Social Security (Recovery of Benefits) Bill [H.L.]

HL Deb 10 December 1996 vol 576 cc968-1017

4.52 p.m.

House again in Committee.

Clause 3 ["The relevant period"]:

Baroness Hollis of Heigham moved Amendment No. 6: Page 2, line I I, at end insert ("or the disease in question was first diagnosed").

The noble Baroness said: In moving the above amendment, I shall, with the leave of the Committee, speak also to Amendment No. 7. The amendments refer to Clause 3 and the issue of disease. As it stands, the Bill persists in distinguishing in its benefit recovery rules between the treatment of injury on the one hand and, on the other hand, the treatment of disease. With injury the clock starts ticking from the point when the injury occurs, but with disease the clock starts ticking from when the victim makes a benefit claim and not from when the disease is first diagnosed.

On this side of the Committee we do not believe that it is fair or reasonable to distinguish between the two, as is the case currently with the Bill. Therefore, the two amendments are designed jointly to bring the treatment of illness and the treatment of injury into parallel so that the period for a disease case should run from when the disease was first diagnosed, not from when the claimant first made a claim for listed benefits.

Why are we moving such amendments? First, the Bill assumes that there is a clear and easily discernable difference between the two and that, therefore, they should be treated differently. Very often that is indeed the case, but it is not always so. On Second Reading, the noble Earl, Lord Russell, raised the question of radiation and asked whether that was an illness or an injury. Yet another example is that of a poisoning case—Gluteraldhyde. I understand that this is a chemical which is widely used for sterilising instruments in hospitals and dental practices. Breathing in the fumes of that chemical can cause appalling sensitisation which may lead to asthma-type respiratory conditions. That sensation may occur from one extreme case which one might then regard as an injury, but, more probably, it may be the result of repeated exposure over time. Is that repeated exposure a series of injuries, or is the victim suffering from a disease brought about by a continuing work practice to which he or she is particularly susceptible?

I shall give the Committee a further example; namely, the asbestosis sufferer. The starting of recoupment from the date of benefit claim rather than from when the illness was diagnosed could, theoretically, lead to more losses for the sufferer. At present, in an asbestosis claim case, the date of claim is regularly backdated by two years from the actual date of claim to give the claimant more benefit. But, having received more benefit, he is likely to face a larger recoupment when the case is finished. If an injury case takes two years to settle, the victim only loses two years of benefit and recoupment; but, if an asbestosis case takes two years, the sufferer will lose not only the two years of claim but also two years of backdated benefit, totalling four years' worth. If we treat disease cases from the date of diagnosis for recoupment, they will be brought into line with injury cases. That is why we believe that they should be treated similarly.

The Government may argue that it is difficult to do that in practice. However, I suggest that that is not so. The date of diagnosis is easily determined by the medical certificate of a GP, analogous to a date of injury claim. Equally, the Government may argue that this would cost the taxpayer more money. Again, that is not so: the burden would still be passed to the compensator under the general principles of the Bill. Precisely because the definition of what is an injury and what is a disease can widely overlap and because to treat them in similar ways will raise neither practical difficulties nor additional financial cost to the taxpayer, I very much hope that the Government will accept the amendments. I beg to move.

Earl Russell

I am happy to support both amendments. My name is attached to Amendment No. 6 and it is also attached, in spirit, to Amendment No. 7. The two amendments are linked. In arguing the case that it is difficult to have a clear line of distinction between disease and injury, I cannot help alluding to the Statement to which we have just listened. The damage—to avoid using anything other than a neutral word—involved in those cases is one that I would hesitate with any confidence to classify either as an illness or as an injury. However, if briefed, I could make a case for either.

As the Bill stands it will make a colossal difference to those affected, some of whom may also be civilians, as regards which definition will be applied to their case. For so fine a philosophical point, I do not think that it ought to make a very severe difference to what the claimant recovers which way the coin happens to fall. The purpose of the amendment is to bring the two cases closer together. As the noble Baroness explained very clearly, at present things are weighted against the illness in favour of the injury. We want that gap to be narrowed.

Obviously there will be objections about the difficulty of finding the date upon which the illness was first diagnosed. However, I believe that the noble Baroness's answer to that is conclusive. After all, that answer will have to stand whatever procedure is used to deal with personal injury. I say that because in litigation and, indeed, in dealings with insurance companies—as the noble Viscount, Lord Chelmsford, will probably confirm—it is necessary to have a GP's certificate to say when an illness first began. That will be necessary no matter which procedure is used. Therefore, why do we not use the suggested procedure to avoid committing an injustice and also to avoid letting the Government in for a great deal of unnecessary litigation at public expense?

5 p.m.

Lord Mackay of Ardbrecknish

Clause 3 defines the period during which benefits, paid in consequence of an accident, injury or disease for which compensation is claimed, may be recovered. Subsection (2) provides for the relevant period in cases of accident or injury, and subsection (3) provides for the relevant period in cases of disease. In the case of disease—the subject of the amendment—unless a settlement is reached beforehand, the relevant period ends five years after the day on which the claimant first claims a listed benefit in consequence of the disease.

As the noble Baroness and the noble Earl have explained, the amendments proposed would change the "relevant period" in disease cases so that it would be counted not from the date of claim, but from the date of diagnosis of the disease. They have argued that this would bring the treatment of diseases under the scheme more in line with that of accidents where the period of recovery runs from the date of the accident.

However, on reflection, the Committee might agree that industrial diseases often arise many years after exposure, and symptoms increase gradually over time. The date of diagnosis of a disease may not be the same as the point at which, owing to the disease, the victim is no longer able to work and therefore claims a social security benefit. Nor will the date of diagnosis always be a clear and indisputable date; for example, where a second opinion is sought or where a considerable number of tests have to be carried out because of the difficulty of diagnosis. By contrast, the date of claim can be easily identified, as indeed can the date of an accident.

In most cases the date of claim gives a reasonable indication of the point at which the victim's suffering as a result of the disease has caused him to be unable to work. This is broadly comparable to the way in which accident victims are treated. If there is to be a stage following his accident during which a victim is unable to work, this will usually commence immediately after the accident, and lead to a benefit claim at that point. I think that that is quite logical. If one has an accident, it does not take months or years for one to reach a point at which one ceases to work and claims a benefit. It is likely that the date of an accident and the commencement of a claim more or less coincide.

Use of the date of claim to determine the relevant period has worked well since the inception of the current scheme in 1990. I believe that there would be significant dangers for the smooth operation of the scheme if the amendments were accepted. 1 hope I have explained to the Committee why I do not think the comparison made by the noble Baroness and the noble Earl is the correct one. The correct comparison between accident and disease is much more closely related to the date on which someone with a disease has to make a claim. I hope that with that explanation the amendment will be withdrawn.

Earl Russell

If the Minister will forgive me, it is not quite so simple. He suggests that one can distinguish between an accident and an illness by the date after the injury at which evil effects begin to appear. There are old war wound cases, notably cases of a bullet being lodged in some portion of the anatomy, where severe ill effects begin to occur a long time after the bullet was lodged. Is the Minister telling us that those cases will therefore be classified as illnesses?

Lord Mackay of Ardbrecknish

The noble Earl—as often happens—has made a false comparison. Cases such as the one he mentioned would not fall under this legislation at all. They would fall under the war pensions legislation. Under that legislation the case itself determines whether benefits should be backdated.

Earl Russell

If the Minister thinks all bullets are fired in war, he has never listened to the Home Secretary.

Lord Mackay of Ardbrecknish

The noble Earl's question concerned someone who was injured in war. I thought I was therefore answering his question.

Baroness Hollis of Heigham

The Minister has been less than helpful on this matter. He made the point that there might be technical difficulties associated with the date of diagnosis as regards consultants, first and second opinions and so on. That was a smokescreen. We all know that after consultation the Government can agree a recommended point at which the clock begins to tick. For example, that may be at the point of first diagnosis, or when a medical certificate is signed by a GP. Whatever appears to be sensible and reasonable to the Government could constitute the guiding line and everyone would know where they stood. That is a simple, technical matter to overcome. The Minister and I know that that could be sorted out in three minutes flat.

The Minister also made the point that the date at which someone has incurred an injury would coincide with the date of drawing benefit for that injury. Perhaps the Minister would like to revise that view in the light of statutory sickness pay being now an employer's benefit and not something that would normally be recouped by government. Therefore there would tend normally to be a six months' discrepancy. I do not think his argument on that point is valid.

Further, the Minister made the point about benefits being linked to loss of work. That, of course, is not true as regards many of the disability benefits which are linked to the degree of disability and not to the point at which someone ceases work. To reinforce the point made by the noble Earl, Lord Russell, I should add that the Minister in no sense dealt with our substantive problem which is that while at extremes there is a clear distinction between an illness and an injury, nonetheless there is a major problem of overlap. For example I referred to chemical poisoning due to the nature of someone's work. In such cases it seems only fair and reasonable that treatment should be similar whether one labels a case injury or illness. The treatment should he parallel in terms of the benefit recoupment system. Will the Minister respond to those points?

Viscount Chelmsford

Before the Minister responds, I must refer to one point that the noble Baroness made; namely, the three minutes to agree the date of diagnosis of an illness. The courts are littered with claims concerning the problems arising out of manifestation of illness. I can assure her it is not a question of deciding these matters in three minutes.

Lord Mackay of Ardbrecknish

I thank my noble friend for underlining a point I was going to make. The noble Baroness makes it look a simple matter to decide the date of diagnosis of an illness. I used a shorthand form when I talked about unemployment benefit, or benefit related to being unemployed—that would be JSA now—because, of course, there are other benefits which are covered in Schedule 2. A person may not have had to give up his job but may still be claiming benefit. From that date the situation is timed and measured. I suggest that is a comparable date to the date on which an accident occurs.

On the question of the six months' delay to payments of recoverable benefit related to SSP, that, of course, applies both to accidents and to disease. Therefore there is not a distinction between the two, such as the noble Baroness sought to make. I am reasonably convinced that, as I have explained it, the position between accidents and disease is broadly comparable in the way the Bill outlines it. If the Committee were tempted to move in the direction the noble Baroness asks—I am not tempted to do that—there would be a considerable mismatch between the possible treatment of disease victims and the possible treatment of accident victims.

Baroness Hollis of Heigham

The Minister referred to statutory sick pay as regards both disease and injury cases and to the six-month period. Therefore, he said, the two conditions were treated in the same way. That was the point I was seeking to establish. The Minister helps me make my point more elegantly than I was able to do. We could argue about the diagnosis point but I am sure that one could produce a straightforward bureaucratic—as I would term it—procedure so that people knew where they stood. However, the basic issue remains that there is considerable overlap in some areas—for example, poisoning—of diseases and injuries. The Minister has at no point addressed that matter. He says that if we were to accept this amendment greater disparities would arise than is currently the position under the Bill. To enable me to reflect on what he said and to determine whether we wish to revisit this issue on Report, will the Minister write to me explaining in what way he believes that greater disparities and greater injustices would arise if the amendment were accepted? That would be a helpful basis on which to consider whether we wish to revisit the matter.

Lord Mackay of Ardbrecknish

Yes.

Baroness Hollis of Heigham

The Minister has said yes. In the light of that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 7 not moved.] Clause 3 agreed to.

Clause 4 [Applications for certificates of recoverable benefits]:

Lord Mackay of Ardbrecknish moved Amendment No. 8: Page 2, line 24, after ("person") insert ("("the compensator")").

The noble Lord said: In moving Amendment No. 8 I wish to speak also to Amendment No. 10. Clause 4 is intended to provide for the issue of, and applications for, certificates of recoverable benefit. We have introduced these two amendments to make it clear that it is the duty of the compensator to apply for a certificate of recoverable benefit, and that when an application is received from a compensator a certificate must be issued within the prescribed period. Under Clause 5 the Secretary of State must copy certificates to victims when they are issued. That mirrors the position under the current scheme. I commend the two amendments to the Committee. I shall listen to what the noble Baroness has to say about Amendment No. 11 and respond after that. I beg to move.

Baroness Turner of Camden

As the Minister said, the clause sets out the arrangements for the compensator to obtain a certificate of benefit paid from the DSS. I do not believe that we on this side of the Chamber have any objection to the two amendments that he moved.

