the widow or widower and the deceased's estate. Although the benefit might be substantial for the mesothelioma sufferer or his estate, the cost to the taxpayer would be negligible.
I hope that the provisions on retrospection will be taken into account. The Bill fails to address an absurdity, in clause 3, that occurs in the provisions on appeals, but the problem may be dealt with through regulation. As matters stand at present, judgment may be made in favour of the injured person. If an appeal is not made on the judgment, the consequent payment is subject to compensation recovery unit recoupment. If an appeal is made, additional CRU benefit accumulates after the judgment. Appeals can also take some time—in many cases, as long as, if not longer than, the original action. I ask that benefit be clawed back only for the period up to the original judgment.
179 The Bill will redress in part the gross injustice of the present regulations that recoup money from victims' damages, but some principles and issues will not be satisfactorily resolved by it. As my hon. Friend the Member for Peckham said, the Bill is a beginning, not the end, in solving the problem.
§ Ms Liz Lynne (Rochdale)
The Bill also has my full support: it is modest, but much needed, and it will right some serious injustices; it will also save the taxpayer money. I hope that it receives Royal Assent before the general election, because it is important to get it on the statute book. It will stop state benefit being clawed back from persons who have been injured. If people sue their employers successfully, and the compensation awarded to them is above the £2,500 limit, all the state benefits they receive after the injury is clawed back. That cruel system was introduced by the compensation recovery scheme in 1990. It was bad for victims, bad for health and safety standards and bad for the Treasury and the taxpayer.
The scheme was bad for accident victims because it gave insurers an incentive to drag out cases and put pressure on victims to settle early and for less money. The Secretary of State mentioned the Trades Union Congress, which has estimated that one in 10 compensation claims started in 1989 have still not been settled. Often, the accident victims have settled for less than £2,500 because any excess would be clawed back.
The scheme was bad for health and safety, because it reduced the level of compensation. Most employers ensure that they practise good safety regulations, but some unscrupulous employers might have felt that they did not need to maintain a safe working environment because insurers no longer had to pay out large sums.
The scheme was bad for the Treasury and the taxpayer, because victims often settled for sums below the £2,500 limit and the Treasury got nothing back. Unison gave me an example. In 1990, 40 claims were settled for £2,500; in 1993, 270 were. We can see the changes that the compensation recovery unit brought about. There was no increase in the overall number of cases, so we cannot use that as a reason for the higher figure.
The GMB said that 12 of the 487 cases in 1990 were settled for less than £2,500, but that, in 1994, 56 cases out of 496 were settled for that sum. That is a fourfold increase. A similar increase has been mentioned by other unions, and I know that unions and personal injury solicitors have written in support of the Bill to hon. Members from all parties.
The evidence has been ignored for too long. On 20 March 1995, in answer to a parliamentary question about the number of claims made for less than £2,500 since 1990, I was told that the information was not readily available. If the Government had monitored claims since the introduction of the compensation recovery unit, the injustice would have been sorted out far sooner. It is interesting to note that they did not do so, and that the figures were not available to me or to other hon. Members.
The Bill will address the issue at long last. I do not claim, any more than other hon. Members do, that the Bill is perfect. Earl Russell, my colleague in another place, 180 pressed for amendments, and various organisations want minor changes. None the less, those organisations are keen for the Bill to become law.
I hope that, in Committee, we shall be able to make improvements, especially by way of amendments to clause 8, so that the compensator will have to provide a breakdown of the gross compensation under the three categories in schedule 2. It would then be easier for victims to assess the offer before them.
Although I want improvements, I welcome the Bill, and I believe that it must become law.
§ Dr. Norman A. Godman (Greenock and Port Glasgow)
I must tell the Secretary of State that it was I who cheered him earlier when he rightly and properly complimented members of Clydeside Action on Asbestos on their sustained campaign on behalf of asbestosis sufferers throughout the United Kingdom, not just those who live near the Clyde.
There is a question that I should like to ask the Under-Secretary of State who is to wind up. It was prompted by a telephone call that I received this morning from the representative of a voluntary association in Northern Ireland. The Minister will see from his copy of the Bill that the fourth paragraph of the explanatory and financial memorandum says:The Bill extends to Great Britain. Corresponding provision may be made for Northern Ireland by Order in Council.I always like to see the word "shall" rather than the word "may" in such cases. I should be grateful if the Minister would confirm that, when the Bill becomes law, it will be followed immediately by such an Order in Council, for the benefit of all the sufferers in Northern Ireland. The Minister is smiling, but I am sure that he agrees that that is important.
§ The Parliamentary Under-Secretary of State for Social Security (Mr. Roger Evans)
I was smiling only because I have the answer to the hon. Gentleman's question. It is yes.
§ Dr. Godman
I am delighted to hear that. I am sure that the voluntary organisations and, much more important the sufferers and claimants, in Northern Ireland will be pleased with the Minister's emphatic assurance.
It is not for me to ask the Minister lots of questions now, because I hope to be lucky enough to be on the Standing Committee, but may I ask him one more? I have received several complaints about the time that it takes for an appeal against a decision of the compensation recovery unit to be heard. If the Minister cannot respond to those complaints now, will he do so later in writing?
