EMPLOYER'S LIABILITY (COMPULSORY INSURANCE) BILL (Hansard, 23 July 1969)

§ LORD PARGITER
My Lords, I beg to move that this Bill be now read a second time. In putting before your Lordships' House this Bill, which has already been dealt with in another place, I would point out that it is in fairly simple terms. It deals with a situation which requires to be remedied for both employers and employees. There have been cases where employees who have been entitled to damages or compensation have been denied them because of the failure of their employers to meet the liability. On occasion this has even resulted in the employer himself going bankrupt, because he was not aware of the steps he ought to have taken to ensure that his business was run properly, both in his own interests and in the interests of his employees.
The Bill does something which is in some respects analogous to compulsory third party insurance in the case of motor cars. It helps the person concerned, who may not himself have sufficient resources to meet any possible liability—in this case, liability to his employee. Employees are carefully defined in the Bill, and there is also provision for the Department to make regulations covering classes of employees to be insured and to make exemptions from the necessity to insure, the general idea being that there should be some corporations who will not need 1060 to insure because of their size and resources and there will be others for whom insurance will be compulsory. I do not think I need say much more. All the interests concerned have been consulted and are satisfied with the provisions of the Bill.
There is one thing I might mention. During the passage of the Bill in another place some remarks, which had nothing whatever to do with the Bill, were made with regard to an insurance company. I should like to make it clear, so far as I am concerned in this House, that those remarks have nothing whatever to do with the Bill; and in so far as a distinguished and respected Member of your Lordships' House was mentioned, I certainly do not wish to be associated with those remarks. I hope that we may proceed with the Bill on the basis that those remarks had not been made at all. I shall certainly be happy if that line is taken in your Lordships' House. Beyond that, I would commend the Bill to your Lordships. I hope that we shall be able to give it a speedy passage and give to the people concerned the degree of protection they ought to have, without placing an undue burden on any particular employer.

§ LORD DRUMALBYN
My Lords, the noble Lord has put this Bill before your Lordships' House in a brief but informative way. I feel that I must look at it rather closely, but before doing so I welcome very much what he said in dissociating himself from the remarks that appear in the Official Report of another place on July 11, col. 1808. We all wish that these remarks had not been made, and I think that they are better forgotten.
This is a Private Members' Bill, but it is one of considerable importance. I am sorry that the noble Lord, Lord Pargiter, was not in a position to introduce it until so late in the Session. This is certainly not due to any fault of his, because the Bill was only passed through another place on July 11, and came here on July 14: and the fact is that it was only two days ago that it was put down on the Order Paper for Second Reading to-day.
It is an important Bill because it affects every person in the country who employs 1061 others in the course of carrying on a business: that includes all professional men, as well as all traders; it includes, churches and charities, as well as producers and distributors. It is important for that reason, and it is important also—and probably even more so—because it can affect any employee if circumstances should so arise. The Bill places on all employers a duty to do what responsible businessmen normally do as a matter of prudence, to put it no higher.
The noble Lord did not mention them, but there are exemptions. In the Bill as it stands, only local authorities other than parish councils, police authorities and industries or parts of industries under national ownership or control, and bodies corporate established by or under Act of Parliament, are excluded. This, I understand, is on the ground that there is no doubt about their ability to meet any liability of theirs to their employees. I think that in Committee one would like to look at some part of that, particularly in regard to the police.
On the other hand, the number of people likely to benefit from the Bill is not great. The number is made up of two elements. There are, first, those who obtain awards in the courts against their employers which their employers cannot meet—an element which the Government spokesman in another place described as "no more than a tiny handful a year"—and secondly, those who do not pursue in the courts what they consider to be a good claim because there seems to be no prospect of recovering any award that may be given: and that number is extremely difficult to quantify. Therefore, as the Government spokesman in another place said, the true size of the problem is unknown. Nevertheless, there is a problem, and means should be found to solve it.
I feel that there are real difficulties in the Bill. First of all, there is the difficulty of achieving its main object of making certain that not only will every employee be covered, but that the cover will be sufficient to ensure that he will receive any possible award that the court may make. The possibility is envisaged in the Bill that it may be necessary to lay down a maximum liability to be covered. So to that extent the full amount of an award might not be covered. There is also the possibility 1062 of fraud—somebody may apply for an insurance policy and make a false declaration. That is something that will have to be looked at very carefully. Then, again, there are many existing policies that can be invalidated by an Act or by, for example, the neglect by an employer of his statutory duty. It would seem that such policies would not be acceptable under the Bill, because employees must be covered under an approved policy—and this is almost the most important thing in the Bill—which is defined in Clause 1 (3) as: … a policy of insurance not subject to any conditions or exceptions prohibited for those purposes by regulation. Before this Bill comes into force regulations will have to be made on that: point as well as on other points—and I count ten which have to cover regulations in the first four clauses. Before the regulations are made, as was said in another place, extensive consultations will have to take place. The Government do not seem to know whether it would be possible to deal with the question of invalidation at all.
Then there is the question of exemptions. It may be that some big, well-established undertakings carry this risk themselves, and the question arises whether they ought to be exempted. At the other end, it may be that after consideration and consultation the Government will decide to make regulations exempting certain kinds of occupation. If so, the regulations should obviously be made before the Bill comes into operation. It would be senseless, I suggest, to require people to take out insurance and then to exempt them. Equally, it may be found that almost every existing insurance policy will have to be re-negotiated, once it is decided what is mean by "an approved policy".
Then there is the question of enforcement and ensuring compliance. This has not yet been fully thought out, and a good deal of preparation and consultation is needed before regulations can be made to prescribe all the requirements mentioned in Clause 4 (2). Although it is a minor point, for my part I cannot see why it is necessary in subsection (2) (c) of Clause 4 to leave this to be prescribed by regulations. I should have thought that it would be perfectly simple to state in the Bill itself the persons to whom, 1063 and the circumstances in which, the policy should be shown. The obvious persons one has in mind are the trade union representatives, who are the people responsible for the welfare of their members, and I cannot see why this cannot be said in the Bill.
I think I have said enough to make it clear that there is a great deal of further preparation and consultation needed before this Bill can be brought into operation. Normally, the House would expect all this work to be done before a Bill is introduced into the House, but the circumstances of this Bill are most unusual. It is not unknown for the Government to give assistance, or even to adopt, a Private Member's Bill. But the Government decided to help with this Bill only after it had obtained an unopposed Second Reading without a debate. So this is the first Second Reading debate that this Bill has had. When the Committee stage started, no Government Amendments were available. They were then hastily prepared by a different Department—and I must say that this Department did a remarkably good job in a very short time. But the Department in question was not even the Department which is likely to be responsible for administering the Bill.
One must ask whether this is really the way to legislate on a matter that will affect nearly every employer in the country, and could affect any of their employees. It certainly means that we in this House have a special obligation to consider the Bill most carefully. There has certainly not been such an opportunity yet. For my part, I should have preferred the thinking to be done first by the Government, and the Bill to be introduced afterwards. I should have preferred to see it made quite plain in the Bill who was to be exempted and who was to be covered by the Bill. I should have preferred that it was made plain, or at least decided, what constituted an approved policy for the purposes of the Bill. I should have preferred that it should have already been decided how, and by whom, compliance with the Bill was to be achieved.
In short, my Lords, while I am in entire sympathy with the basic purpose and concept of the Bill, I am far from convinced that it is properly thought 1064 out and in the correct form. It is difficult to accept that it would not have been possible, with proper prior consideration, to draft this Bill in a different way, so as to avoid having these ten different classes of regulations in the first four clauses.
In those circumstances I feel bound to say that if the Bill is given a Second Reading it should not be taken that the House is doing anything more than signifying that it is right to require employers in appropriate cases to insure against liability for personal injury to employees. It is not necessarily approving the content of the Bill. It should plainly be examined very carefully, and it hardly seems likely that there will be an opportunity to do so in the remainder of the present Session. If that should prove to be the case, the work which has been done on this Bill will not have been wasted. Great credit is due to Mr. Watkins for introducing it and carrying it through the Commons and, above all, for getting the Government to start work on it. A great deal of work—as the Government spokesman said in another place—has still to be done and this can certainly go on, even if the Bill does not reach the Statute Book this Session. It may be, and I hope it will be, that a much better and more fully considered Bill will emerge as a result of these consultations.