However, we believe that it is necessary for all the parties concerned to know exactly where they stand, including, most importantly from our viewpoint, the accident victim. We do not believe that the clause is clear as to the right of the claimant to be entitled to apply for a certificate and to receive it within a given period, on much the same basis as does the compensator. I believe that the period is four weeks. Unless the right is allowed to the victim, he and his advisers—his union and lawyers—would be in a disadvantageous position relative to the compensator in planning the strategy to be followed in dealing with the claim.

The issue is revisited in Amendment No. 14. Unless the right is allowed to the complainant, we believe that he will be disadvantaged. While we have no objections to the amendments just moved by the Minister, we believe it necessary for there to be an arrangement that the claimant has an entitlement on the same basis as the compensator. Those are the reasons for the amendment.

Lord Mackay of Ardbrecknish

I am grateful to the noble Baroness for explaining her amendment. Perhaps I may explain how the situation will work. Under the present scheme only the compensator may apply for the certificate. However, victims are sent copies of the certificates issued by the unit at the same time as they are sent to the compensator. Therefore the victim receives a copy of the same certificate as does the compensator, at the same time.

The compensation recovery unit also runs a benefit inquiry service which can provide victims with details of all benefits that have been paid with the exception of statutory sick pay. The unit has an internal target to respond to a benefit inquiry within 30 days of receipt.

It would seem unnecessarily bureaucratic to add to the scheme the further complication that certificates of recoverable benefit—a document with legal force—must also be issued to victims on demand. I am concerned that the implications of such a change would require significant consequential changes to be made to other clauses of the Bill. For example, we would need to make similar requests of victims concerning the provision of information to those placed on a compensator. Certain obligations are placed on the compensator which are not placed on the victim. It seems inappropriate to create such a raft of duplicated procedures when victims are copied certificates at the same point as compensators.

We are not aware that the present arrangements cause any particular difficulties. Nor are we aware that victims are failing to obtain all the information they need about recoverable benefits. Indeed the Select Committee's inquiry revealed widespread satisfaction with the service provided by the compensation recovery unit.

In summary, a victim can contact the benefit inquiry service and have details provided. However, perhaps more important is the fact that if the compensator applies for a certificate, when that certificate is sent to the compensator it is also automatically sent to the victim without the victim having to make an application or to do anything else.

With that explanation and assurance on how the system works, I hope that the noble Baroness will withdraw her amendment.

Baroness Turner of Camden

I thank the Minister for that explanation. However, I can see no reference in the Bill to the procedures to which the Minister referred. I do not see it stated anywhere that the victim receives a copy. Presumably, if the victim does not receive a copy, he can do something about it; he has some status from which to complain, or whatever. If he receives a copy, he at least knows the situation. I am glad that the Minister accepts that the victim has to know at the same time as the compensator. I am a little worried that that provision does not appear in the Bill so far as I can see. I should like to consider what the Minister said.

Lord Mackay of Ardbrecknish

Perhaps I can help the noble Baroness, having quickly found the right place in the Bill, I think. As the noble Baroness knows from previous discussions on legal matters, I am always a little reticent to act as a great legal authority in case my surname becomes confused with others who are in a better position.

Baroness Hollis of Heigham

The collective Lords Mackay!

Lord Mackay of Ardbrecknish

Yes, the collective Lords Mackay. I thank the noble Baroness.

Clause 5(5) states:

Where the Secretary of State issues a certificate of recoverable benefits, he must provide the information contained in the certificate to (a) the person who appears to him to he the injured person". I believe that that is the right place in the Bill. I hope that it reassures the noble Baroness.

Baroness Turner of Camden

I am much obliged for that explanation.

On Question, amendment agreed to.

5.15 p.m.

Baroness Turner of Camden moved Amendment No. 9: Page 2, line 25, at end insert— ("( ) As soon as practicable after receipt of an application for a certificate of recoverable benefits, the Secretary of State shall issue a written acknowledgement of receipt of the application.").

The noble Baroness said: Amendment No. 9 ensures that the Secretary of State issues a written acknowledgment of receipt of the application as soon as practicable after receipt of an application form.

Clause 21 refers to the requirement for an acknowledgment. The intention is to make it incumbent on the Secretary of State to issue a written acknowledgment as soon as is practicable for him to do so. I can see no other reference in this section of the Bill to acknowledgment being necessary.

I note that the Minister's Amendment No. 12 has the same effect. The only difference is that in our amendment we state, As soon as practicable after receipt of an application".

Therefore I prefer the wording of Amendment No. 9 to that of Amendment No. 12. However, I am willing to listen to what he says on the issue. I beg to move.

Lord Mackay of Ardbrecknish

Perhaps I may respond to the noble Baroness and speak to my three amendments which are grouped with Amendment No. 9.

As the noble Baroness said, the amendment requires the Secretary of State to issue an acknowledgment of the receipt of an application for certificates of recoverable benefits. Under the current scheme the regulations make a similar requirement.

However, it has been suggested, and the Government have agreed, that it would be more appropriate that the requirement to issue an acknowledgment be provided on the face of the legislation, and the three amendments in my name are designed to achieve that. I am sure that the Committee will have noted that the Government amendments do not include a requirement that an acknowledgment should be issued as soon as practicable. However, we do not believe that it is necessary to set out such a requirement on the face of the Bill since the compensation recovery unit already has an internal target to issue acknowledgments within seven days.

Amendment No. 12 makes clear on the face of the Bill that the Secretary of State is obliged to issue an acknowledgment of a compensator's application for a certificate. That is exactly what the noble Baroness asks me to do. Under the present scheme, this requirement is provided in regulations.

Under Clause 21 of the Bill, which relates to cases where the Secretary of State has failed to issue a certificate, it is one of the conditions for a payment to be exempt from benefit recovery process that a compensator must have in his possession an acknowledgment of receipt of his application for a certificate. It has been suggested, and we agree. that it would be appropriate, therefore, for the requirement to issue an acknowledgment also to be provided on the face of the legislation. Amendment No. 12 meets that concern.

Amendment No. 44 removes the regulation-making power relating to acknowledgments from Clause 21. I trust that a regulation-making power biting the dust will please the noble Earl.

Amendment No. 45 corrects a reference in Clause 21 to the amended Clause 4.

I am not inserting quite the words that the noble Baroness seeks. However, I hope that she accepts that I am taking on board the spirit of her amendment. With the assurance that the internal target for the compensation recovery unit is within seven days, I hope that she will withdraw her amendment and that the Committee can accept my amendment.

Earl Russell

Before the noble Baroness replies, without entering into the question of which form of words is better in a perfect world, I am extremely glad to see the Minister's amendment. I thank him warmly for tabling it.

Baroness Turner of Camden

I thank the Minister for his explanation and for the statements he made in moving his amendment. In view of that, I am willing to withdraw my amendments and shall support Amendment No. 12 when it is moved by the Minister.

Amendment, by leave, withdrawn.

Lord Mackay of Ardbrecknish moved Amendment No. 10: Page 2, line 26, leave out ("a person") and insert ("the compensator").

The noble Lord said: I have already spoken to this amendment. I beg to move.

On Question, amendment agreed to.

[Amendment No. 11 not moved.]

Lord Mackay of Ardbrecknish moved Amendment No. 12: Page 2, line 27, after ("must") insert ("(a) send to him a written acknowledgement of receipt of his application, and (b) subject to subsection (6),").

The noble Lord said: I have already spoken to this amendment. I beg to move.

On Question, amendment agreed to.

Baroness Turner of Camden moved Amendment No. 13: Page 2, line 37, leave out ("may") and insert ("shall").

The noble Baroness said: This is a simple amendment which places an obligation upon the Minister by putting "shall" instead of "may" in this section of the Bill. I hope the Minister will be prepared to accept it. I beg to move.

Earl Russell

I warmly support this amendment, which is a point of some importance. Drafting of legislation must not become too permissive or it fails to serve its purpose as legislation. I very much hope that the Minister can accept the case for this amendment, which I do not think would do him any harm and would do a lot of other people a great deal of good.

Lord Mackay of Ardbrecknish

I am in a little difficulty because Amendment No. 13 is grouped with some others. I do not know whether the noble Baroness wishes to take them separately. I will deal with Amendment No. 13 which, as the noble Baroness said, would require the Secretary of State to issue replacement certificates of recoverable benefits whenever existing certificates expired.

There are many circumstances when it would be completely unnecessary to issue such a certificate, perhaps the best example being when the negotiating parties have already agreed a settlement and no further certificate is therefore required. I am concerned that such an amendment might lead to a never-ending series of certificates issued by the recovery unit, at significant administrative expense and to no practical purpose.

Clause 4(2) of the Bill places an obligation on the Secretary of State to respond to an application for a certificate within a set period. This arrangement will facilitate the settlement process without adding unacceptable administrative burdens. I believe it is properly a case of "may" because, particularly in the circumstances of subsection (5)(b), one would not want the Minister to have to do that in all cases and have an obligation upon him. There will be certain cases in which he may wish to do it, but I do not think we should impose an obligation. There is quite enough bureaucracy around without adding to it. What we have here is perfectly reasonable and will allow us to respond immediately when an application is made. I do not believe we need to go that little bit further and replace "may" with "shall".

Earl Russell

The Minister has made a perfectly serious point, which I take on board; but the noble Baroness, Lady Turner, has also made a perfectly serious point. At present, there is not quite a correct fit between those two points. The Minister's "may" stretches a little too far. It does not only cover the cases to which he referred, where there is no reason for such a certificate to be issued; it extends to any case whatsoever, as I understand it. In any circumstance, the Secretary of State might, perhaps through sheer inadvertence, perhaps because something else has happened that day, fail to get round to issuing a certificate.

Is it possible that we might find a form of words that could bridge the gap between these positions? Perhaps we could think about some form of words as follows: "The Secretary of State must either issue a certificate or show good cause why he has not done so". That is a tentative, on-the-spur-of-the-moment suggestion. Does it come anywhere near bridging the gap?

Lord Mackay of Ardbrecknish

I am not sure if there is a very big gap here. The real problem is that, where a compensator applies for a certificate, the Secretary of State, under subsection (2), must issue a certificate before the end of the following period, as it says on the face of the Bill. That seems to cover the point. The "may" is much more relevant to subsection (5)(b), where no application has been made.

I will look at what the noble Earl says and see whether there is some mismatch in the construction here; I do not think there is any mismatch about what we aim to achieve.

Baroness Turner of Camden

I thank the Minister for that explanation and the noble Earl, Lord Russell, for his intervention. There is a point to be made here, but I think that perhaps we should be better advised to think about it and have another look at it at Report stage. I think that what the Minister said has some relevance to our discussions and I am prepared to accept what he said. On the other hand, there may be occasions when a certificate ought to have been issued but has not been and to have a stronger wording here might be more helpful. I should like to think about what has been said. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 14 and 15 not moved.]

The Deputy Chairman of Committees (Lord Aberdare)

I should tell Members that, if Amendment No. 16 is agreed, I cannot call Amendment No. 17.

Lord Mackay of Ardbrecknish moved Amendment No. 16: Page 2, line 41, leave out subsection (6) and insert— ("(6) Where the compensator applies for a fresh certificate while a certificate ("the existing certificate") remains in force, the Secretary of State must issue the fresh certificate before the end of the following period. (6A) The period is—

1. (a) the prescribed period, or
2. (b) if there is no prescribed period, the period of four weeks,

which begins with the day following the day on which the existing certificate ceases to be in force.").

The noble Lord said: This amendment relates to Clause 4(6). In the present draft of Clause 4(6), as is the case under the present scheme, no application for a fresh certificate may be made while any existing certificate remains in force. This can in some cases lead to a slight delay between the expiry of a certificate and the issue of the next certificate, which can be inconvenient to the negotiating parties. The amendment in my name addresses this problem by allowing an application to be made before the expiry of an existing certificate. However, certificates may remain in force for a considerable period of time. If the Secretary of State were obliged to issue such a replacement certificate during the same time limit as that set out in subsection (3) of this clause, some overlapping confusion as to the proper recoverable amount would result. The amended subsection (6) therefore sets the time limit for the issue of a certificate to run from the date of the expiry of the old certificate, although replacement certificates may be issued as soon as the original certificate expires. I commend the amendment to your Lordships. I beg to move.