I believe that an increasing number of appeals have been upheld over the past two years; it is doubly unfortunate if a person making an appeal has to wait an unconscionably long time before it is even heard, let alone decided.
Having served my time in a shipyard as a shipwright, I, like my hon. Friend the Member for Midlothian (Mr. Clarke), have seen many serious injuries. As one who is closely associated with the fishing industry, I have also come across numerous fatalities in that industry, both when vessels are at sea and when they are tied up at the quay.
181 I welcome the Bill. It is an important measure—although the Secretary of State and the Under-Secretary of State will not be surprised to hear that in my view it does not go far enough. The Secretary of State would be astonished if I were more complimentary than I already have been. I have frequently engaged him in debates on issues concerning constituents and others in the unfortunate position of having to seek social security incomes of some kind from the state. If nothing else, the right hon. Gentleman usually listens courteously—although he usually gives me an equally courteous dismissal.
I have always thought that the CRU was engaged in a squalid exercise, but the record of the insurance companies is far more despicable than that of Ministers and officials in the Department of Social Security. Ministers have, at least partially, seen the error of their ways, but insurance companies seem much more concerned with providing benefits for their boards of directors than with dealing expeditiously with the legitimate claims brought by people, many of whom have been severely injured or are terminally ill.
I am sure that I speak for every hon. Member when I say that I have seen such people in my surgeries—terminally ill people with asbestosis, for example. I do not say that that disease is peculiar to the shipbuilding and construction industries, but people in those industries who have given loyal, skilled and hard-working service to their employers have often been made to suffer dreadfully because of those employers' sheer negligence and indifference.
The insurance companies have a poor record in that regard. Their conduct when dealing with such cases is always characterised by prevarication and procrastination. It is disgraceful that cases involving people who are seriously injured or who suffer from a terminal illness take so long to settle.
What is the average length of a case involving such a person—three years, four years, five years? I have dealt with some cases recently, involving people making claims against the hospital board, and been told that the average is five years. Is it the same for asbestosis sufferers and people who have been injured because of the negligence of their employers?
I wish to record my grateful appreciation of the efforts of the Union of Construction, Allied Trades and Technicians, the GMB, the Transport and General Workers Union and, last but not least, those of the members of Clydeside Action on Asbestos, including some of our Scottish colleagues who are in the Chamber today. The Scottish Trades Union Congress and the TUC have also played an important role.
On behalf of my constituents and others in Scotland who have suffered the problems that we are discussing, I wish to express thanks to my hon. Friend the Member for Birkenhead (Mr. Field), the Chairman of the Select Committee. My hon. Friend had to attend a meeting at 5 o'clock, so he offers his apologies for his unavoidable absence from the debate.
I thank my hon. Friend the Member for Clydebank and Milngavie (Mr. Worthington) for organising a remarkable meeting with the Chairman of the Select Committee and other interested Members of Parliament that enabled some 182 seriously ill members of Clydeside Action on Asbestos to present their cases to us. I am sure that that had an effect on those members of the Select Committee who attended the meeting.
I received a letter and a briefing from Margaret Sharkey of UCATT. The briefing said:Last year UCATT dealt with nearly 900 cases of industrial injury or disease winning over £5 million in damages for UCATT members with average settlements of £6,015. But at least half a million pounds was clawed back by the Compensation Recovery Unit.It went on to say:Compensation is paid by employers/insurers because they have broken the law".That is an emphatic statement with which I have a great deal of sympathy.
The briefing continued:if the government is unhappy about the price of ill health and injury on our building sites they should settle the score with those who are responsible by tougher enforcement of health and safety regulations, stricter penalties for those who break them and clawback of DSS benefits, if needed, from the employers/insurers on top of the settlement to the victim.My reason for saying that I have a great deal of sympathy with that emphatic statement is that I have seen other accidents in the industries that I know well, largely—not always—brought about by the negligence of employers who demand that workers work excessive hours. Making workers do shifts of 10, 12 or more hours increases the incidence of accidents.
The briefing continued:The scale of death, injury and ill-health in the industry is a disgrace. Construction is Britain's most dangerous industry. There were 80 building workers and 3 members of the public killed on sites in 1995/96 and 88 in 1994/95. The death and major injury rate is three times higher than the average for other industries. Studies show most of these deaths are caused by poor management and failure to take basic precautions.To that I would add the lack of inspection by accredited inspectors. I have seen strange requests carried out by workers at the behest of their foremen and supervisors. They have had to engage in risky operations.
My hon. Friend the Member for Clydebank and Milngavie quoted from the Clydeside Action on Asbestos briefing. I want to reserve a couple of quotations for the Standing Committee, but I should like the Minister to respond to the group's demand on the need to avoid the delay spelled out by the Secretary of State.
