§ 3.13 p.m.
§ The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish)
My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
§ Moved, That the House do now resolve itself into Committee.—(Lord Mackay of Ardbrecknish.)
§ On Question, Motion agreed to.
§ House in Committee accordingly.
§ [The CHAIRMAN OF COMMITTEES in the Chair.] Clause I agreed to.
§ Schedule 1 [Compensation payments]:
§ [Amendment No. 1 not moved.]
Baroness Turner of Camden moved Amendment No. 2:
Page 17, line 27, at end insert—
(". Any payment made
- (a) in consequence of an action under the Fatal Accidents Act 1976; or
- (b) in circumstances where, had an action been brought, it would have been brought under that Act.
- . Any payment made to or for the injured person in respect of a liability arising by virtue of section I of the Damages (Scotland) Act 1976.
- . Without prejudice to section 6(4) of the Vaccine Damage Payments Act 1979 (which provides for the deduction of any such payment in the assessment of any award of damages), any payment made under that Act to or for the injured person.
- . Any award of compensation made to or for the injured person by the Criminal Injuries Compensation Board or Criminal Injuries Compensation Authority under the Criminal Injuries Compensation Act 1995.
- . Any payment made out of property held for the purpose of the charitable trust called the Macfarlane Trust and established partly out of funds provided by the Secretary of State to the Haemophilia Society for the relief of poverty or distress among those suffering from haemophilia.
- . Any compensation payment made by British Coal in accordance with the NCB Pneumoconiosis Compensation Scheme set out in the schedule to an agreement made on 13 September 1974 between the National Coal Board, the National Union of Mineworkers, the National Association of Colliery Overmen, Deputies and Shot-firers and the British Association of Colliery Management.
- . Any payment made to or for the injured person in respect of sensorineural hearing loss where the loss is less than 50db in one or both ears.
- . Any contractual amount paid to the injured person by his employer in respect of a day of incapacity for work.
- . Any payment made by the Macfarlane (Special Payments) Trust established on 29 January 1990 partly out of funds provided by the Secretary of State for the benefit of certain persons suffering from haemophilia.
- . Any payment made by the Macfarlane (Special Payments) (No. 2) Trust established on 3 May 1991 partly out of funds provided by the Secretary of State for the benefit of certain persons suffering from haemophilia and other beneficiaries.
- . Any payment made under the National Health Service (Injury Benefits) Regulations 1974 or the National Health Service (Scotland) (Injury Benefits) Regulations 1974;
- . Any payment made to or for the injured person to compensate him for the cost of medical treatment and incidental expenses for medication and travel for medical treatment.
- . Any payment made to or for the injured person to compensate him for damage to property including (but not limited to) damage to or loss of a motor vehicle and expenses incidental to such damage or loss, damage to or loss of clothing or jewellery and damage to or loss of physical aids used by the injured person.").
§ The noble Baroness said: Schedule 1 to the Bill is concerned with the exemptions to recoupment under the terms of the Bill. The list of exemptions contained in Schedule 1, Part I, is not as extensive as in the existing law. Section 81(3) of the Social Security Administration Act 1992 sets out a series of exempt payments. Contained in that list, but missing from the list in the Bill, are the following, which perhaps I may summarise: the 1992 Act; the Fatal Accidents Act; Section 1 of the Damages (Scotland) Act 1976; the Vaccine Damage payments; criminal injuries compensation payments, now under the Criminal Injuries Compensation Act 1995. That is extremely important, given the statutory basis of the new criminal injuries scheme and the new criminal injuries compensation authority.
§ I understand that the existing regulations also provide for a number of exclusions. For example, there are payments to haemophiliacs—surely a most important consideration. There are payments under the pneumoconiosis compensation scheme. Again that is very important since pneumoconiosis, as Members of the Committee know, affects many miners even after they have left the industry. There are low level deafness cases. There is contractual sick pay and payments under the National Health Service (Injury Benefits) Regulations. There is also discretion to exclude, under existing provisions of legislation, a number of other items which are also exempt, including damages for insurance policy excess; damage to a vehicle; replacement of property—for example, clothing and jewellery—and reimbursement of private medical expenses.