Baroness Turner of Camden

I thank the Minister for that explanation of his amendment. On the other hand, I must say that I prefer my own amendment, Amendment No. 17, because there is no definition of "prescribed period" for the purpose of this clause. The purpose of our amendment is to ensure that there is continuity from certificate to certificate. The Government's amendment does not deal with the fundamental criticism which we make of the existing Clause 4, which is that there can be a substantial hiatus between the expiry of one certificate and the issue of a new certificate. We suggest that the certificate must be issued within the period provided for in Amendment No. 17. A hiatus could delay a settlement and leave the parties in limbo, particularly where a case is coming up for trial. We therefore think that our amendment, which is very clear and attempts to cover the hiatus in Clause 4, is preferable to the Minister's amendment.

Lord Mackay of Ardbrecknish

Amendments Nos. 16 and 17 tackle a similar problem but in a different way. Amendment No. 17, which the noble Baroness has just discussed, would allow applications to be made for certificates up to four weeks before the expiry of a current certificate. We believe that the effect of this amendment would be rather inflexible because it does not allow for the prescription of shorter periods for the issue of certificates, as may become possible in the future with developing technology. In addition, since the compensation recovery unit is required under Clause 4(3) to issue certificates within four weeks of the receipt of a request, this amendment might cause considerable administrative difficulties where a request was received close to four weeks before the expiry of a certificate.

In order to meet their legal obligation to issue certificates within four weeks, the unit might have to issue a new certificate before the expiry of the certificate in force. It might therefore be difficult to avoid having two conflicting certificates in force at the same time, which is the point I made when I spoke to my own amendment. I believe that my amendment will allow an application for a certificate to be made during the currency of an earlier certificate but will not give rise to the possibility of conflicting certificates being in circulation at the same time. I have little doubt that the noble Baroness will be content to accept my amendments. If she wants to go a little further, perhaps she can reflect on what I have said and see that I have gone some way to meeting her concerns.

5.30 p.m.

Earl Russell

I wonder whether I have followed this point correctly. I should be grateful for a little more clarification. What the Minister has provided is that one may apply for a fresh certificate while the old one is in force. But he has not closed the gap, so that the fresh certificate must arrive before the expiry of the old one.

The Minister's fear is that there may be two certificates in force at one time, which I should have thought could have been perfectly successfully dealt with on the same principle as is used in the making of wills: "This will revokes all former wills"—"This certificate revokes all former certificates". I wonder whether the Minister has perhaps seized here on a purely imaginary danger that there is a rational way of providing for it.

Let me put the point about a gap, even if it is a very small one. Under the Minister's amendment, I understand that it must be less than four weeks. Let us suppose that that four weeks comes, as the noble Baroness, Lady Turner, suggested, when a High Court case is about to come to trial. We heard a great deal yesterday in the Civil Procedure Bill about the amount of confusion that can be caused if court listings go wrong and the cost to public funds that may result from it. If indeed, we achieve anything like a civil justice commission, it might well have views to express on this matter.

So I wonder whether the Minister is perhaps being not sufficiently careful of the public funds of another department and whether some further thought here might be worthwhile.

Baroness Turner of Camden

I shall study very carefully what the Minister said. But again I return to the point that I made in moving the amendment. The Minister's amendment says:

The period is—… the prescribed period". But there is no definition of that period. The amendment goes on:

or … if there is no prescribed period, the period of four weeks". I cannot understand why the noble Lord objects to the amendment that I moved. I cannot believe that the problem of double certification is insuperable, as the noble Earl, Lord Russell, said. If there is ambiguity in legislation—for example, the definition of a "prescribed period", lack of clarity and so on—it can lead to difficulties in the future. I am not terribly happy with what the Minister said. I am willing to look at it, but I am quite certain—

Lord Mackay of Ardbrecknish

When I studied this particular problem, I myself had some difficulty in working out how the gaps occurred and so on. The certificate itself can be seamless in that when the first certificate (if I may so call it) comes to the end of its day—say, for the sake of discussion, the end of November—the next certificate, although it may not be issued on 1st December, may well run from 1st December. But I see the problem of the gap. In fact we had a discussion about it this morning.

I know that the noble Baroness will not press the point. She will think about what I have said and I equally will think about the points that have been made, especially about the possibility of a court perhaps meeting after a certificate has gone and without a new one. I can quite see that point.

On Question, amendment agreed to.

[Amendment No. 17 not moved.]

Clause 4, as amended, agreed to.

Clause 5 agreed to.

Clause 6 [Liability to pay Secretary of State amount of benefits]:

Baroness Turner of Camden moved Amendment No. 18: Page 3, line 35, at end insert— ("( ) Subsection (2) shall not apply to an interim payment or payments paid before the final settlement of the claim which is or, where more than one interim payment has been made, are in total below an amount or amounts specified in regulations made pursuant to this subsection.").

The noble Baroness said: The amendment before the Committee under Clause 6 deals with the rather difficult question of interim payments. Admittedly, this matter can sometimes be rather complicated. As those who have dealt with industrial injury cases are aware, it is very common, in a case which could be lengthy because of the condition of the accident victim, to negotiate an interim payment in advance of the final settlement.

The present practice is for insurers to require the interim payment to be allocated to special rather than general damages. Interest rates on special damages are higher than on general damages. Thus, by making an interim payment allocated to special damages, the insurer potentially saves money on the final settlement. The original recoupment provisions added a complication to interim payments in that any interim payment had not only to deal with the needs of the accident victim but also any recoupment incurred to date. That meant that an interim payment often had to be applied for in a much larger sum than might at that time be needed and could push towards the final value of the claim.

In smaller cases that was not so much of a problem because of the small payments limit of £2,500. In bigger cases, however, the impact on recoupment could dramatically cut back on the interim payment, often eating into the final compensation. We believe that some thought should be given to the problem of interim payments and that is what our amendment is intended to do. It makes clear that subsection (2) should not apply to an interim payment made before the final settlement of the claim which is below, or in the case of a second or subsequent interim payments are below, an amount or amounts specified in regulations to be made pursuant to this section.

We say essentially that this needs to be looked at; hence the suggestion that we have made about regulations. We no longer have the small payments limit of £2,500 in the Bill. This amendment makes provision for the Secretary of State to specify how much recoupment can be deferred to protect a small interim payment. The kind of payments likely to be involved are those relating to partial earnings loss to be made up by an interim payment. I hope that the Minister will be prepared to agree that there is something quite serious to talk about here and that he will be prepared to accept what we have to say. I beg to move.

Lord Mackay of Ardbrecknish

The noble Baroness is quite right in saying that this is a rather complicated issue. I hope that what I have to say can allay her concerns, which I understand, about this matter. I also understand that under the old system these matters sometimes did turn out in the way that she suggested.

The noble Baroness's amendment would exempt interim payments from benefit recovery, where their total fell below a prescribed limit.

I understand that the amendment is in response to a genuine concern that, after recovery is made from an interim payment, the victims may not, in the short term, be left with the funds that they need, for whatever reason the interim payment was being granted. I think that the suggested amendment is unnecessary. It would probably introduce a potential loophole into the reformed scheme, although I understand the problem as it occurred in the old scheme.

Under the reformed benefit recovery scheme, although we propose to continue the present arrangements that benefits may be recovered in respect of interim payments, the rules of the new scheme will only allow the victim's compensation to be reduced pound for pound in respect of benefits already paid to meet a corresponding need. So it should not be possible for benefit recovery to lead to a reduction in an interim payment that has been made, say, for private medical expenses.

That is because benefits are not paid to meet such expenses. If an interim payment is made for the purpose described, it could not be reduced on account of any benefit repayment that the compensator was obliged to make at that time.

However, if an interim payment would fall to be reduced under the provisions of Clause 8, it is up to the victim's representative to negotiate a payment with that reduction in mind. Under the present scheme, we have no evidence that the courts ignore the effects of recoupment when they award interim payments.

An attempt has been made by the noble Baroness to limit the extent to which the amended clause could be used to avoid benefit recovery by making provision for a limit below which recovery would not be triggered. Our knowledge of the way in which the small payments limit has been manipulated under the present scheme makes me fear that the taxpayer's interest, if we introduced a similar limit and applied it to interim payments, might not be protected. Of course, it might be possible to introduce a limit at such a low level that manipulation was almost impossible. However, this would make an interim payment made within such a limit all but worthless to the victim.

I appreciate that victims' representatives would rather not have to negotiate an interim payment with benefit recovery in mind; but I do not see any alternative if the taxpayer is to be properly protected. I hope that my pointing out that the reform scheme is different from the old scheme and that payments given for other than benefit will not be recoverable against, reassures the noble Baroness that the kind of scenario she painted (which definitely could arise under the old scheme) is not likely to arise under the new one. I appreciate that these are complicated issues. However, I hope the noble Baroness can withdraw her amendment. I appreciate that she may wish to consider the issue. If she wants to come back to me in writing, I shall be happy to respond to her.

Earl Russell

I am grateful to the Minister for his last assurance to the noble Baroness. I take the points that he is making. However, he did not say anything to meet the point about the difference between the treatment of general and special damages. If the noble Lord does not want to meet that issue by way of the amendment, perhaps he will consider some other way of meeting it. Indeed, before the next stage of the Bill he may want to consult his noble and learned clansman on the matter.

Baroness Turner of Camden

I am obliged to the Minister for his explanation. As he rightly said, this is a complicated matter. However, there are still issues of concern to be resolved for those of us on this side of the Chamber. The noble Earl, Lord Russell, referred to the difference between general and special damages. I am concerned also that there may now be a situation in which the representatives of an injured person may not go for an interim payment at all if they feel that recoupment is to be made from it. That would be a disadvantage. Many legal cases arising from accidents at work tend to be long and drawn out. As I said in moving the amendment, it is usual in such instances to try to negotiate an interim payment to try to look after the interests of the injured person.

I am well aware that the taxpayer needs to be protected. On the other hand, we are also concerned with the interests of the person who suffered the injury. Therefore, as the Minister rightly assumed, I will look carefully at what he said. It may be a good idea to revisit the whole issue at Report stage. I am not happy about what he said this afternoon. However, the matter is complicated and we need to give it a great deal of consideration. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 6 agreed to.

Clause 7 [Recovery of payments due under Section 6]:

Lord McCarthy moved Amendment No. 19: Page 4, line 4, leave out ("may") and insert ("shall").

The noble Lord said: We return to the fascinating notion put forward by the Minister of the "seamless certificate", and the question of whether or not it will materialise. We are raising this question again in relation to Clause 7 in order to hear what he says.

Clause 7 deals with the recalcitrant compensator who fails to apply for a certificate of benefit or fails to make a payment even if he has a certificate. It gives the Secretary of State certain powers, presumably in order to force the recalcitrant compensator to compensate. It stipulates that the Secretary of State "may"—our amendment would change that to "shall"—issue another certificate, issue a copy of a certificate or, in either case, issue a demand for payment immediately. I suppose that would be, in certain circumstances, without a certificate.

We would like to know why, as the Minister explained in relation to a previous amendment, the issue of the certificate should be discretionary rather than mandatory. It is surely fairer to the compensator that he should know how the demand is calculated, and if he has lost the certificate, he should have another. He is more likely to pay if he obtains another certificate. Both sides will want to know and be clear about what the certificate contains.

That is what we are asking. In other words, what are the circumstances in which the Secretary of State may not issue a certificate or may not recover the amount? What are the circumstances in which he may demand the amount without a certificate or issue a certificate and not demand the amount. It would surely be better if the matter was clear and he issued the certificate in all circumstances. I beg to move.

5.45 p.m.

Lord Mackay of Ardbrecknish

Over such great disagreements as "may" and "shall" are parliamentary battles made. As I did earlier, I hope to be able to assure the noble Lord, Lord McCarthy, that there is nothing suspicious in the use of "may" rather than "shall"; indeed, it allows some flexibility which is useful for the Secretary of State and the Compensation Recovery Unit.

Amendment No. 19 would require the Secretary of State to issue copies of certificates and demands for payment in any case where a compensator had made a compensation payment but had not applied for a certificate or had not made a payment to the Secretary of State within the allotted time. The amendment would make the provisions of Clause 7 much more inflexible for the Compensation Recovery Unit to operate.

In many cases, although the compensator may not have applied for a certificate, he may co-operate with the unit when contacted. Or, although the compensator was in possession of a certificate and the unit had not received payment, the compensator may indicate when contacted that he was about to make payment. In either case it would be unnecessarily bureaucratic and a poor use of the time of officials as well as of funds to issue a formal demand for payment or a copy of the certificate. That is what the word "shall" would do. The Secretary of State would be obliged to issue a certificate even though he knew that the compensator intended to pay and was in contact with him. That is unnecessary.