Members of Clydeside Action on Asbestos said:We are told that the reason for the delay between the Act being passed in April 1997 but only coming into force in October 1997 is to allow the CRU to prepare itself for the new system. We do not see why the CRU cannot prepare itself well before then. The Act has a broad party support, any amendments to the Act are unlikely to lead to substantial amendment and the CRU can therefore tool up quite adequately for the coming into force of this Act.If the Act was to come into force in April 1997 there would be certainty for plaintiffs and pursuers and it would prevent administrative delays which could be occasioned by the CRU trying to tool up for a new system while operating the present system.I consider that a legitimate complaint; matters could be expedited along the lines suggested.
The Bill is a worthwhile measure: it does not go far enough, but it will bring some relief to many of my constituents who at this very moment are pursuing claims against negligent and careless employers. If those employers were to have a son or daughter injured because 183 of their negligence, that might bring home to them the scale of neglect and negligence on some of our building sites and shipyards and elsewhere.
Shipyards today have a much better record than hitherto, but there are still too many accidents in workplaces throughout the United Kingdom. My hon. Friend the Member for Peckham (Ms Harman) is absolutely right to say that much more needs to be done, but at least those who are injured will derive some benefit from this legislation.
§ Mr. Jimmy Wray (Glasgow, Provan)
It is an absolute disgrace that a Bill of such substance and importance is given only two and a half hours to be debated in the Chamber. Think of the time that has passed: asbestosis and mesothelioma go back as far as 1889.
It is also important to note that previous Governments have done nothing about a disease that is one of the biggest killers. Millions of pounds have been spent on prevention and training about AIDS and other diseases that are a much lower priority, but very little has been spent in the past seven years on mesothelioma: only £447,000.
The disease affects not only bricklayers and plumbers, but members of the public. I remember, when I was a plumber, going into King's Park school where pipe coverers were stripping all the pipes and taking off all the asbestos. The place was polluted with dust. If a small speck of that dust gets into people's lungs, they are finished.
We are talking about ring-fencing pain and suffering, but it is very sad that thousands of people before and after 1989 lost out on their claims. I am glad that the Secretary of State for Scotland has said that the Government are getting rid of the small payment of £2,500, because it has been a disaster, but is it right for the Government to have gained through the clawback system from the pain and suffering of people with mesothelioma? Will those people be re-compensated? This is grave-robbing, and the families are suffering. It is not only the person working with asbestos dust who dies: it is the woman who washes the clothes and the children who greet their father or mother. That is the seriousness of the case.
I want to take a little time to explain some of the saddest cases. I want them to be recorded in Hansard, because I believe that the Government have taken a diabolical liberty over the years, especially as it has taken eight years, from 1989 to 1997, to get something done. Nothing would ever have been done if the Social Security Committee had not examined this unfair situation in 1995, or without the efforts of organisations such as Clydeside Action on Asbestos, the Association of Personal Injury Lawyers, the Scottish Trades Union Congress, the Trades Union Congress and all the other unions involved. People do not think that the matter is serious; but thousands of people are dying because the environment that they walk through to get to work means that they have contracted mesothelioma or asbestosis, which is not as deadly.
Most people with mesothelioma, a cancer of the chest lining, die within one or two years of diagnosis. It is uniformly fatal and as ugly and horrible as it sounds. June Hancock, who is still alive, was diagnosed as having the disease in January 1994. She is still relatively active and mobile. She is enjoying some borrowed time, as she calls 184 it, because she was one of the first people to win a claim as having contracted the dust in the environment. She won the last round of her historic legal battle for compensation for the damage done to her health by asbestos. It was the first example of the so-called third wave of environmental asbestos cases to reach the British courts. Many more similar compensation claims are likely.
June is now 60. When she was a child in Armley, a suburb of Leeds, she and her friends played in the streets around the former J W Roberts asbestos factory. White fibrous dust from the factory filled the air and built up in drifts in corners and against walls as the children played in the streets. In the loading bays of the factory, they would throw snowballs made of asbestos at each other in fun. The deadly particles steadily accumulated in their lungs.
Fourteen years ago, June Hancock watched her mother die a painful death from mesothelioma. Now she, too, has the disease, but early on she decided to fight it rather than give in. She has been sustained by the fight to win compensation from T and N plc, formerly Turner and Newall, of which J W Roberts is a subsidiary. She is one among many victims of a man-made epidemic—I call it the silent epidemic—that makes few headlines but is becoming impossible to ignore. While we worry that eating beef might trigger a rare brain disease, thousands of people have died not through any choice that they made, but from having once inhaled asbestos fibre in their workplace, home or school. They are the innocent victims of our modern industrialised society.
About 3,000 people die in Britain every year from asbestos-related disease; more than half die from mesothelioma. Asbestos has killed thousands of people since it was first exploited commercially at the end of the last century. It has been, and still is, the largest occupational killer in industrialised societies. It is not one among equals but the leader of the pack. The death toll is rising steeply.
The Health and Safety Executive, not a body given to wild predictions, said recently that, by 2025, there could be 10,000 deaths annually in Britain from asbestos-related disease. That is far more than are killed in road accidents or by AIDS-related illnesses. It is 200 times more than Creutzfeldt-Jakob disease has ever killed in a year. Over the past 20 years, we have learned that asbestos is dangerous stuff, to be avoided at all costs. Less often do we hear that it is too late for many thousands of June Hancocks—the people dying and doomed to die—or that thousands more are still being exposed to risk. In many places and trades, asbestos is a plague to come, yet Governments have ignored the dangers for most of the century. We are looking forward to a Labour Government taking action to stop the killer once and for all.