§ I understand that the Government did not intend to reduce the list of exclusions, but that remains to be confirmed formally by the Government. For the sake of clarity, it seems to us that the list of exclusions should be included in the Bill. I beg to move.
§ Lord Mackay of Ardbrecknish
Schedule 1 to the Bill sets out that certain compensation payments will be exempt from benefit recovery, and it makes provision for others to be exempted by regulations. The amendment adds a number of other payments to the list already in the Bill, as has been explained by the noble Baroness.
Perhaps I may make clear from the outset that our intention is that payments which are exempt in the current scheme shall continue to be exempt in the reformed scheme. However, we need first to ensure that the payments we wish to exempt from benefit recovery are not already exempt in practice because they do not fall within the provisions of the Bill. For example, the noble Baroness lists in her amendment payments under the Fatal Accidents Act 1976; Section 1 of the Damages (Scotland) Act 1976; the Vaccine Damages Payments Act 1979; and the Criminal Injuries Compensation Act 1995. I fully 943 understand her reasons for doing so. Those appear in primary legislation under the current scheme but do not appear on the face of the Bill.
The reason for the apparent omission is that the parliamentary draftsman is confident that the payments to which I have referred cannot fall within the provisions of the Bill because those payments are allowed for in statute and therefore are free, so to speak, from the provisions of the Bill.
I have dealt with the four specific Acts referred to by the noble Baroness. The remainder of the provisions listed by the noble Baroness are to be found in regulations in the current scheme. We intend that those payments will continue to be exempt in the new scheme. However, it may be that some of those payments would not be caught by the provisions of the Bill for the reasons that I gave regarding the four Acts which I have discussed. It is a matter which departmental lawyers are considering carefully. If they conclude that exempt payments which are currently in regulation could be caught by the Bill, then such payments will be made exempt when we regulate next year.
I hope that that gives the noble Baroness sufficient assurance for her to withdraw the amendment.
§ Baroness Turner of Camden
I thank the Minister for that explanation. It makes the issue much clearer. I am glad that the department's lawyers are to consider the whole matter. In the circumstances, there is no point in proceeding with the amendment at this stage of the Bill. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
Earl Russell moved Amendment No. 3:
Page 17, leave out lines 28 to 41.
§ The noble Earl said: First, I apologise to the Committee, the Minister, and the noble Baroness, Lady Turner of Camden, for having made such a precipitate arrival. I have been engaged in duties in another place—I hasten to add, not the proverbial "other place". There are times when I could wish that the Strand was a little shorter than it actually is.
§ We are concerned here with what the Government's attitude may be to the question of the small payments limit. We understand that there is no provision in the Bill for a small payments limit. On the other hand, under the terms of Schedule 1 there is the rather confusing provision that they might be capable of reinstating one. Under Schedule 1, Part II, paragraph 9(1) there is provision for excluding payments which do not exceed the prescribed sum. We are thus back again with regulation and the matter of prescription. It sounds remarkably like a trip to the chemist.
§ I do not quite understand why that provision is contained in the Bill. To ask whether or not the Government have a small payments limit, reminds me of the time when my father rang Gilbert Murray's door and the maid answered and said, "I think they're in, unless they're out"; but in this case the situation seems to be, "I think they're out, unless they're in".944
§ We on these Benches would prefer it to be absolutely clear that there will not be a small payments limit. If the Minister can give me a reassuring answer on that now, I will not develop the argument further. If it is to be developed further, I shall develop it in reply to the amendment to be moved by the noble Viscount, Lord Chelmsford, which I understand is to be spoken to shortly. I beg to move.
§ The Chairman of Committees (Lord Boston of Faversham)
I should inform the Committee that, if Amendment No. 3 is agreed to, I cannot call Amendment No. 4.
§ Baroness Hollis of Heigham
I wish to speak to Amendments Nos. 1, 3 and 5 and also to Amendment No. 4, which I shall seek to move.