The word "may" means that the unit can act when it knows that the compensator is not playing ball and is just being difficult. I hope therefore that the explanation that there is nothing sinister in the use of the word "may" and that it is simply a better way of allowing the Compensation Recovery Unit to proceed rather than to oblige it to send out a copy of a certificate or a formal demand in every case, whether or not it needs to, is enough to allow the noble Lord to withdraw his amendment.

Earl Russell

Without taking issue with the Minister's general argument, perhaps I can give him a little friendly advice. If he wants to persuade us, perhaps he should invoke the argument of flexibility slightly less often. While that is a great virtue, Ministers—I do not refer only to the noble Lord present but to Ministers as a generic species—think of flexibility as entirely their own flexibility; they do not often think enough about the flexibility of other people. Therefore, if the Minister wishes to persuade us, he should perhaps stick more to the practical points without the theoretical implication, which is not always as persuasive as perhaps sometimes it should be.

Lord McCarthy

Perhaps the Minister can clarify a point. He seemed to be saying that the certificate itself was optional. I took the view that it is optional in Clause 7 because the compensator may have lost the first certificate. The Minister says that if he has lost the certificate, he may know what it said and therefore another one need not be issued. However, at one point the Minister appeared to be saying that the issue of the certificate was a voluntary matter and if one had reason to believe that the compensator knew what he had to pay, one did not need to issue a certificate. Was the Minister really saying that?

Lord Mackay of Ardbrecknish

I do not think I was saying that. The easier one to look at is the formal demand for payment. If "shall" is placed there, a formal demand for payment has to be sent, even though the unit knows, because it has contacted the compensator, that the payment is coming as it should do. In the case of the certificate, it is the copy of the certificate which is optional. The original certificate, of course, is obligatory on request. It is the copy part that is optional. My point is that I do not think that we should oblige the unit to send a copy certificate if it knows, because it has made a telephone call or whatever, that that is not necessary. That is why I think that "may" is a happier word for a better administration of the system than "shall". I am taking the noble Earl's strictures to heart.

Lord McCarthy

We shall have to go away and look at this and maybe we shall come back again. There is a substantial difference between "may" and "shall". You may be shot or you shall be shot. There is a very substantial difference. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 7 agreed to.

Clause 8 agreed to.

Baroness Hollis of Heigham moved Amendment No. 20:

After Clause 8, insert the following new clause

OFFERS OF COMPENSATION PAYMENT: HEADS OF COMPENSATION (". A person who makes an offer of a compensation payment (whether by payment into court or otherwise) which takes account of a reduction calculated in accordance with section 8 shall state—

1. (a) the gross amount of the offer;
2. (b) the amount allowed in the offer for each head of compensation listed in column 1 of Schedule 2; and
3. (c) the name and amount of each recoverable benefit it is proposed to deduct from each of those heads of compensation.").

The noble Baroness said: We should like to insert a new clause into the Bill. Clause 8 deals with heads of compensation. Our amendment would specify for the claimant—that is the victim—the basis on which the compensator has determined his final sum. We believe that the claimant, the victim, needs to be able to assess whether an offer by the compensator for settlement is reasonable. To do this the victim clearly needs all relevant information that is entered into the compensator's calculation. This amendment requires the compensator to provide a breakdown of an offer into the separate heads of damages so that the claimant can learn, for example, how much of the damages have been allocated to each head of damage.

The Government at Second Reading resisted this, and I am still quite baffled as to why they did so. The compensator has to make this breakdown for his own internal purposes. Why should he not pass that information to the claimant and his lawyers? It is simpleC and straightforward. The claimant surely has the right to know how much of his proposed damages are for pain and suffering and how much to cover benefits already received. Without that information, how can the victim decide whether the heading for pain and suffering, which should be ring-fenced, for example, is reasonable? Otherwise, the claimant might suspect that the compensator is overloading one head of damages to reduce the liability to pay excessive benefit claims.

The compensator, we know, has a vested interest in increasing the offset amount, as this reduces the excess he must pay. His interests conflict with those of the claimant. It is important for the claimant to know on what formal basis of division between heads of damages the compensator is operating.

The Government may repeat, as they said at Second Reading, that the claimant's lawyers will have made that assessment. So they will; that is the basis of their claim. But surely it is sensible and reasonable to see whether their estimates and assumptions—the estimates and assumptions of the claimant's lawyers—coincide with those of the compensator. It cannot be right that the victim is denied key information that the compensator is working on, on the basis of which the compensator is offering a settlement.

I hope the Government will agree that it is reasonable that there be an agreed basis of information on which both parties are negotiating. I beg to move.

Earl Russell

I once looked up the word "Dutch" in the dictionary of English slang. I shall not amuse the Committee with some of the things I found there, but I am concerned at the moment with the words "a Dutch account". That is the sort of account that says "to services rendered, £5,000". It is awfully hard to query an account like that. It is quite important under what heads various sums are awarded, since damages for pain and suffering are ring-fenced from the operation of the courts. That is one of the most welcome things in the whole Bill. It means that it is important to the victim to know which damages are put under which head. Indeed, if the victim wishes to argue with that, as has been known from time to time, it is essential that he should know exactly what it is with which he wishes to argue. This is a decision which will be of legal significance.

There is a long judicial tradition, stretching back to the 17th century, recently re-asserted by the noble and learned Lord, Lord Woolf, that there must be reasons given for decisions with a judicial input, otherwise they cannot be challenged. There must be records made and reasons given. The two things are inter-dependent. The courts have, for a long time, tended to find any breach of those propositions a breach of the principles of natural justice.

I understand that the Government do not want the growth of judicial review to go too far. Many on the Bench would also hope that it would not. That depends on certain care in the drafting of legislation as well as on the operation of the judiciary. This is a case where the amount of judicial review in the future might very well be kept down by accepting the noble Baroness's amendment, and for that reason I am extremely happy to support it.

Viscount Chelmsford

I am afraid I must oppose this amendment. It ignores the way in which settlement negotiations which do not reach the courts actually take place. Surely it is true that initially each party will seek to emphasise the substance, or the lack of such substance, to each heading of the claim. There will not be too many heads where even approximately agreement on the quantum is going to be admitted initially. The gap between what the claimant's representative wants and what the defendant's representative offers will be wide initially. If these two representatives do succeed in getting their clients to agree on an award out of court, then this agreement will be in the aggregate. No agreement will have been reached on the make up of the individual parts. Whether they need the amendment of the noble Baroness, Lady Hollis, to be agreed, it would undoubtedly reduce the number of out of court settlements significantly and, correspondingly, increase the number of contested cases that will reach court. I must assume that all parts of the Committee would consider that to be retrograde.

Baroness Hollis of Heigham

I wonder whether the noble Viscount, Lord Chelmsford, would help me further. I have noted his words and I am baffled by them. He said that there probably would be no agreement on parts, even if both parties had agreement on the total sum. How could they have agreement on the total sum if they did not agree on how that total sum was arrived at? I do not understand his thinking on that.

Viscount Chelmsford

In my experience, that frequently is the case: after a lengthy negotiation, without agreeing on the parts, there is agreement on a compromise between the aggregate requirements of one party and the other.

Baroness Hollis of Heigham

If the Minister would allow me, how would that aggregate compromise work? Part of the settlement would be for pain and suffering, which is to be ring-fenced, and part for damages for loss of earnings and the like, which are part of the recoupment procedure. How can you agree a total figure if you cannot agree on those two elements, one of which is protected from recoupment and the other is not? This is a new world into which we are moving, and I do not understand how the noble Viscount's thinking applies to this new world.

Earl Russell

I should like to reinforce the point the noble Baroness makes about a new world. I understand that you can reach a settlement in aggregate, and that you can divide that up afterwards. In this new world, in which one part of the settlement is subject to recoupment and another part is not, it will make a great deal of difference to what the victim actually receives under which head those damages are being awarded. Therefore, the effect of what the noble Viscount is proposing may be the opposite of what he suggests.

He is concerned about the incentive to settle and so, I hope, are we all. I can certainly imagine a litigant being extremely reluctant to settle if he does not in fact understand under which heads he is getting the damages and what they are going to be worth to him when he gets them. That is a question which tends to interest litigants, very naturally. There may be a better chance of getting settlements if litigants do understand exactly what they are getting under which head of damages, and therefore what is going to be recouped and what is not. I thought that might be another possible way of looking at it, and I would be very interested to hear what the Minister has to say about it.

6 p.m.

Lord Mackay of Ardbrecknish

First, I should make clear that we are talking about out of court settlements. We are not talking about court settlements. My noble friend Lord Chelmsford has brought the real world to our proceedings. That real world was evidenced before the Select Committee of another place. It was told that offers of compensation and resultant settlements are very often not broken down into their component parts in out of court settlements. Some 90 per cent. are out of court settlements.

My noble friend Lord Chelmsford is right to say that nothing we do in the Bill should lead to more cases going to court. That would be in no one's interest. The Select Committee was told that offers of compensation and resultant settlements are very often not broken down into their component parts. That was confirmed by my noble friend.

The product of negotiations is a global settlement; that is to say, a single sum of money is offered which represents compensation for all losses suffered. In such negotiations there is rarely a distinction drawn between the separate elements of compensation which may be included; loss of earnings, the cost of care, pain and suffering, and so on. The negotiating parties may very often disagree on the amounts of compensation which they believe should properly be payable in respect of each of these elements. But while their minds may never meet on those issues, they may, nevertheless, be able to agree on an overall sum in settling the claim.

I believe it would be entirely wrong for the operation of the reformed benefit recovery scheme to interfere with that process. Indeed, there is no need for it to do so. Under the reformed scheme it will be possible for both victim and compensator to calculate the amount of compensation they believe should be paid in respect of the losses which the victim has sustained. They will also take a view on the reductions that should be made under the scheme for each of those categories. Each side will therefore have an anticipated net figure or indeed probably a range within which such a net figure should fall. When both parties are satisfied that the offer conforms with their projections, they will settle.

It would be excessively bureaucratic and unnecessary to require compensators to set out all the elements suggested in the amendment when they come to such an agreement—or rather when they are negotiating such an agreement, because I presume that that is actually what would happen. Furthermore, it would place them at a disadvantage in the negotiations since the amendment would place no corresponding requirement on victims to set out their calculations for the information of the compensators. I doubt whether representatives of victims would complain if the amendment were carried but I believe that we have to be even handed and be seen to be even handed. In essence, the benefit recovery process must not exert an excessive influence on the way in which compensation settlements are negotiated. It should certainly not exercise an influence which would lead to more cases going to court because the parties could not agree with the component parts, although they might be able to agree the total figure.

That is the nub of my argument. It is an argument about the real world where these negotiations happen and where we all want to see settlements satisfactory to both parties agreed in out of court settlements. I suggest to the noble Baroness and to the noble Earl that they might look at what the Select Committee of another place was told about these out of court settlements not being broken down and that they heed what my noble friend Lord Chelmsford, who understands how this part of the world works, has said. With that explanation, I hope they will agree that it would not be to the benefit of victims, compensators and to the speedy out of court settlement of claims if we went down the road suggested in the amendment.

Earl Russell

It is not quite as simple as the Minister suggests. When he talks about the real sum on which he hopes the two will settle, he is perhaps importing an unjustified adjective. Until they know which parts of that sum are liable to recoupment, and which are not, there is not any real sum involved. What we are dealing with is a notional sum. It is like being paid a salary and not knowing whether it is before or after tax. It makes a considerable difference.

I do not dispute what the Minister and the noble Viscount say about the real world as it has been hitherto. But the Bill is fundamentally changing the situation. Our job as legislators is not to legislate for the real world as it was yesterday; it is to legislate for the real world when the Bill is in force. Those are very different things. I am not a lawyer but I cannot help being tempted to imagine that if I were and I were dealing with a case of this kind, I would very strongly advise my client not to settle until he knew what part of his damages was liable to recoupment and what part was not.

Lord Mackay of Ardbrecknish

I explained a little while ago that even if no certificate has been asked for, the victim is able to telephone the inquiry line to get some idea of the totality of benefits that may be recoverable. Indeed, I should have thought that the compensator is equally in that position. It will fall to the compensator to make the payment. The victim and the compensator will both know the kind of parameters they are working within. The concern of victims at the moment, and the one which we are addressing in the Bill, is that benefit recovery can eat into pain and suffering. If the victim sees that all his award will be removed because of benefit recovery and nothing has been allowed for pain and suffering he will not agree to the deal.