The basic dangers relating to asbestos have been recognised since the end of the last century. For example, the report of Her Majesty's lady inspector of factories of 1898 mentions theevil effects of asbestos dust".In 1899, a 33-year-old man who came to consult Dr. Montague Murray at London's Charing Cross hospital seemed to be merely another victim of bronchitis until he mentioned that the other nine men who had worked with him spinning the new miracle substance—
§ Mr. Deputy Speaker (Sir Geoffrey Lofthouse)
Order. I hesitate to intervene, but the hon. Gentleman is going rather wide of the Bill.
§ Mr. Wray
Those matters have never been raised in this Chamber. I do not see anything about it in Hansard. 185 However, they are important to the public and to my constituents. I have been dealing with cases of asbestosis and mesothelioma for several years. It has happened in schools, in the home, and in the workplace, and it is happening in the environment. It is time that the public had it brought to their attention and that the Government—and if not this Government, the next Labour Government—did something about it.
It is a dying shame that, over the years, the Government have allowed the Department of Social Security to defraud people who have died and suffered. They have defrauded families of the claims to which they were entitled. I know that this is an important subject and that many hon. Members wish to speak, but it is time that the nation faced its responsibilities and banned the substances that are imported into this country to make quick profit at the expense of people's lives.
§ Mr. Michael Clapham (Barnsley, West and Penistone)
Like other hon. Members, I welcome the Bill because it goes some way to remedying a gross injustice created by the Social Security Act 1989. Nevertheless, I have some concerns to highlight.
The Bill is particularly welcome because it ring-fences general damages. The part of a payment that is made for pain and suffering is to be ring-fenced; deductions for social security payments will not be taken from that element of damages but will be restricted to the payment for loss of earnings. The 1989 Act allowed the deduction to be made from the global sum, which included pain and suffering, as well as payments for loss of earnings.
The other major part of the Bill is the removal of the £2,500 limit below which benefit recovery does not occur. That is welcome because the present system deters people from pursuing claims if they feel that they are likely to be penalised. Claims of more than £2,500 are sometimes not pursued as rigorously as they might be.
We should put the Bill in an historical context by considering the situation between 1948 and 1989 and then judge its worth. When the industrial injuries legislation was enacted in 1948, contributions were worked out between employer and employee. Because the employee contributed to the industrial injuries scheme through the national insurance scheme, it was agreed that the employer would be able to deduct 50 per cent. of all benefits from any settlement. The deduction was restricted to the loss of earnings element and did not affect that part of the payment relating to pain and suffering. The system worked well until the 1989 Act was introduced. The injustice that flowed from that Act has been illustrated by some of the examples given by previous speakers.
Half the benefits paid at that time—industrial injury benefit, disablement benefit and invalidity benefit—were deducted. What is not always taken into consideration, however, is the fact that, although the deduction reduced the amount of damages, if a person returns to work but cannot do the job that he had been doing before his accident or an equivalent job, a cushion of support in the form of a special hardship allowance is available. That later became the reduced earnings allowance, which was abolished in 1990. Although it is no longer available, in many cases enormous sums are deducted from damages payments.
186 I wish to refer the Minister to a particular case. Following an accident in 1989, the compensation recovery unit calculated that the deduction would be made until 11 April 1997 and stated:Amount to be deducted before payment and sent to us within 14 days of the date of payment of compensationwill be £50,500.99. The case involved a miner who had a small multiplier. The sum to be recovered by the compensation recovery unit has wiped out all the payment for loss of earnings and has taken a portion of the payment for pain and suffering.
Although we welcome the Bill, it will still wipe out considerable amounts of damages in cases such as I have cited. A person earning £10,000 a year with a multiplier of eight, where the element for loss of earnings is as much as £80,000, would receive a payment of £80,000 for loss of earnings. However, the deduction from that loss of earnings payment over a five-year period would be considerable.
As the Minister knows, in the type of case that I have quoted it would take a long time to determine the medical condition. It can take five or six years to determine whether an injury, particularly a head injury, is stable. Consequently, benefits accumulate while one is waiting for a medical condition to stabilise. Benefits that have accumulated over five years must be deducted in full, and, in many cases, the deductions wipe out the loss of earnings allowance.
If a worker can return to work but cannot continue his pre-accident occupation, there is no cushion to help him in a job that pays less than his pre-accident job. The position is therefore much worse today than it was between 1948 and 1989. Reduced earnings allowance is an essential payment and the Minister will agree that most of our partners in the European Union have a similar payment which helps to cushion the effects of light work when a person returns to a job that pays less than his pre-accident job.
Clause 2 provides that there is to be no retrospection. In effect, therefore, four different schemes are likely to operate. We shall be dealing, first, with cases of men injured under the old workmen's compensation legislation before 1948; secondly, with cases that occurred between 1948 and 1989; thirdly, with post-1989 cases that occurred before the introduction of this Bill; and, fourthly, with cases that occur after this Bill is enacted. The Minister should consider the complications that that is likely to cause and give some thought to retrospection, which would be enormously helpful.