We support the Bill and what we understand to be the Government's position on the small payments limit. Unlike those on the Liberal Democrat Benches, we wish to retain a permissive power for the Secretary of State to introduce a small payments limit, if it should prove necessary and in the light of experience. We hope—and we accept the Government's arguments on this—that such a small payments limit will not prove necessary, but we think that for it to be included as a permissive power is a useful fail-safe. The disability groups with whom I have spoken would welcome it as a backstop should, in the light of experience, a small payments limit prove a useful way for many disabled people to avoid going through the trauma of contested claims. We would not wish to see that permissive power removed from the schedule and we therefore oppose Amendments Nos. 1 and 3.
The aim of Amendment No. 4 is to ensure that, should there be a small payments limit in future, there will be consultation at that time. The Minister might therefore be willing to accept an amendment, either now or at Report stage, to the effect that, should a small payments limit be contemplated in future, its level would only be agreed after consultation with the appropriate organisations. I hope that the Minister can meet us on that point. I do not think we disagree on it.
That means that we disagree very strongly with Amendment No. 5 to be moved by the noble Viscount, Lord Chelmsford, which, in our view, would result in the worst of all possible worlds. I believe that the Government will oppose that amendment. The figure included in it is too small to reflect pain, hardship and damages; a figure of perhaps £5,000 or £10,000 might be appropriate. If the figure mentioned is meant to represent a de minimis figure, it is almost certainly too large; a de minimis figure should probably be no more than £250. The figure introduced in this amendment is too small to be realistic compensation, but too large to be an effective de minimis payment. We therefore believe that this figure is inappropriate and strongly resist the amendment. If the noble Viscount, Lord Chelmsford, were minded to move it at considerable length, we, like the noble Earl, Lord Russell, may want to return to it to argue in greater detail our resistance to a small payments figure of such a size.
945 We support the provision of the Bill to the effect that there should be no small payments limit in primary legislation. The Government have a permissive power, should it prove necessary, to introduce one at a later stage. If they were minded to do so at a later stage, two or three years hence, we hope that it would be accompanied by a regulation which would allow full consultation with all interested parties.
§ Earl Russell
The noble Baroness talks about a small payments limit in case it should prove necessary. Could she explain further what kind of circumstances might convince her that it was necessary?
§ Baroness Hollis of Heigham
I had hoped that I had made that clear; I apologise to the Committee if I failed to do so. The disability groups, represented by the Disability Income Group which I have spoken to on this matter, felt that one advantage of a small claims exemption limit, whether it be £2,500, £5,000 or whatever, would be to allow their disabled clients with moderate injury to avoid the problems, trauma and stress of a contested case. They fear that, with the abolition of the small payments limit, insurers may be more willing to contest cases and therefore disabled people may face that situation. They are not sure that that will necessarily be the case, but they would feel more comfortable with a permissive power in the legislation allowing Government to introduce a small payments limit should insurers act in that way, though we believe and trust that they will not do so. I hope that that meets the noble Earl's point.
§ The Chairman of Committees
As Amendment No. 5 is now being spoken to, I should also inform the Committee that if Amendment No. 3 is agreed to, I cannot call Amendment No. 5.
In speaking to Amendment No. 5, I would remind the Committee that at Second Reading I referred to the insurance industry's doubts on the wisdom of deleting the small payments limit entirely. Prior to the enactment of the Bill, statutory sick pay was the main element in the SPL, not subject to claw-back if the SPL was deleted. I believe that quite a number of claims under £2,500 are in fact statutory sick pay only. Post enactment of this Bill, claims under £2,500 not subject to claw-back if SPL is deleted will include both statutory sick pay and amounts representing pain, suffering and loss of amenity. I believe that that will have two consequences. To the extent that the claim is not challenged, it further reduces the Government's scope for claw-back due to the deletion of the small claims limit because there will be fewer claims capable of being clawed back. To the extent that either government or insurer challenges a claimant's assumption that part of the sum paid, up to £2,500, represents PSLA, it adds administrative costs to the Government, the insurer and possibly to the courts.