As so often happens, these debates are nicely theoretical but they do not deal with the real world where people have a rough idea of what they are going to settle for. That is the sum we are talking about and that is the sum they are going to agree on. So they will know what the benefit recovery is.

Baroness Hollis of Heigham

The Minister said that in the real world people have a rough idea of what they will get. Why should they have only a rough idea?

Lord Mackay of Ardbrecknish

I said that more in relation to where the victim decides to telephone for benefit advice. He will then get an idea. That does not tell him exactly what will be on the certificate, if and when it is applied for. But the moment the certificate is applied for, both the compensator and the victim, who gets a copy of that, know exactly what the benefit recovery unit is likely to be looking at.

Baroness Hollis of Heigham

I genuinely do not follow the Minister's reasoning. Normally, when the Minister opposes an amendment or produces one of his own, we understand where he is coming from and we understand the nature of the argument. We may agree or disagree with some of the information he brings to bear or his ideological concerns, but at least we know his shape of the argument. I am utterly baffled. I know this is a technical Bill; but I do not understand where the Minister is coming from.

In the amendment we are asking that the claimant should have the right to know what are the parts that make up the total which is up for negotiation. Why should not the victim—the claimant—have the right to know? The Minister has not argued that this is a hugely complex matter and that it would generate an unreasonable bureaucracy because he accepts, as we argued, that the compensator has to make that assessment himself as well. What we are saying is that the victim should share the information that the compensator has.

After all, it was the approach of the noble and learned Lord, Lord Woolf, that there should be cards on the table and an agreement of the data. It may well be that the damages are ring-fenced for pain and suffering but there is also the public policy interest which is to ensure that both parties can police the question of recoupment and avoid overloading onto one head of damages so that the compensator is relieved from paying back to the government what he otherwise should. It is in the public policy interest that all parties should know the building blocks to a final settlement. I cannot understand why the Government are resisting that sharing of that basis of information. It goes against everything that the noble and learned Lord, Lord Woolf, has said. He wants more discovery of information, particularly by the plaintiff, so that there is a level playing field and a shared basis of information. Why this concealment and vocabulary of secrecy as though somehow the real world needs secrecy in which to operate? Will the Government explain to someone who is utterly baffled, why should the victim not share the same building blocks of information on which the compensator is operating and making his offer?

Lord Mackay of Ardbrecknish

I am afraid that I am in the same position as the noble Baroness. I am baffled by her inability to see the point which had been made clearly by myself, I thought, but perhaps abundantly clearly by my noble friend Lord Chelmsford and which was clearly made to the Select Committee.

Baroness Hollis of Heigham

The Select Committee was dealing with the difficulties of the present situation and the real world of yesterday and not the situation that we shall be faced with once this Bill becomes law. Therefore, it does not help the Minister's case to keep referring back to the world that we are departing from.

Lord Mackay of Ardbrecknish

The real world is one in which I hope most settlements will continue to be reached out of court. I say to the noble Baroness that if her amendment were passed I strongly suspect that the argument would become more than it is at the moment and that more cases would at least take longer to settle because people would be arguing about the component parts when they were actually perfectly content to come to an agreement on the whole.

It is not as though people are going to be in ignorance, because both the victim and the compensator will have certificates which set out the benefits. In Schedule 2 they will be able to read quite clearly the allowable reductions. It is not as though there is going to be a great mystery about that part of it: it is going to be quite clear. The victim will be able to see quite clearly what he or she is going to get in his or her hand. I believe that that is the point that the noble Baroness is arguing about. They will be able to see what they are going to get because it will be known from the certificate what is likely to be paid to the Government. It will be possible to see what is the net offer. That is the point at which, I suggest, in the real world, as my noble friend said, they will settle. I do not begin to comprehend the huge argument that has been made by the noble Baroness about this.

Lord McCarthy

Perhaps I can help the noble Lord. He said he thought that the victims might like this amendment. I can understand that. But at other times he seemed to be saying that nobody would like it. I could understand it if the Minister said that it would help the other side if we did not have this amendment because people would not know precisely what the situation was. It may be that if they do not know what the situation is it is more likely that they will settle, but not necessarily because it may be that if they do not know they will refuse to settle. In fact, at one stage I believe that the Minister said that. Surely he is right when he says that the victims would like our amendment and that is why the Government oppose it.

Earl Russell

Before we leave this matter, perhaps I may ask the Minister not to assume that it is only the noble Baroness who is concerned about this point. It is very definitely both of us.

Baroness Hollis of Heigham

It is clear that there appears to be not only no meeting of minds, but actual confusion as to what is in each other's minds. That may be the source of the problem. The situation as I read it, and as I am advised, is exactly the opposite of what the Minister says and is as my noble friend Lord McCarthy has said—that is to say, the victim or claimant is more likely to settle if all the information is above board and in the open and if he knows the split between the recoupment from damages and the excess to be paid by the insurers. He needs to know that he is not being ripped off and therefore feels secure and sure that what is in his hand, net, is fair and reasonable under the circumstances.

All I can suggest at this stage is that we perhaps see whether we can resolve this difficulty in discussion outside this Chamber. I simply remain unable to follow the Minister's reasoning on this matter. It may be that I have misunderstood some basic principle of law, but I am advised that the situation is almost certainly the opposite of what the Minister has suggested, and that comes from people who are practising in the field. In the light of profound misapprehension, confusion and misunderstanding, I beg leave to withdraw this amendment. I suspect that we may have to revisit it if we cannot find some meeting of minds in the meantime.

Amendment, by leave, withdrawn.

6.15 p.m.

Schedule 2 [Calculation of compensation payment]:

Lord Mackay of Ardbrecknish moved Amendment No. 21: Page 18, line 6, column 2, leave out ("and gratuity") and insert ("payable under section 103 of the 1992 Act).

The noble Lord said: In moving this amendment, I shall speak also to Amendments Nos. 22, 24 and 27. Schedule 2 does not allow for any reduction of compensation payable in respect of pain and suffering. The general principle is that any reduction of compensation should be only in respect of a corresponding benefit. So, for example, compensation for the cost of care may only be reduced where a benefit designed to contribute to the cost of care has been paid during the relevant period.

This will mean that any compensation paid for which there is no corresponding benefit, such as a payment for the cost of an operation—which I believe takes me back to some of the points that we were making in the discussion between the noble Baroness, Lady Turner, and myself, as regards interim payments—could not be reduced on account of the repayment of benefit by the compensator.

The compensation listed in column I of the schedule as available for reduction is that paid to compensate the victim for losses incurred during the same period for which benefits are recoverable. For example, compensation for future loss of earnings or for future loss of mobility in the labour market would not be available for reduction.

The benefits listed in column 2 of Schedule 2 are intended to reflect the benefits listed as recoverable in the Social Security (Recoupment) Regulations, with some minor changes so that the relevant elements of the benefits appear opposite the appropriate category of compensation in the table. Amendments Nos. 21, 22, 24 and 27 make some minor corrections to the list which relates to components payable with disablement benefit. I commend the amendments to your Lordships.

On Question, amendment agreed to.

Lord Mackay of Ardbrecknish moved Amendment No. 22: Page 18, line 14, column 2, at end insert— ("Unemployability supplement")

On Question, amendment agreed to.

Baroness Hollis of Heigham moved Amendment No. 23: Page 18, line 17, column I, after ("care") insert ("by way of personal assistance").

The noble Baroness said: In moving this amendment, I shall speak also to Amendment No. 25, with which it is grouped. These are probing amendments at this stage. Our difficulty is that the headings or descriptions in Schedule 2 are very abbreviated. I hope that the Government will be the first to accept that they perhaps need to improve on the wording so that we can make the law more clearly reflect the Government's and our intentions. Therefore, we are suggesting, for example, with Amendment No. 23, that where it says under "Head of compensation" and, compensation for cost of care",

that that should be, by way of personal assistance",

because we know that that is a much more specific definition.

Similarly, as regards Amendment No. 25, where we are talking about mobility, we need such additional phrases as we suggest there; namely, through the provision of an adapted motor vehicle or for additional travelling expenses for social purposes".

We are not suggesting that the wording of these amendments cannot be changed, but we are saying that Schedule 2 is going to be vitally important. It is too abbreviated and it is not helpful. It needs clarification. We hope that the Minister will say that they are going to consult about this matter and come back with more comprehensive definitions. I beg to move.

Lord Mackay of Ardbrecknish

In Schedule 2 and the two columns "Head of compensation" and "Benefit", these two systems are not a mirror image of one another. Compensation is paid to recompense for losses sustained, whereas social security benefits are paid to meet need.

What the parliamentary draftsman has sought to do in Schedule 2 is to set out the points at which both systems intersect and where as a result it is reasonable for the compensator to make a reduction in the settlement or award that would otherwise be payable.

I understand the sentiment behind the attempt that has been made to clarify the terms of Schedule 2 to the Bill. However, I believe that there is a danger in seeking to define more precisely the elements of compensation that are reducible on account of recoverable benefits. If the attempted clarification did not capture all the circumstances in which a reduction could take place, there would be a consequent risk that any omission on the part of the Government would be taken by practitioners to be a deliberate one. It seems better to provide a series of generic descriptions of reducible heads of compensation, which could, if necessary, be amended later in the light of practical experience.

Against this background, as noble Lords will have observed, Clause 23 gives the power to amend Schedule 2 by secondary legislation, with regulations subject to the affirmative procedure. If it emerged that the interests of the negotiating parties were not fully recognised by the current wording of Schedule 2 it would be a relatively simple matter to amend it at a later date. The noble Baroness suggested that I might think about amendments to be tabled between now and later stages of the Bill. All noble Lords look for ways to improve legislation as it passes through the House. That we shall do. It is not intended that it should not be possible at a later stage to reform these matters in Schedule 2 other than by primary legislation if it is found that the system does not work as we all hope it will. In those circumstances, we shall be able to deal with the problem by way of an affirmative order.

I understand what the noble Baroness has said. However, we must be careful not to tie down the definitions of the heads of compensation to such an extent that we begin to create problems for those who have to deal with these matters from the point of view of the victim or the compensator. I prefer to leave the words as set out in the Bill, that is,

Compensation for cost of care incurred during the relevant period", and not qualify them by referring to "by way of personal assistance", or to qualify mobility in the way that the noble Baroness suggests. I believe that it is better left in the more general terms in which it is expressed here under the heads of compensation.

Baroness Hollis of Heigham

I understand the wish of the Minister for generic terms and flexibility. However, given that so many of the court cases will hinge on such definitions, if the Minister is not willing to see these matters defined on the face of the Bill the courts will certainly do the job for him. The courts may determine an intention which is not of the Minister's mind. However, having listened to the Minister, we will consult and see whether we need to press the matter further. It may be that in this area we have to accept that it should remain broadly drawn. I am slightly fearful because the interlocking of that matter with the regulatory powers may not necessarily be to the advantage of the victim, particularly when court cases are pursued. However, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Mackay of Ardbrecknish moved Amendment No. 24: Page 18, line 18, column 2, at end insert ("Disablement pension increase payable under section 104 or 105 of the 1992 Act")

The noble Lord said: I have already spoken to Amendment No. 24. I beg to move.

On Question, amendment agreed to.

[Amendment No. 25 not moved.]

Lord Mackay of Ardbrecknish moved Amendment No. 26: Page 18, line 26, at end insert ("or paid concurrently with each of those benefits by means of an instrument for benefit payment").

The noble Lord said: I beg to move Amendment No. 26. The amendment corrects the wording of the note which follows the table in Schedule 2 to allow for the fact that benefits may be paid either by an instrument for payment—an order book or girocheque—or an instrument of payment, that is, a benefit payment card. Although the benefit payment card will eventually take the place of most instruments for payment, both methods will exist in parallel for some time to come and so must be provided for in the Bill. I commend the amendment to your Lordships.

On Question, amendment agreed to.

Lord Mackay of Ardbrecknish moved Amendment No. 27: Page 18, line 33, at end insert ("3. In this Schedule "the 1992 Act" means the Social Security Contributions and Benefits Act 1992.").

The noble Lord said: I have already spoken to Amendment No. 27. I beg to move.

On Question, amendment agreed to.

Schedule 2, as amended, agreed to.

Clause 9 agreed to.

Clause 10 [Review of certificates of recoverable benefits]:

Lord McCarthy moved Amendment No. 28: Page 6, line 10, at end insert— ("( ) Nothing in subsection (3) shall permit any additional amount of benefit to be recovered from the person to whom the compensation payment is made if that person provided to the Secretary of State or to the person making the compensation payment information which was?