My hon. Friend the Member for Glasgow, Provan (Mr. Wray) made some important points about asbestosis. The Minister should consider whether it would now be wise to accept exemptions. It takes a long time for asbestosis to develop. Many people were exposed to asbestos in the 1950s. I am currently dealing with a claim by a miner who worked a machine that had asbestos brake linings and has recently developed an acute chest problem. He has been into hospital and part of his lung has been removed. His illness is attributable to the asbestos fibres that he inhaled during the 1950s when he worked that machine.
It is difficult to determine when asbestosis developed. That fact must be determined, particularly for disablement assessment. If disablement assessment goes back for many years, a sizeable lump-sum payment has to be made. 187 Under the Bill, whenever an award is made to compensate for negligence, a lump-sum payment is deducted from the loss of earnings element for five years. However, the deduction could be considerable and, in cases of asbestosis, could greatly reduce the amount available in a negligence claim. Will the Minister consider whether, at this stage, he is prepared to consider exemptions because asbestosis should be exempt from deductions? The disease has special characteristics and it is only fair that it should be exempt from the provisions in the Bill.
The Bill is to be welcomed because it takes us a little further down the road towards fairness, although much more needs to be done. I hope that we can outline that more fully in Committee.
§ Mr. Tony Worthington (Clydebank and Milngavie)
I am grateful to you, Mr. Deputy Speaker, for calling me, and I apologise for missing the opening speeches because of other parliamentary business.
I very much welcome the Bill, for the reasons expressed by other hon. Members. I worked for several years alongside Clydeside Action on Asbestos, to which tribute has been paid tonight. It is an enormous tribute to that group that, although a handful of the cases that affect the compensation recovery unit are asbestos cases, tonight's debate has been dominated by that issue.
We should not be here today if Clydeside Action on Asbestos had not lobbied Parliament in November 1994 and if we had not together persuaded the Social Security Select Committee to investigate the unit's work. It is a credit to our democracy that a relatively small local group, working with Members of Parliament, can change the law. Had it not done so, the work of the compensation recovery unit would have continued unchanged.
The Select Committee's report turned the tide. It was a tremendous eye-opener for all members of the Select Committee to discover what was happening in their name. The report was damning, and said that the results of many cases were contrary to natural justice.
Let us consider the scale of the problem. In 1995, the compensation recovery unit was reclaiming much more than £100 million a year from more than 30,000 people who had been victims of accidents, diseases or illnesses for which other people were culpable. In that year, more than 1,500 people were paying back more than £15,000 in benefits. The highest sum that I could find was £94,000, which was paid back by a person who had neck injuries. Imagine the suffering that must have been involved to have led to the payment of £94,000 in benefits.
When the issue received publicity in the Daily Mirror, I received more than 150 letters from people who were outraged by what had happened to them—not only asbestos sufferers but people who had been in road accidents, those with industrial diseases, and victims of industrial accidents or any affliction that had been caused by other people.
One of the great evils of the CRU's work—implementing legislation and the Conservative Government's instructions—is that it has further undermined the insurance principle. My constituents and others believed that they had paid their stamp and would receive benefits in the event of catastrophe, but the Government clawed back that benefit. People were outraged: what was the point of paying the stamp if they were obliged to pay back the benefits?
188 I shall concentrate my remarks on the asbestos issues, which especially interest me because, regrettably, Clydebank in my constituency is the national leader for male deaths from mesothelioma. Our death rate is 11 times the national average because of the deadly cocktail in our background of shipyards, ship repairing and an asbestos factory.
The 10 areas that head the Government's list—the Health and Safety Executive list—for asbestos deaths are all ports. Wherever there have been ports and shipbuilding, asbestos has caused carnage. Between 1976 and 1991, in Greater Glasgow, there were 500 deaths from mesothelioma alone—not asbestos-related diseases as a whole. According to the Government, the people who died came into contact with the dust between 50 and 60 years ago; as has been said, asbestos-related diseases are by far the biggest industrial killer, and the problem is getting worse.
According to the Department of the Environment, there will be between 1,300 and 3,000 deaths from mesothelioma in 20 years' time, which dwarfs all industrial deaths, deaths on the road and deaths from any similar cause. If we take into account the fact that there are estimated to be between one and two deaths from asbestos-related lung cancer for every death caused by mesothelioma, we realise the scale of the continuing problem.
Can the House imagine the appalling way in which we have treated those sufferers? They must prove that they are suffering from an asbestos-related disease, which is not easy when many of them have been heavy smokers. They must prove where they contracted the disease, perhaps 50 to 60 years ago, and find evidence. They must enter the legal system against an asbestos industry that knew decades ago that it was killing people but decided to go on doing it, and if they win they must pay back any benefit that they have received.
The most immoral aspect of the Government's action is that they have clawed back money that was awarded for pain and suffering, although they had no right to it. That was repulsive, immoral theft, and I am glad that it is to end. I am pleased that the Government have moved on the issue, but they can claim no credit for being forced to amend what they set up. I nevertheless pay credit to the Minister, who has been unfailingly courteous on this matter.