Up till now the insurance industry has tended to turn a blind eye to the validity or make-up of claims settled within the SPL. If the SPL is removed, the facts will have to be reviewed, however small the claim.
946 In the Minister's response at Second Reading, he offered to consider a de minimis limit if a good case could be made; but he added that the ABI had not produced convincing evidence. He also rejected the suggestion that the terms of reference of his compliance cost assessment did not take full account of all the consequences of ring-fencing PSLA and deleting the SPL. No, the ABI cannot offer hard evidence, but neither, I suggest, can the Minister's department. No one has previously been particularly interested in the make-up of, or even the justification for, claims settled by the industry on the basis that they did not exceed £2,500. I suggest that, if the Minister waits to collect evidence of the need for a small payments limit before making one by regulation, the period in which such evidence is collected will have hurt his department just as much as it hurts insurers. His additional costs will rise well above the extra £2 million per annum which he expects, if the evidence stands up.
So surely it makes much more sense to approach the problem from the other way round and to use the powers progressively to lower the SPL towards zero stage by stage, stopping either when expenses start to rise above expectations or when sufficient data on the make-up of small claims exist to allow an intelligent forecast of the future of small claims. I note, incidentally, that I am not alone in advising the Government to retain some form of SPL. I understand that the Law Society does so also, but perhaps for rather different reasons, reasons which the noble Baroness, Lady Hollis, touched on.
My amendment suggests halving the current SPL to £1,250, but it is in fact a probing amendment. I hope that the Minister accepts that there is a scarcity of evidence on the results of deleting the SPL and will consider the prudence first or the stage-by-stage type arguments that I offer.
§ 3.30 p.m.
§ Lord Mackay of Ardbrecknish
The Committee is perhaps more accustomed to hearing the noble Baroness, Lady Hollis of Hingham, and myself in gladiatorial combat over the Dispatch Box and blinking as it discovers this afternoon that, by and large, we are in agreement over most of these issues. On this particular group of amendments, we shall start off certainly by agreeing, if not on the detail, at least on the principles.
Let me turn first to the amendments by the noble Earl, Lord Russell, and my noble friend Lord Chelmsford and then, lastly, to the amendment in the name of the noble Baroness.
In my speech on Second Reading, I said that we could not allow the fact that a disproportionate number of compensation payments have been pitched at or around the current small payments limit of £2,500. This clustering of settlements in the current scheme was identified by independent consultants who researched the compliance cost assessment. To prevent a similar effect occurring in the reformed scheme, we do not intend to set a small payments limit. This intention was first signalled in the consultation document issued in response to the report of the Select Committee in 947 another place and it remains our firm intention now. However, in the light of experience, it might be that one would prove useful and workable. For that reason, I say to the noble Earl we have decided to retain the power to set one. We consider that it is wise to retain the power, although at present we have no intention of using it. But it is a backstop which we think that a government of the future might feel that they need in order to set a limit.
I turn to the amendment by my noble friend. It provides for a limit of £1,250, which is half the current limit. If the Committee accept this amendment, it would mean that where a compensation payment was made at or below that level, there would be no liability for the compensator to repay recoverable benefits. Furthermore, by prescribing the amount of the small payments limit on the face of the Bill and removing the power to set one in regulations, the limit can only be changed by primary legislation. This would mean that the flexibility to change the amount from time to time in the light of experience would certainly be lost.
I have already said that we do not plan to set a small payments limit. The compliance cost assessment revealed that, under the current scheme, the small payments limit is being used as a way of avoiding benefit repayment. We cannot allow that situation to continue; and, if we were to accept this amendment, it is by no means certain that a small payments limit of £1,250 would not be manipulated and clustering would occur around it. However, if an appropriate level could be identified which would avoid unnecessary administrative effort while still affording sufficient protection to the taxpayer, we would be prepared to give the issue further consideration. In fact, if insurers are prepared to work with the department in monitoring the operation of the reformed scheme, I suspect it would prove possible to identify a suitable point at which to set a revised small payments limit within a reasonable timescale following implementation. If insurers agree to work constructively with the Government on this matter, we would be prepared to take matters forward in the way I have described. But in general terms, we feel that the arguments in favour of not having a limit are quite compelling and we should have to be convinced that there were administrative savings without any downsides to setting a limit in the future.