1. (a) correct; and
2. (b) sufficient to allow the correct calculation of his entitlement to a recoverable benefit.").

The noble Lord said: Clause 10 is all about the review of certificates of recoverable benefits where mistakes have been made. Subsection (3) provides: The Secretary of State may not vary the certificate so as to increase the total amount of the recoverable benefits unless it appears to him that the variation is required as a result of the person who applied for the certificate supplying him with incorrect or insufficient information".

The issue is what is incorrect or insufficient information, who is responsible and who should pay the difference. We suggest that the following addition should be made to the clause: Nothing in subsection (3) shall permit any additional amount of benefit to be recovered from the person to whom the compensation payment is made"—

the victim— if that person provided to the Secretary of State or to the person making the compensation payment information which was … correct: and … sufficient to allow the correct calculation of his entitlement to a recoverable benefit".

That appears to us to be only fair. It could be that when the settlement was made the victim was told that he had, say, £20,000 left. He might subsequently find that instead of having £20,000 left he had £10,000 more to pay. That might occur some time after he thought that he had £20,000 left. That is an obvious shock. It could be a disaster. It could happen long after the victim had spent all of the money. If it can be shown that it derives from a mistake for which the victim is culpable that is only fair. If he or she gives the wrong information to the compensator, who is the person who must apply for the certificate under Clause 4, that is fair enough. The clause as it stands provides, quite fairly, that if it is the fault of the Secretary of State the victim is not to blame.

However, as I understand it, the normal procedure is that the compensator will ask the claimant for details. He will ask the victim to tell him the date of the accident, the nature of the injury, the DSS number and so forth. It is not clear on the face of the Bill exactly what information must be provided. Presumably, the Minister will tell us that all of that will be in the regulations. We suggest that if the correct information was provided in sufficient detail to enable a proper calculation to be made but nevertheless a mistake was made somewhere and as a result further money had to be given that would be unfair.

This evening noble Lords have been asked not to speak about theories but to talk about the real world. Therefore, when we were approached about tabling an amendment of this kind we asked for a concrete example. Those who feel that this amendment is only natural justice were asked to give a concrete example. They suggested the following. Suppose that a claimant tells the compensator that he has an injury to back and foot and the compensator gets it wrong and simply puts down "foot". Once the foot heals, the victim continues to receive benefit in relation to the back, but the DSS issues a certificate of recovery in relation only to the foot. As a result, the certificate is based upon a mistake that has been made by the compensator. The victim believes that what he gets is his to keep. After he has spent a large part of it or some of it—probably to get out of debt—he discovers that there is more to come.

We do not believe that that is fair and that something should be done about it. This amendment is supposed to be the way to do it. I beg to move.

Earl Russell

Surely, it is fair that an error should be corrected if it is discovered in a certificate no matter who is responsible for creating it. The powers of an Act of Parliament are very sweeping. If Parliament enacts that an error should be uncorrectable it is extremely difficult to do anything about it. That happened in the case of the Bude and Torrington railway, although I shall not regale the Minister with the details.

The noble Lord, Lord McCarthy, is right about the danger of all the money having been spent. The Minister may care to ponder the sad case of the woman who was bankrupted by being left £1 million in shipping shares. She inherited the shares in April 1929 and duty was payable in October 1929.

One does not need such drastic circumstances to create a situation in which recovery is being attempted when there is nothing to recover. Surely it is worth correcting errors in a certificate quickly before that happens, no matter who is responsible for creating them.

6.30 p.m.

Lord Mackay of Ardbrecknish

The amendment would prevent a compensator from making a further reduction to a compensation payment in the situation where, because of a mistake or misleading information in an application for a certificate of recoverable benefits, the amount specified in it was increased on review but the victim had supplied the correct information to the compensator or Secretary of State. The noble Earl added to the opinion by giving one or two examples of a parallel nature. Perhaps in railway terms that is an appropriate expression.

I am not unsympathetic to the view that, because of someone else's mistake, a victim should not lose out by a further reduction to his compensation payment. However, the amendment as drafted could have the effect that the Secretary of State became involved in disputes between the compensator and the victim about who gave what information to whom. We would not wish to be drawn into that argument. Clearly, an important aspect is that if the victim gave wrong information upon which we acted it would be reasonable for that to be corrected and for action to be taken. Conversely, if the victim gave the correct information and the compensator did not pass it on correctly, that is a different issue.

We would like to consider the matter further and to consult with the interested parties involved. That may not be possible before the Bill is passed. Furthermore, some Members of the Committee may have noticed that the clause does not contain regulation-making powers. However, never fear, regulation-making powers are always to hand to a Minister who looks carefully for them. The regulation-making powers in Clause 14 contain powers for making the necessary adjustments to payments that have been made when a certificate of recoverable benefits is subsequently altered on review or appeal. The issue raised by the amendment could therefore be looked at in detail when drawing up those regulations.

I have already said that we will consult interested parties when we are working out the details of the regulations. As regards this matter, I certainly undertake that we will consult on the issue. If action is required after the passing of the Bill, as I suspect will be the case, we have the tools of regulation under Clause 14 to rectify any problem that has arisen along the lines mentioned by the noble Lord and the noble Earl.

Lord McCarthy

I thank the Minister for that reply which I must read carefully. I cannot agree that we will not come back with a better form of words. Many of the points that he made against our amendment are fair. I do not want to get the department involved in an argument about who is to blame. We want to say who is to blame and then we want that person to pay the money. That may be possible by regulation. However, on Report we may have another go. If necessary the Minister can tell us that that is wrong too. In the meantime, I thank him very much and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 10 agreed to.

Clause 11 [Appeals against certificates of recoverable benefits]:

Lord McCarthy moved Amendment No. 29: Page 6, line 23, leave out subsection (3).

The noble Lord said: Under the provisions of the Bill the victim cannot appeal against the assessment of what is to be paid in recoverable benefits until he has finally disposed of his arguments and debates with the compensator. Therefore, the liability to repay the recoverable benefits is finally discharged.

That appears to us to place the victim in a double bind. When he is negotiating, litigating or arguing a claim against the employer, a third party or whoever, he cannot be sure whether the certificate of recoverable benefits is correct, too high or too low. He may assume that it is correct, and in nine cases out of 10 it will be correct. However, if he has reason to believe that it is not correct he must wait and see and take the settlement. When he receives the settlement he must try to persuade the department that his appeal is sustained. We do not believe that that is fair.

Perhaps I may give another example. Let us suppose that as a result of an accident a victim is put out of work and claims benefit for four years. Let us suppose that the defendant claims that the victim had some of the symptoms before the accident and offers compensation for only two years. We could refer to the previous example relating to backs and feet. In the meantime, the DSS want four years' benefit returned. If, as a result of an early appeal, the victim can get that reduced to two years he might wish to settle at the defendant's offer out of court. He will save the court liability and time and he will save money. If he loses on appeal to the DSS perhaps he will not accept the settlement and will fight on to see what he can get in court. Either way, he needs to know his total liabilities finally and irreversibly and in certain circumstances before he can decide what to do in relation to any offer. If he does not have that chance we do not believe that that is natural justice. We believe that it is unfair. I beg to move.

Earl Russell

I listened carefully to what the Minister said in answer to an earlier amendment about the importance of encouraging out of court settlements. I agree with him entirely. However, it seems to me that it will be very difficult to get people to settle out of court if there is a big dispute about how much of the benefit is recoverable and how much is not. It would be much easier to reach an agreement if parties could be clear what they are being asked to agree.

I do not believe that the Minister has entirely taken on board how much the provisions of the Bill will alter the processes of negotiating for a settlement and, indeed, of arguing for a settlement in court if no agreement is to be reached.

One must have a settlement on the basis of all the material information. If all the material information is not taken into account there must be a risk that the whole issue is likely to be reopened. There will be cross litigation and usually some other point can be brought into issue. Conditions worsen and new grounds of action might arise. Is it not a mistake to continue with erroneous information knowing perfectly well that it is so? Is it not like saying that you cannot stop to mend your brakes because you have to get to the end of the journey? Would it not be better to put it right quickly?

Lord Mackay of Ardbrecknish

Of course, if it is agreed, there is provision to put it right quickly. That is not a great problem in the terms outlined by the noble Earl. However, we enter into this field when there is no agreement. The purpose of the amendment is to remove the requirement that before any appeal can be brought against a certificate of recoverable benefits compensation payment must be made and any liability to pay recoverable benefits discharged. The noble Lord, Lord McCarthy, and the noble Earl, Lord Russell, have argued that the inability to appeal against a certificate until the compensation payment has been made can create difficulties for the victim in seeking to pursue a claim for damages. It is suggested that, because he disputes the certificate, the victim can be placed in an uncertain position about the outcome of his claim despite the fact that the settlement has taken place.

However, the provisions in the Bill were put in place in order to prevent an appeals system being used as a way in which to delay benefit payment recovery. If an appeal against a certificate were accepted before final settlement, even though the amount of the award and certificate could still be revised at that time, a further appeal could also be made subsequent to settlement. That would not just affect the Secretary of State in benefit recovery terms but it could lead to a further build-up of benefits which would in turn affect the size of the victim's payment.

In short, I do not believe that this amendment would remove uncertainty in the negotiating process. It could actually affect the victim because the benefit payment period would run on and the recovery could run on during that period if the settlement were delayed. Also, it could lead to delays. Therefore, while I understand the point that is being made, I think that in the, I hope, very few cases where such an appeal will prove necessary, the current arrangements whereby the matter must be settled, compensation paid and then an appeal can be entered is the best way to make sure that the appeals system is not used as a means of delaying final settlement.

Earl Russell

I think the Minister is rather unwise to assume that this may be necessary in only a very few cases. It is always unwise to legislate on the assumption that there is no such thing as human error, because if that were, by any remarkable chance, to be true, a great deal of the legislative process would become entirely redundant. Therefore, that is an extremely unwise assumption.

I take the point which the Minister makes that the amendment might not remove the uncertainty and might move it in some cases to another place. But the point that remains of substance in the amendment is the hope that, in the end, the uncertainty should come to an end. It will not do so unless both a certificate of recoverable benefits and the amount of damages are completed.

The Minister has not taken on board the fact that with recoupment, especially recoupment under some heads and not others, there will be an inter-relationship between the amount of recoupment and the amount of damages awarded. Litigants on both sides being human, I cannot see how that can be otherwise. Therefore, we really need to achieve an agreed certificate of recoverable benefits before the case can be properly settled. I cannot see how the Minister can answer that point.

6.45 p.m.

Lord McCarthy

Nor can I. There are many questions arising from what the Minister said. I am not sure why the Minister thinks that the victim would wish to delay the final settlement. If you are a victim, you want a settlement. I can understand why the insurers may wish to delay the settlement but I cannot understand why a victim should wish to do so. The quickest way to have the issue disposed of is, if there is any debate about the recovery, to go to an appeal and have that settled. It would be much more likely that there would be a quick settlement and a settlement out of court. That is my first question. I do not understand why the Minister says that the victim would wish to delay settlement and we must not do anything to encourage that.

Secondly, I am not sure that I follow what the Minister seems to regard as an infinite redress. In my situation, there is no settlement. There may be negotiations but there is no settlement. The victim goes to appeal and the appeal either goes in favour of him or against him. The Minister seemed to be saying that, if as a result of the appeal the victim were dissatisfied with the result of the appeal and subsequently settled, he would in some way have a right to another appeal.

I should not have thought that there would be much chance of that. I should have thought that he would have one opportunity to put forward his argument that there had been a miscalculation or wrong information and that the department would make a decision accordingly. I do not understand why the Minister does not accept the amendment.

Lord Mackay of Ardbrecknish

I am not sure if I am being invited to try again but I shall certainly do that. One point that I make is that, as the period of recoverable benefit ends with the payment of compensation, there cannot be an agreement on the recoverable benefit before that point is reached.

The provisions of the Bill are there to prevent an appeal being made before a compensation payment has been paid and the liability to repay benefit discharged. It mirrors the current provisions. I am reminded that I should think about future as well as current provision. The rule was drawn up deliberately in order not to delay the negotiating process while an appeal was being determined and to prevent the possibility of a series of appeals being made. Unless five years have elapsed between the date of the accident or injury and the date from which the victim first claimed a relevant benefit in case of disease, benefits paid up to the date of the settlement or award are recoverable. Thus it is possible, without provision to prevent an appeal being made before the end of that period, to appeal against the certificate and have it amended on appeal only for the Secretary of State to be compelled to review it again when the details of the settlement are known and for an appeal to be brought against that reviewed certificate. We believe that that would be costly in administrative terms and could delay the negotiating process to the detriment of the victim.