§ Mr. Worthington
I regret to say to my hon. Friend that it is true that the Minister has been unfailingly courteous on this matter.
The Social Security Select Committee deserves credit for suggesting that the polluter should pay: that those who cause the accident, illness or disease should pay back any benefits to the Government. That should concentrate minds and lead to earlier and larger settlements, as the clock will be ticking, not against the employee—the victim-but against the employer and insurance companies.
I pay a final tribute to Clydeside Action on Asbestos because I am convinced that without that group we should not be improving the law today. I express, as have others, the hope that improvements will be made in Committee. 189 There is a powerful case for exempting mesothelioma from the workings of a clawback. I also want to remember those people who have died feeling bitterly let down and angered by a so-called welfare state that kicked them as they were dying an appalling, painful death. They should be remembered today.
§ 6.6 pm
§ Mr. John Home Robertson (East Lothian)
I happily join my hon. Friends the Members for Clydebank and Milngavie (Mr. Worthington), for Glasgow, Provan (Mr. Wray) and for Greenock and Port Glasgow (Dr. Godman) in paying tribute to Clydeside Action on Asbestos, because I am sure that all my hon. Friends are right that we should not have made the progress that we have in this campaign but for the work done by that organisation.
I am surprised that Conservative Members have not taken part in the debate because, although there are serious cases in shipyard and port areas, surely in every constituency there must be people who have had compensation clawed back by the compensation recovery unit—sometimes in grotesquely unjust circumstances.
I have been involved in this issue from its fairly early stages. I recall initiating an Adjournment debate, which was replied to by the right hon. Member for Maidstone (Miss Widdecombe), who is now responsible for prisons but was then responsible for social security—we may draw what conclusions we like from that. I also met her to discuss cases from my constituency.
I must be courteous to the Minister. The Bill makes a small but important step in the right direction in recognising the iniquity of clawing back compensation awarded in respect of pain and suffering to people who have been injured at work through no fault of their own, but I share the complaint made by my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham): that the provisions start from later this year. What about all those people, including several of my constituents, and no doubt people throughout the United Kingdom, who have had their payments for pain and suffering clawed back in the eight years since 1989? It was never right for the Department of Social Security to claw back money that was awarded by the courts for pain and suffering.
Can the Minister give the amount that was paid in respect of pain and suffering and clawed back by the compensation recovery unit in those eight years? Will he please, even at this late stage, consider the overwhelming case for making the provision retrospective? If it is right not to claw back that money from claimants in future, surely it must be wrong for the DSS to hang on to the money that it has illegitimately clawed back from people who have claimed on the same grounds in the past.
§ 6.9 pm
§ Mr. Henry McLeish (Fife, Central)
Important points have been made in the debate, but the overwhelming concern is to get the Bill on to the statute book. Time is running out. If, as expected, the Government call a May election, it is vital in the interests of all the considerations that have been mentioned this evening that we get the Bill into Committee and through its remaining stages, so that it will start to benefit people who have been suffering for many years.
190 I congratulate my hon. Friends who have contributed to the debate—my hon. Friends the Members for Midlothian (Mr. Clarke), for Greenock and Port Glasgow (Dr. Godman), for Glasgow, Provan (Mr. Wray), for Barnsley, West and Penistone (Mr. Clapham), for Clydebank and Milngavie (Mr. Worthington) and for East Lothian (Mr. Home Robertson). The hon. Member for Rochdale (Ms Lynne) also contributed to the consensus that prevails in the House and the country on the matter.
It is rare that we achieve consensus, and when we do, we should take advantage of it. Despite some of the concerns that have been expressed, the Bill is positive and it takes the issue forward. Legislation should always be seen to be building for the future. We may want to return to the issue in later months or years, but the Bill represents a significant step forward.
My hon. Friend the Member for Peckham (Ms Harman), the shadow Secretary of State for Social Security, said that prevention was better than compensation. That sends a powerful message to the workplaces of Britain that much of what has been achieved is fine, but much more remains to be done to make our workplaces safe, secure and friendlier environments for people to work in. The Bill does not deal with those issues but, as my hon. Friend the Member for Provan suggested, it is important that we debate the issues and record our concern. Progress has been made, but we have much more to do.
I want to put on record my appreciation of Clydeside Action on Asbestos. If democracy is to work, we as the elected representatives must have groups to pressurise us to bring about positive changes. The action group, supported by others, has been influential, and helpful work has been done by the Trades Union Congress, which is keen for the Bill to be passed.
It is important to recognise that we can have consensus on issues in Britain. The Government, the Opposition, the minority parties, the TUC and action groups throughout the country all say that changes are necessary to the payment of compensation, and we have almost completed the first part of the process.
In Committee we must deal briefly with issues. Outstanding issues remain, and these have been highlighted by my hon. Friends. An important aspect is the start date for the legislation. We hope that the Bill will complete its passage through Parliament before April, but October 1997 is the date on which it is to be implemented. When the Minister replies, will he tell us why, if the legislation has been enacted by then, it cannot take effect from April 1997, instead of October? That would send another message: not only are we concerned to get the Bill enacted, but we are keen for it to benefit people at the earliest opportunity. That would reflect well on the House and on both Government and Opposition.