I turn to the question of consultation. We have a number of amendments along the same lines as we go through the Bill. I may well attempt not to repeat the argument during the course of further amendments.
We do intend to consult with interested parties in drawing up the details of all the regulations to be made under the provisions of this Bill. We consulted on the Select Committee report and the compliance cost assessment and have demonstrated, by introducing this Bill, that we wish to reform the compensation recovery scheme and that we have listened to what people are saying, although occasionally, as governments do, we sometimes have had to balance conflicting opinions. We are not able to please all of the people all of the time. But in respect of compensation recovery, we certainly have a good record on consultation.
948 It may not be immediately obvious on the face of the Bill, because the detail is hidden in the raft of consequential amendments in Schedule 3, but regulations made under this provision of the Bill are to be subject to referral to the Social Security Advisory Committee. As the Committee knows, one of the functions of that committee is to scrutinise regulations and to consider whether they should be subject to wider consultation. This means that a consultative mechanism is already in place via the SSAC.
The Committee has the assurance that we intend to consult on the first set of regulations and the fact that regulations made subsequently will fall to be referred to the Social Security Advisory Committee. The effect of the amendment from the noble Baroness would be to introduce an unwieldy, expensive and unnecessarily bureaucratic consultative mechanism which would inevitably slow down the regulation-making process. It would not seem to be in the interests of either the Government or the other interested parties, particularly accident victims, if we were to slow down any necessary changes that we feel need to be made via regulations. If this amendment were accepted, we could in fact face consultation where the department was required to go out around the various organisations listed and then have that duplicated by the Social Security Advisory Committee.
Amendments of this nature are not unknown to me in that almost every Bill that I have taken through this Chamber has had amendments suggesting a list of people whom we consult. My arguments are normally fairly standard; namely, that the Government can be trusted to consult and in any case there are always people not on the list who may require to be consulted and if they are not on the list, there is a danger that the Government will not in fact ask the question, "Whom should we consult?", and will just obey the letter of the Act.
I can assure the noble Baroness that we have every intention of consulting widely on these and any other regulations regarding this Bill and indeed, the Social Security Advisory Committee will be in a position to consult as well. So I hope that she can withdraw her amendment. I hope, with my explanation of why I think it wise to keep the power, that the noble Earl will be able to withdraw his amendment. With my explanation of why I do not believe that setting a limit of £1,250 is sensible, I also hope that my noble friend will be able to withdraw his amendment.
§ Lord McCarthy
We shall return to this point and I should like to get the Minister's position clear. He mentioned the SSAC. Is his position that the Government would not want to have anything on the face of the Bill because it leaves matters to the SSAC, so that even if the SSAC decided not to consult, it would be perfectly all right for the Government?
§ Lord Mackay of Ardbrecknish
I did not say that or mean that at all. Certainly, I did not intend to do so. If I did, it was a mistake on my part in wording my sentences. The SSAC does have the right to consult and these regulations under this Bill have to go to it. I also 949 said—I hope that I gave the assurance quite clearly—that we have a very good record of consultation. If we come to make any changes, we shall consult with those people who in our view have an interest in this matter, and then the SSAC will act as a backstop and perhaps introduce a further consultation process, if they feel it necessary.
§ Baroness Hollis of Heigham
Following the question of my noble friend Lord McCarthy, am I correct in understanding the Minister to say that, if the Social Security Advisory Committee does not feel the need to consult, the Government give an undertaking that it will?
§ Lord Mackay of Ardbrecknish
As the noble Baroness may know, things are done in a rather different order to the one she suggests. What I was saying—as I have said during the passage of a number of pieces of legislation that I have taken through your Lordships' Chamber—is that we fully intend to consult, and do consult, when we make up regulations. Indeed, I am in the middle of the most elaborate consultations in relation to the Pensions Act, where these arguments arose from time to time. So we fully intend to consult.