I accept fully that this is a difficult area. It does not cover many cases. I am told that no more than 100 cases a year reach this situation. However, I understand what the noble Lord, Lord McCarthy, is saying. Because we are going to a new system, we should not look back too often at the previous system. However, in this case we can do so because the new system does not materially alter the particular issue which we are discussing. We should keep what we have and incorporate it in this new Bill rather than move to a new system which would have the disadvantages which I have outlined. I accept fully that it may have some of the advantages which the noble Lord has outlined but, as is so often the case, one must make a decision and on balance I still prefer the Bill as it stands rather than the noble Lord's amendment.

Earl Russell

I understand the Minister's fear of delays but it is my hope, as I am sure it is his, that this Bill will reduce considerably the incentive to delay. We are not concerned with legislating for tomorrow only; we are concerned with legislating for the day after tomorrow. When the Civil Procedure Bill is complete and the new system being introduced under the auspices of the noble and learned Lord, Lord Woolf, is in place, I hope that there will be still further incentive to expedition. Therefore, many of the arguments which the Minister uses will be very much out of date.

It is important that the fit should be right for the world of the day after tomorrow. Before we are through with this Bill, will the Minister consult on some of these disputed points not only with his noble and learned clansman on the Woolsack but also with the noble and learned Lord, Lord Woolf, himself because it is important that these matters fit together and where better to go for that than the horse's mouth, if I may so describe the noble and learned Lord, Lord Woolf?

Lord Mackay of Ardbrecknish

I always reflect on what has been said in Committee and I shall certainly reflect on whether I should consult my noble and learned clansman about these matters.

Lord McCarthy

I thank the noble Lord for that. I shall read very carefully what he said. I believe that he accepts that there is an injustice here. I believe that he accepts that there is something wrong with the face of the Bill. He does not like the way in which we suggest it should be changed and points to certain real and practical difficulties. It is up to us to take away the amendment and think about that. But I feel that there is room in which to make the point, because it is unjust that the victim should be forced, induced or persuaded to make a decision before he is in full possession of all the facts. We want to find some way of enabling the victim to be in full possession of the facts without fouling up the system and without promoting more litigation while facilitating settlements out of court in an equitable way. I shall go away and think about it. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Mackay of Ardbrecknish moved Amendment No. 30: Page 6, line 36, after ("made,") insert— ("( ) as to the procedure to be followed where such an appeal is made,").

The noble Lord said: This is a technical amendment to allow regulations to be made as to the procedure to be followed when a person lodges an appeal against a certificate of recoverable benefit under the provisions of this clause. The amendment is necessary because, by re-enacting the current provisions relating to benefit recovery in their entirety—including appeal rights—it follows that provisions contained in the Social Security Administration Act no longer apply to the Bill. Regulations made under this provision will, for example, require the appellant or other person affected by the appeal to submit evidence required in connection with that appeal. I commend the amendment to the Committee. I beg to move.

On Question, amendment agreed to.

Lord McCarthy moved Amendment No.31: Page 6, line 41, at end insert— ("() Before making regulations under subsection (5)(b), the Secretary of State shall consult interested persons, including persons who appear to him to he representative of employers, employees. disabled people, consumers, the insurance industry, lawyers and other persons providing advice services.").

The noble Lord said: I shall not detain Members of the Committee too long with this amendment. We return to our old friend, consultation. I know that we shall not be able to persuade the Minister to agree to what we say. He has already told us that the Government will not put this provision on the face of the Bill because they do it anyway. He has also told us that they will not put it on the face of the Bill because they may not want to do it; and, indeed, he has told us that the Government will not put it on the face of the Bill because the SSAC often does it. In any case, the noble Lord does not like lists. Therefore, we do not have much chance of getting through to the Minister on the matter. However, I merely point out that, although I am moving Amendment No. 31 and speaking also to Amendments Nos. 34 and 41, I shall deal separately with Amendments Nos. 42 and 46 because they raise rather different, wider issues. I beg to move.

Lord Mackay of Ardbrecknish

The noble Lord rightly predicts that I shall make the same speech I made earlier today in response to a similar amendment moved by the noble Baroness, Lady Hollis. As the noble Lord did not weary Members of the Committee with a repeat of his speech, I shall not weary noble Lords with a repeat of mine. I simply underline the fact that it is our intention, as always, to consult interested parties where appropriate before the first set of regulations under the provisions of the Bill are made. Thereafter, the SSAC comes into play for any changes made after the period of six months from the date of commencement of the regulation-making powers.

Those are the normal procedures. I like to think, especially in regard to the pensions legislation, if I may say so, that the assurances I give about consultation are carried out. On the subject of the pensions Act, I can assure Members of the Committee that they most assuredly are being carried out.

Lord McCarthy

In the circumstances, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 11, as amended, agreed to.

Clause 12 [Reference of questions to medical appeal tribunal]

Baroness Hollis of Heigham moved Amendment No. 32: Page 7, line 10, leave out subsection (3) and insert— ("( ) In determining any question referred to it under subsection (I), the tribunal shall be bound by any decision of a court relating to the same issue and must take into account any decision of a court relating to a similar issue arising in connection with the accident, injury or disease in question.").

The noble Baroness said: We turn now to a fresh issue. In Clause 12 there are two, so to speak, parallel jurisdictions: the courts and the medical appeal tribunal, and they may on similar information come to different decisions. There are, therefore, two separate considerations in Clause 12(2)(a) and (b). Under subsection (3) the medical appeal tribunal is to hear appeals from both and, must take into account any decision of a court relating to the same [case]".

However, just to "take into account"—that is, to give due weight to it—does not mean to say that the tribunal is bound by it and, indeed, it may come to a different decision from that of the court. We believe that that is a recipe for conflicting judgments and contradictory findings. Hence the amendment which requires the medical appeal tribunal not just to take into account but to be "bound" by the findings of the court on the same case and also to "take into account" the findings of the courts on similar cases.

What sort of case might we be talking about? Well, the typical case is one involving a pre-existing medical condition; for example, a back injury. The plaintiff has a pre-existing problem with his back, such as spondylosis. Inevitably this will have troubled the plaintiff at some stage in his life and he has, say, received benefit for four years. He claims damages on the basis of four years' exacerbation of his back condition—namely, that the symptoms came on four years earlier than would otherwise have been the case. He has medical evidence to support that contention. At trial, the insurance company produces medical evidence to say that the exacerbation was only for two years, and that any continuing symptoms after two years were down to the underlying back condition and not to the effects of the accident. The judge compromises and decides that the exacerbation was for three years. The claimant is thus compensated by the court for three years' worth of loss; but, as he has received benefit for four years, the DSS demands four years' worth of recoupment.

The claimant appeals and, as the clause is presently drafted, the medical appeal tribunal could come to a different decision from that of the court. That would be unfair to the claimant as the point has already been tried at court. When making that decision, the judge will have had before him the medical reports of consultants called by both sides and the benefit of hearing the doctors giving evidence under cross-examination. However, the medical appeal tribunal will have had the benefit of medical reports but will not necessarily have called the doctors to give evidence. The doctors in court would have been leading consultants, whereas the doctors appearing at the medical appeal tribunal are likely to be two local GPs who may have a general knowledge of the condition in question but they will not necessarily have the specialist knowledge of the consultants whom the judge has heard.

Therefore, we may have a bizarre situation in which the medical appeal tribunal comes to a different decision from that of the court, even though it had, so to speak, inferior and less expert information on which to base its judgement. We feel it right that the medical appeal tribunal should be bound by any finding of the court on the same issue, given the fact that the latter is likely to be in possession of superior and more expert information and judgment. I beg to move.

Earl Russell

If I do not repeat the arguments put forward by the noble Baroness, I hope that she will take it for granted that it is for no other reason than that I agree with them entirely. I want to take the matter on another front. I want to take up the words in subsection (3) of the clause; namely,

the tribunal must take into account any decision of a court". It reminds me of an incident which took place, I believe, on my second day in this Chamber. The Copyright, Design and Patents Act was being debated. It was almost totally unintelligible to nearly everyone in this place. A Division was called. I looked to see who had moved the amendment and discovered that it had been moved by my own Front Bench. Unwisely I uttered the words, "Ah, that helps". However, I was told, "No, it doesn't help; that settles it".

I cannot help thinking that if I were a judge and I looked at this provision in the Bill I might feel very much the same way as the person who was advising me on that day. In a country subject to the rule of law, you do not take into account decisions of courts; you abide by them. This is a very unwise and, I am sure, entirely inadvertent piece of wording in the Bill which I believe we might be wise to correct.

The Minister may well remember—if not, I am sure that his department will—the judgment of Lord Justice Millett in the Court of Appeal in the case of Bate v. Chief Adjudication Officer. It is a case that I have been with in various capacities since the second Bill that I led on in 1990. I know that that judgment has been overturned by the Appellate Committee of this Chamber, but it steered round the reasoning of that judgment without ever directly rejecting it. That judgment dealt with a provision in the 1990 Act which required courts to judge as if past judgments had not been made. In an area where precedents rule, the Court of Appeal thought that this was to require the judges to judge contrary to law, which was contrary to their judicial oaths and which they could not do. Those are the kind of areas that we are extremely unwise to explore. I do not think it should be suggested that tribunals should be so cavalier as merely to take into account court judgments; I think that they ought to be bound by them. Before we go into other fundamental, far-reaching cases, the Minister might be wise to amend the Bill accordingly.

7 p.m.

Lord Mackay of Ardbrecknish

The purpose of this amendment is to bind a medical appeal tribunal to a decision of the court where that decision relates to the same question in respect of the accident, injury or disease at issue. In some cases where the courts have decided an issue it will be clear that the tribunal should follow that decision. However, there will be occasions where the evidence before the tribunal shows that the decision of the court should not necessarily be followed. For example, where the court has decided that the effects of an injury should no longer be apparent after a certain period but the injured person nevertheless continues to claim a benefit for the same medical reason beyond that time, it should be open to the tribunal to take all these facts into account. If it is to be bound by the decision of the court in such cases, the effect will be that the Secretary of State will not be entitled to recover benefits which have been paid in respect of the accident, injury or disease in question and the compensator may gain from his own negligence as a consequence.

If the tribunal decides not to follow the decision of the court, it is important to view this scenario in its proper context. Under Clause 6 the liability for repayment of recoverable benefits falls on the compensator. If the court decides that damages should only be awarded for a fraction of the period for which benefits have been paid, the scope for the compensator to make a corresponding reduction in those damages under Clause 8 will be reduced. Furthermore, damages for pain and suffering will be paid in full in any event.

It is also important to remember that the decision of a medical appeal tribunal can be the subject of an appeal to a social security commissioner, with leave, and on a point of law. If a decision of a medical appeal tribunal is far removed from the decision of the court without apparent justification, it is possible that leave to appeal would be granted. It is also the case that the victim may appeal against the amount of compensation awarded to a higher court if he does not agree with the decision of the lower court.

In summary, I believe the problem is the difference in this case between the current and the new scheme. Some Members of the Committee are naturally concerned that, as with the present scheme, the money recovered could bite into the pain and suffering payment, whereas in future that will not be possible. With that provision removed, I believe that the concerns which lie behind this amendment do not apply. Therefore we do not need to bind a medical appeal tribunal in the manner which is suggested. I hope with that explanation the noble Baroness will be able to withdraw her amendment.

Earl Russell

I accept the Minister has a good intention—he has a real problem—but he knows what happens to good intentions. I do not think his speech has done his case much good. The Minister has said that without this form of words in the Bill the Secretary of State will be unable to recover sums of benefit which court judgments prevent him from recovering. That comes close—I say no more than that—to authorising the Secretary of State to break the law. That is not something that this House can or should view with equanimity. If the Minister has—as I think he has—a perfectly laudable and proper objective, I must ask him to consult the parliamentary draftsman and find a way of achieving that objective which is not quite so directly contemptuous of the authority of the courts. It is a kind of challenge which I cannot imagine any authority with any self-respect failing to rise to. The Minister should not go round waving red rags at the courts. I hope that he will think again.