I seek an assurance from the Government that with our wholehearted co-operation the remaining stages of the Bill's passage will be completed quickly. There is no reason why that should not be accomplished in the time span that we discussed, and I am sure that such reassurances will be forthcoming.
The preponderance of Scots—complemented by my hon. Friend the Member for Barnsley, West and Penistone—who participated in the debate is no coincidence. In areas that have undergone tough industrial times and years of hardship, the legacy of many industries 191 remains. As an economy is modernised, the products of the old are evident alongside the benefits of the new. It is no surprise that my hon. Friends should speak passionately from the Opposition Benches—I almost made a slip and said the Government Benches, but that is a few weeks ahead. Even in a debate on a technical measure, there is no reason why hon. Members should not show that they care.
On issues that affect people's income and hardship, we must be clear that the Bill is not the end of the story. Many organisations will see it as a welcome step forward. There has been cross-party endorsement and endorsement from those who belong to no party. That is encouraging. The Bill should be seen as part of a process of improving working environments, improving compensation and ensuring that those who should pay up do pay up. If that message is sent out to the country, it will do a great deal for the victims and for the credibility of the House.
§ The Parliamentary Under-Secretary of State for Social Security (Mr. Roger Evans)
I thank all hon. Members who have spoken for the support that they offered for the measure. The hon. Member for Fife, Central (Mr. McLeish) asked for reassurances from the Government that we would do everything in our power to speed up the Bill's progress. I hope that, by general agreement, that will be possible.
If I may summarise the hon. Gentleman's winding-up speech, the main question—apart from collateral issues—was whether the measure could take effect in April rather than October this year. I shall deal with that shortly.
It is important that I have an opportunity to respond to the hon. Members who have spoken. The hon. Member for Peckham (Ms Harman), who opened for the Opposition, made a point that was taken up by several speakers: that all personal injury action cases begin with a personal tragedy of injury or death, and that prevention is very much better than compensation. It is common ground that money will never compensate for the misery involved. The Bill, however, is directed at the narrow issue of the triangular relationship among the three parties involved, and how it should operate fairly and appropriately.
The hon. Lady described that clearly, but she mentioned a number of other matters which arise out of the Bill but go beyond it—the question of the extent to which information should be provided by the Department to encourage the promotion of personal injury claims. Because the Bill removes disincentives in a particular group of cases, it will indeed encourage litigation in appropriate cases, but the hon. Lady went on to argue that further steps should be taken by the Government. Perhaps one of the strangest sights these days is the advertisements that appear on the back of buses for lawyers offering to take up these cases. Trade unions have had a distinguished record in helping their members to bring that kind of litigation over the years.
The hon. Lady asked whether the Secretary of State could go further and either fund claims or step into the shoes of the plaintiff. She used the precise, professional language that I would expect of her: the language of subrogation. That is what occurs in private insurance—although one never bothers to read it on one's insurance policy. If the insurance company pays, it stands in the 192 person's shoes and controls the litigation. That is the end of it as far as the individual is concerned, and the insurer is in the driving seat.
The Government deliberately rejected that model in 1989 because we believed that it would involve direct interference in virtually every personal injury litigation. We thought that it was more appropriate to allow the parties to determine how they pursue and conduct the litigation, but nevertheless to operate the process of compensation recovery after they had done so. I do not wish to describe such a proposal for subrogation too unkindly as nationalising personal injuries litigation. However, the Government were reluctant to become involved to that extent.
I turn to the issue raised by the hon. Member for Midlothian (Mr. Clarke) and by several other hon. Members regarding asbestos and the powerful and persuasive role played by the Clydeside Action on Asbestos group. Asbestosis has several formidable and unpleasant features. The hon. Member for Glasgow, Provan (Mr. Wray) graphically described the experiences and the misery of his constituents who suffer from that extremely horrible disease. Its consequences were not apparent in the past, and people either did not realise the danger or failed to take adequate precautions.
Asbestosis cases are among the most horrible, graphic and difficult of personal litigation cases. I think that the hon. Member for Clydebank and Milngavie (Mr. Worthington)—[Interruption.] My hon. Friend the Member for Kincardine and Deeside (Mr. Kynoch) corrects me on my Scottish pronunciation; it clearly is not adequate and I apologise to everyone involved. The hon. Gentleman correctly said that we must prove where the disease was contracted, prove the consequence and then establish the negligence. Many people, particularly the hon. Member for Provan, think that the latter issue should be easier to establish. However, the process of establishing the links in particular cases has proved long, bitter and difficult.
Despite those problems, people have succeeded in bringing such claims. The unhappiest features of the 1990 scheme, which this Bill reforms, were most horribly and graphically displayed in relation to existing asbestosis cases. However, it is difficult to see how we could go further in respect of asbestosis, and exactly what remedy and course Opposition Members advocate. It may be argued that asbestosis cases should be taken completely outside common law litigation, and that a special compensation scheme should be established. The pneumoconiosis scheme and the criminal injuries compensation scheme were mentioned in that regard.