But it is after we have consulted and drawn up the regulations that they go to the Social Security Advisory Committee. We cannot do what the noble Baroness suggests, therefore; that is to say, allow the Social Security Advisory Committee to decide and, if it does not consult, neither would we. We would consult before sending any regulations to the committee.
§ Baroness Hollis of Heigham
Most of the provisions in this Bill will be welcomed by the Committee in an aura of sweetness and light. One of the few areas of sharp disagreement is over the issue of a small payments limit and therefore there is a high degree of potential controversy surrounding it should the Government, at some point in the future, be minded to make use of their permissive powers to introduce such a limit. Because it is the most controversial issue in the Bill, it would seem wise not merely for the Government to give a verbal undertaking that they expect to consult, but, on this issue at least, to put on the face of the Bill in the schedule that, should the Government be minded to go for a small payments limit in the future, they will consult about its level.
I repeat that this is probably one of the two most contentious issues in a Bill which otherwise will be widely welcomed. To avoid any acrimony, it would be helpful if the Minister could allay our fears on this. The insurance industry may also welcome the knowledge that it will be involved in the consultation.
§ Lord Mackay of Ardbrecknish
Having said that we were going to agree, I do not want to start disagreeing on the first amendment. I should like to think that, when the noble Baroness reads Hansard, she will be reassured that the assurances I have given are definite and answer the question she raised without the need to put the list of bodies we should consult on the face of the Bill. As your Lordships know, I usually successfully resist such a suggestion.
§ 3.45 p.m.
§ Earl Russell
I agree with the noble Baroness about the importance of this issue in a generally welcome Bill. It is my impression that the negotiating process which is proper to the Committee stage is still capable of going a little further than it has. Therefore, while I warmly welcome some of the comments made by the Minister in his reply, perhaps I may take the opportunity to probe a few of the other points he made in order to understand a little better what the position behind them is.
The Minister said—this I warmly welcome—that the Government,
do not intend to set a small payments limit".And he added,
and it remains our firm intention now".Those I am sure were carefully chosen words. He said that there may be situations where the Government will wish to do otherwise. He did not give us any clear indication of what those situations might be. There was a reference which I found intriguing in its ambiguity as to what might happen if the insurers were to work constructively with the Government. I shall be interested to know exactly what those words mean.
As it stands, the determination to keep a power in the Bill just because it might be needed at some time is the school of legislation which is analogous to the famous five reasons for drinking:
Good wine—a friend—or being dry—Or lest we should he by and by—Or any other reason why".It is not the first time I have known the Minister to put powers in the Bill because there may be some other reason why they may be wanted. The real and serious argument arises behind this issue relating to parliamentary control of legislation. I am sure the Committee will be relieved that I do not intend to enter into the depths of that at the moment. However, I hope the Minister will take those issues as read. I should therefore like to understand under what circumstances he might be persuaded otherwise about the small payments limit.
In reply to the noble Viscount, Lord Chelmsford, to whom I listened with great interest, there is an issue of cost involved. I was interested to hear the Minister say that the small payments limit has been used as a way of avoiding recoupment. That is also my understanding and the point is of some importance.
We on these Benches are a great deal more concerned than the Minister is sometimes aware to keep down the cost of government in ways we believe have a realistic chance of achieving that objective. I have received advice that a small payments limit could save the Government £40 million. Governments can find plenty of uses for £40 million. But the more important issue to these Benches is the great inequality between the contestants when an injured person is negotiating with an insurance company.
When it comes to reading technical documents, I am slightly more battle-hardened than some. But when I receive communications from my insurance company I read them with great care. I regret to confess that I do not always understand them. What is true of me may 951 perhaps be true on many occasions of others. Between a great institution and a small person perhaps of limited standards of literacy or perhaps with damaged eyesight, there is a real inequality of power. The pressure to settle low, if it comes from an insurance company, may therefore be hard to resist.