§ BARONESS PHILLIPS
My Lords, I should like to express my thanks to the noble Lord, Lord Pargiter, for introducing the Bill this evening in such a clear way. It has been stressed in the course of the Bill's passage through the Commons that this is a Private Member's Bill and not a Government measure, and I must reiterate that this evening. The Government have not assumed responsibility for the Bill. On the other hand, the Government appreciate that the Bill represents a good idea and they have given substantial help to the sponsor of the Bill in order to make it into a practicable piece of legislation. But the problem it deals with is a small one, and the Government would not feel justified in setting up a great deal of expensive administrative machinery merely to secure compliance with the terms of the Bill. As the noble Lord, Lord Drumalbyn, has pointed out with his 1065 usual skill at examining a Bill closely, it has become very apparent that a great number of matters have to be dealt with before compulsion can be applied, and those matters must be the subject of consultation with the interests concerned. I have noted that two points on which there would obviously have to be careful examination during Committee stage would be the clauses dealing with exemption and certification. The noble Lord, Lord Drumalbyn, has added others on definition and enforcement. Having said that, I should like to emphasise that the Government are willing to see the Bill moving through your Lordships' House.

§ LORD PARGITER
My Lords, I am grateful for the reception which the Bill has had, even though it was rather qualified by the noble Lord, Lord Drumalbyn, but only in respect of a number of detailed matters which will obviously require consideration. I do not quarrel in the least with what he says about time being required to consider this matter. I would express the hope that there may be time to deal with these points before this House finally departs for the Summer Recess. Certainly during the Recess period some work could be done, and I hope it will be done. I appreciate the force of what has been said. It is admitted that it would be difficult to put everything in the Bill, and therefore some things have to be dealt with by regulation. I think there is a safeguard there, because a proper reading of the Bill shows that before a particular class of employer or particular employers can be dealt with, regulations have to be laid, and they are subject to annulment in either House. This is a good safeguard so far as the Bill is concerned.
1066 In regard to many detailed matters that we cannot possibly get into the Bill provisions will be provided for in regulations which may be dealt with at the appropriate time.
In those circumstances, I should have thought there would be adequate cover for those things which are implied in the Bill but which are not specifically stated. I welcome the admission that something has to be done. If this Bill does not deal with that point quite precisely, I hope that we shall be able to amend it—I am sure that we shall be able to do so with the co-operation of all concerned—in such a way that it commends itself to your Lordships' House.