The difficulty is that statutory schemes of compensation are not usually—I stress that this is the general rule—as generous as common law damages when one succeeds in proving one's case. Therefore, I suspect that there would be some reluctance to retreat from the common law situation. I appreciate that this group of people have suffered the worst effects of the 1990 arrangements. However, under the ring fencing for pain and suffering, that group is likely to benefit more than any other from the legislation. Mesothelioma, one of the worst manifestations of asbestosis, tends to strike many years after the event, often when a person has retired. Therefore, there would be no loss of earnings. As schedule 2 193 carefully limits what may be set off against what, the pain and suffering—as is intended by the legislation—should be recovered by the plaintiff, whole and undiminished.
§ Mr. Worthington
A range of diseases are associated with asbestos, of which mesothelioma is one. If the Minister is not willing to exempt the whole range of asbestos-related diseases, will he examine the special circumstances of mesothelioma before the Committee stage—I shall not be able to serve on that Committee—and consider whether a case could be made to exclude it from the provisions?
§ Mr. Evans
I am happy to examine that argument. If the hon. Gentleman or any other hon. Member wishes to discuss the matter further, I shall be delighted to do so.
The hon. Member for Midlothian made one slip of the tongue, as a result of which I hope to encourage him. He referred to people dying as a result of asbestosis and to widows suffering recoupment of benefits. Fatal accident damages are excluded under the 1990 scheme for compensation recovery.
The hon. Member for Rochdale (Ms Lynne) argued—we may return to the issue in Committee—that the Bill should provide for some form of breakdown of the defendant's offer. I am reluctant to be persuaded by that argument, as parties to a personal injury action do not need to agree upon anything other than the fact that both sides are prepared to go away for X thousand pounds, with costs to be taxed if not agreed. The parties may disagree totally about liability, contributory negligence and the medical issues, but they know that they are agreed upon whatever sum proves satisfactory to both parties. Once we start going beyond the process that is already embodied in the court rules of exchanging in the process of negotiations what each party's contentions are for particular heads of damage, we are likely to promote confusion rather than a speedy settlement.
I am conscious that time is passing, so I shall deal with several specific points. The hon. Member for Barnsley, West and Penistone (Mr. Clapham) gave an example, and I would be grateful if he will explain later the figures that he cited. I suggest that he is not necessarily correct in his example, as I understand it. Let us suppose that his case is the worst sort and takes a full five years to settle, resulting in a loss of earnings of £80,000. The loss of earnings benefit specified in schedule 2 can be set off against that. At common law, if the loss of earnings goes beyond the five-year period, or there is handicap in the labour market, there may be further damages for reduced earnings in the future, and Smith and Manchester damages for handicap in the labour market. I do not think that the hon. Gentleman needs to worry about that.
I shall conclude with the important question whether the legislation should be brought into effect in April.
§ Mr. Eric Clarke
I am concerned about the delay in the appeals procedure and the compensation recovery unit taking back money. As I have said, that process could take much longer than the original case.
§ Mr. Evans
I apologise to both the hon. Gentleman and the hon. Member for Greenock and Port Glasgow (Dr. Godman), who also raised that important point. They are right to be concerned about delays in the appeals process regarding compensation recovery. Happily, the 194 number of appeals even under the existing scheme has proved far fewer than anticipated or feared. The Bill will simplify, and one hopes speed up, the appeals process. I shall write to both hon. Gentlemen and provide the statistics on those delays. I will be happy to examine the issue further in Committee.
Several hon. Members asked whether the measure might be introduced before October or retrospectively. I follow the argument of the hon. Member for East Lothian (Mr. Home Robertson): if the way in which it has been done since 1990 is wrong, should it not be possible to compensate those who have suffered unfair losses according to the new scheme?
However, it would be difficult to unscramble cases settled over that period when we do not know the basis of settlement. For example, we do not have the information to answer his question as to how much pain and suffering damages have been eroded in specific cases, let alone in total. There may well, of course, be a small fraction of cases, in which a judge has determined the case, where there is a definitive breakdown, but those are a few cases out of a hundred. They are the exceptions. It is just not practical or possible to unscramble them. I regret that that must be my answer.
§ Mr. Evans
I am a lawyer. I have practised on personal injuries at the Bar. I have seen these tragic cases while acting for people who have suffered from them. Every hon. Member who made the point that we are talking not about statistics but about human blood is absolutely right.
This is not quite "no retrospection". When the accident occurred is immaterial. We will catch claims if they are in the pipeline. The difficulty with introducing that before October is that the regulations have to be made, and there have to be the usual consultation procedures. Perhaps the hon. Member for Fife, Central (Mr. McLeish) will offer to speed that up. I shall talk to him about that afterwards if he wishes. The second issue is the administration of the CRU. It is the Government's view that it is not practical to speed it up at this stage.
I commend the Bill to the House for a Second Reading.
§ Question put and agreed to.
§ Bill accordingly read a Second time, and committed to a Standing Committee, pursuant to Standing Order No. 61 (Committal of Bills).