At this point I take up the comment made by the noble Baroness, Lady Hollis of Heigham. I understand why the noble Baroness takes the line she does. I respect the decisions that she has taken, though I do not entirely agree with them. I understand the pain it may be, especially for people who have a disability, to go through a contest. My view is that they cannot avoid going through a contest. If it does not happen in the courts, it happens with the insurance company. The only question is with whom the contest will be and what the issue will be. If I thought the noble Baroness was correct in her premise that a contest could be avoided altogether, then her argument would have been entirely persuasive. I am not at present convinced that that is the case. We therefore have another argument why it might be better to do without the power to have a small payments limit altogether.
In relation to consultation I take the point about the Social Security Advisory Committee. I am extremely grateful for it. I have a great deal of confidence in that committee. However, I would welcome the proposal more warmly if the Government were to accept the advice of that committee a little more often than it does at present. Before we take this matter further, I should be grateful if the Minister could answer some of the questions I have been putting to him, because they are of importance.
Before the Minister replies, I must rise to suggest that the existence of a small payments limit actually operates in a way opposite to that suggested by the noble Earl. If anything, it increases the amount of the settlement because of the administrative factor of arguing against it. Part of the whole case I am putting to the Committee is that, when there is a small payments limit, it is simpler in many cases for the insurer to accept the amount rather than to argue about it. That is why we are seeing what the Minister referred to as "clustering".
§ Lord Mackay of Ardbrecknish
Perhaps I may say a little more. The noble Earl is probing the need for the power and whether, deep down, I intend to use it. I hope I illustrated to him that, deep down, I have no intention of using it. Equally, I hope I explained that it is sensible to retain it in case, as the new scheme develops, it becomes obvious that it may be sensible to introduce a small payments limit. It is simply something that we may need to use in the light of experience once the new scheme beds down.
I believe I described the principal situation that might arise if we were to be convinced that we should use the power to institute a small payments limit; that is, if we could identity a limit—it would not be anything like £1,250—which would avoid unnecessary administrative effort and expense while at the same time affording sufficient protection to the taxpayer. That would stop a new cluster occurring which would be to the disadvantage of the victim, but the amount would be just below the level 952 at which the taxpayer was losing out. I hope the noble Earl can accept at face value what I am saying to him and accept from me that his suspicions that I may actually have some proposals in the back drawer which I will whip out in a year or two's time are quite unfounded. This really is a fail-safe, just in case, in the light of experience, we decide it would be sensible. I cannot help but notice that the, noble Baroness agrees with me. Dare I suggest that if the noble Baroness and I are on the same side, then it must be right.
§ Earl Russell
That is a slightly determinist view of the matter. We have more conversation to exchange, but I am not sure that we need to keep the Chamber listening to us while we do it. I would like to ask the Minister one more question before leaving the matter, if he will forgive me. If he is absolutely determined to keep the power to impose a small payments limit, would he consider fixing that limit in terms of the amount of benefit to be recouped rather than in terms of the amount of damages awarded because that would not have all the effects that we, on these Benches, are worried about in relation to a small payments limit. Is that a situation that the Minister might be prepared to discuss?
§ Lord Mackay of Ardbrecknish
I would have to think about that and take some advice. These matters are complex. One of the problems arising at £2,500 is that in fact it tempts people to fix the payment there, or near the limit, and pretend there is no benefit in it. One has to be a little cautious and protect the taxpayer. I shall consider what the noble Earl has said, and I have no doubt that we shall return to the matter at the next stage.
§ Earl Russell
I thank the Minister. "I require notice of this question" is a good traditional ministerial reply. I give him notice of the question, thank him for considering it and beg leave to withdraw my amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 4 not moved.]
Viscount Chelmsford had given notice of his intention to move Amendment No. 5:
Page 17, line 33, leave out ("the prescribed sum") and insert ("£1,250").
§ The noble Viscount said: I rise simply to say that to the best of my knowledge the insurance industry was delighted to consult constructively with the Government on the question of what is an appropriate limit, if there is a limit.
§ [Amendment No. 5 not moved.]
§ Schedule 1 agreed to.
§ Clause 2 agreed to.
§ Moved accordingly, and, on Question, Motion agreed to.
§ House resumed.