Baroness Hollis of Heigham

I, too, was disappointed by the Minister's comments. Normally the Minister gives a good imitation of being persuaded by his own case. However, I am not at all sure that this was one such example. The example that he elaborated where the courts and a medical appeal tribunal might disagree and where it was right for the medical appeal tribunal not to be bound by the courts, seemed to me—I was listening as carefully as I could—to relate to a different issue which is not the subject of this amendment; namely, a case of over claiming. The two substantive points I sought to make in the amendment were not addressed by the Minister. Indeed, as regards the first point, he confirmed my concerns. He said that there was an appeal, beyond the medical appeal tribunal, to the social security appeals system, and there was an appeal from the lower courts to the higher courts. That merely confirms the point that he is running together two parallel sets of jurisdictions.

We instituted in the 19th century—as I am sure the noble Earl, Lord Russell, will confirm—a court of common law. Wherever that was harsh, it was overruled by a court of equity, particularly as regards matters such as married women's property settlements. It took Gladstone to realise that that was an absurdity because it meant that the rich had one system of law because they could mitigate the effects of common law by appealing to the court of equity, but the poor could not because they were lumbered with common law. As I say, it took Gladstone through the judicature Act to integrate the two and bring us one system of law. It seems to me that the Minister is unscrambling what Gladstone wisely put together and running parallel jurisdictions. The result will be conflicting judgments, confusion and the real problem of what courts in future may be bound by if it is discovered that the courts are coming to a different decision from that of the medical appeal tribunals. The Government should seek to avoid conflicting judgments and non-concurrent jurisdictions wherever they possibly can. We invite the Minister to do that.

The second point that the Minister failed to address was that the courts are likely to have superior and not inferior information to that which the medical appeal tribunal has. Nonetheless, on the basis of less adequate, less accurate, less informed and less specialist information, the medical appeal tribunal appears to be in a position to overrule the court's decision relating to the same issue. The Minister did not address that point at all in his reply. However, if he wishes to do so now, I would welcome that.

Lord Mackay of Ardbrecknish

I should point out an incontrovertible fact; namely, that the person has continued to claim benefit after the date on which the court said that his injury—if it was an injury—was no longer such that he ought to receive damages. He either will continue to claim benefit after that point, or he will not. That is an incontrovertible piece of evidence on which to base this issue.

Baroness Hollis of Heigham

The question at issue is not whether he has continued to claim benefit, but rather to what degree the claiming of benefit is related to the medical condition on the basis of which he is receiving benefit. The medical appeal tribunal has inferior evidence to that of the court in determining the degree to which the disease, the illness or the injury has generated a condition to which benefit is attached. The Minister makes my point for me. I ask the Minister to think again about this matter because the case that he made against me relates to a different issue which is one of over-claiming. That is not germane to this amendment.

I offered him two arguments; namely, that we shall continue to have conflicting jurisdiction in the same case, and that a decision of a medical appeal tribunal will be binding irrespective of the decision of the courts. The Minister did not address that point. The courts—the first body to hear the evidence—may well have superior information to that of the medical appeal tribunal because it is based on specialist information and the cross-interrogation of the doctors concerned. The Minister has not addressed that point either. I hope that the Minister will therefore say that he will want to think about what we have said, as we must do. I invite the Minister to make that offer to us.

Lord Mackay of Ardbrecknish

As was the case with one or two of the previous amendments, I am not sure that we are not talking at cross purposes to some extent. We are talking about someone who continues to claim benefit and has a medical certificate which states the basis on which the benefit continues to be paid. In that case the medical appeal tribunal may decide that the recovery of benefit should encompass that period as well, even though the original court judgment indicated that no compensation award was to be given for that period because the man is now cured of his injury. If he is still applying for benefit because of that injury, clearly there is a contradiction. Perhaps the noble Baroness invites me to put down a clause which states that after the court makes its decision anyone who claims for any benefit related to these issues will not obtain it. However, I do not think that she wishes to be as harsh as that.

Earl Russell

Might it be helpful if the Minister consulted with his noble and learned clansman on this issue? If a compromise is to be found, I believe that the noble and learned Lord is capable of finding it. It is better to do it that way if we can.

Baroness Hollis of Heigham

I believe that we are talking at cross purposes. We must continue this debate outside the Chamber. We have in mind, for example, a disabled individual who may well be entitled to benefit. Whether or not the disablement is due to an accident, the issue relates to the extent of damages against which he can recoup.

However, we have probably pressed the issue enough. We fail to have a meeting of minds. I do not recognise the Minister's example; and he does not seem to recognise our concerns. Perhaps the issue needs to be explored outside the Committee. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Mackay of Ardbrecknish moved Amendment No. 33: Page 7. line 25, leave out from ("provision") to end of line 26 and insert— ("(a) as to the manner in which, and the time within which, a reference under subsection (I) is to be made, and (b) as to the procedure to be followed where such a reference is made. () Regulations under subsection (6)(b) may (among other things) provide for the non-disclosure of medical advice or medical evidence given or submitted following a reference under subsection (1).").

The noble Lord said: This is a technical amendment which enables regulations to be made for referring questions to a medical appeal tribunal in a prescribed form and within a prescribed time limit and for the procedures to be followed by the tribunal. It is necessary because similar provisions in the Social Security Administration Act will not apply as a matter of course if this Bill is enacted. The amendment will provide, for example, for the precise format in which an appeal will be referred by the Secretary of State to an appeal tribunal and for appeals to be decided by majority decision.

The amendment also makes provision for non-disclosure of medical information submitted following an appeal. This will be used to prescribe that medical information will not be disclosed where it is in the interests of the victim not to do so, for example, where he is unaware that his condition has become terminal. I beg to move.

Lord McCarthy

Towards the end of the Minister's speech, I began to see the argument. However, perhaps he will spell it out. There may be another way of achieving the aim.

I object to the last part of his amendment, which states,

Regulations under subsection (6)(b) may (among other things) provide for the non-disclosure of medical advice or medical evidence given or submitted following a reference under subsection (1)". No doubt the situation is quite common but it is not my chosen area and I could think of no reason why the individual should not have this information available to him. It seemed to me unfair. I would go so far as to say that it is contrary to the principles of natural justice. A claimant should have available to him or her the medical evidence which is before a medical appeal tribunal so that appropriate submissions on that medical evidence can be made. It is surely not fair to the claimant that decisions are made on information which he or she has not seen and cannot comment upon, including, for example, rebutting any factual inaccuracies.

I understand that in the interests of mercy there may be a case for not telling people information of the kind that the Minister mentioned. But surely there are many other cases which do not involve that problem, where it would be in the interests of the victim to be told the full medical evidence and what the tribunals have said about him. I ask the Minister to explain that matter.

Earl Russell

Perhaps the Minister will also tell us who decides what is in the interests of the victim.

7.15 p.m.

Lord Mackay of Ardbrecknish

As I mentioned in introducing the amendment, the Bill re-enacts Part IV of the Social Security Administration Act in its entirety. Members of the Committee will remember that I said that that was a decision that the draftsman advised us to take. Rather than having a Bill which amended another Bill, we would have one Bill which encompassed not only what we were amending but also those parts which we were not amending. That means that procedures to be followed on appeal will have to be included in the Bill although they make no changes to the existing situation.

The amendment allows us to make provision for a number of procedural aspects: the precise format in which an appeal can be referred to a tribunal; the time limits for referring appeals; the ability of a tribunal chairman to strike out an appeal where the appellant has failed to attend a hearing without good cause; the time allowed for submitting evidence; the tribunal hearings to proceed with the agreement of the appellant in the absence of one of its members; majority decisions to be made by the tribunal; the tribunal chairman to give directions for the disposal of an appeal where he is satisfied that the tribunal does not have jurisdiction to hear it; and the ability to withhold medical information from a person where that information shows that the person is suffering from an illness which he does not know is terminal.

I believe that it is the last point which concerns Members of the Committee. The provision exists already; it is used very rarely indeed. It would be used only where the tribunal was aware of the fact that the victim did not know that his illness was terminal. I do not believe that any noble Lords would consider that it would be up to a tribunal to give such information to a person.

These are fairly sensitive areas. It would be quite wrong for a tribunal to be forced to give information which a person's doctor or family had decided, for whatever reason, they would prefer that he did not have.

I hope that that explanation will satisfy Members of the Committee. The provision is very rarely used but it is a humane provision that should be in the Bill.

On Question, amendment agreed to.

Clause 12, as amended, agreed to.

Clause 13 agreed to.

Clause 14 [Reviews and appeals: suppletnentary]:

[Amendment No. 34 not moved.]

Clause 14 agreed to.

Clause 15 [Court orders]:

Lord Mackay of Ardbrecknish moved Amendment No. 35: Page 8, line 27, leave out from beginning to second ("in") in line 28 and insert— ("(1) This section applies where a court makes an order for a compensation payment to be made in any case, unless the order is made with the consent of the injured person and the person by whom the payment is to he made. (2) The court must,").

The noble Lord said: Clause 15 imposes a duty on courts, when making an order for compensation, to specify in that order what amount, if any, of such compensation is in respect of loss of earnings, cost of care or loss of mobility as we have already discussed. These are the categories of compensation set out under Schedule 2, which may be reduced following repayment of recoverable benefit.

Where a court is asked to make a consent order—an order whose terms have been agreed by the parties—it would not be appropriate for the courts to be required to break down the settlement in this way, since the terms themselves would not have been determined by the court.

Amendment No. 35 exempts consent orders from the requirement otherwise placed on courts to specify compensation payable under the categories of compensation listed in Schedule 2.

The provision relates to a small number of cases where, for whatever reason—a minor may be involved—an agreement has been made, but the parties have to go to court. In those cases, they do not have to break down the settlement in the way that they would for normal cases going to court.

On Question, amendment agreed to.

Clause 15, as amended, agreed to.

Clause 16 [Payments into court]:

Earl Russell moved Amendment No. 36: Page 8, line 32, leave out subsection (1).

The noble Earl said: In the first instance this is a probing amendment. I am concerned with Clause 16 (1), which is a Henry VIII provision superficially of a fairly extreme sort. It states: Regulations may make provision (including provision modifying this Act) for any case in which a payment into court is made".

In fact, it gives the Minister power by regulations to alter the primary legislation.

I am aware that the Delegated Powers Scrutiny Committee made no objection to this clause. I am also aware that it is intended to deal with an extremely complicated situation with regard to overpayments into court, complicated also by a case which I am handicapped in discussing because it is, or was until recently, sub judice. Nevertheless, this power is very widely drawn.

I gave notice to the Minister that I intended to put down this amendment, first to try to obtain some indication of what he wanted to do with this power and, secondly, to ask whether the drafting could in some way be made tighter so as to tie the Government and any successors more carefully to the specific intention of Parliament as it exists today. We cannot pass Cambises clauses which provide that, like Cambises, King of Persia, the Secretary of State may do whatever he likes. I am sure that that is not the Minister's intention. If he can define his intention, maybe we can tighten the clause to fit the intention. That would seem a rather more reasonable way to go about it. I beg to move.

Lord Mackay of Ardbrecknish

The noble Earl's amendment, as he explained it, is put down because of his concern about the operation of the regulation-making powers in Clause 16 of the Bill. These regulation-making powers are intended to deal with circumstances currently provided for in Section 93 of the 1992 Act. These circumstances concern where a payment into court is made. These are the circumstances encompassed by the regulations. Provision is needed to make it clear how the reformed scheme will operate in respect of such payments. Such provision will essentially concern issues of procedure which we think are more appropriately dealt with under secondary legislation.

The noble Earl pointed out that the Seventh Report of the Select Committee on Delegated Powers and Deregulation reported on this Bill and did not draw any adverse inference from the inclusion of these regulation-making powers. I hope that that reassures the noble Earl and that my explanation of the narrow circumstances surrounding payments into court allays his fears.

Earl Russell

I thank the Minister for the reply. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Turner of Camden moved Amendment No. 37: Page 8, line 42, at end insert ("and must make provision to ensure that the amount of recoverable benefits is disregarded when the issue of costs arises for consideration by a court").

The noble Baroness said: This, too, is an amendment to the clause of the Bill relating to payments made into court. At the moment Clause 16(3) reads: Rules of court may make provision governing practice and procedure in such cases".

In this amendment we seek to insert at the end: and must make provision to ensure that the amount of recoverable benefits is disregarded when the issue of costs arises for consideration by a court".

It is my understanding that there have been problems about payments into court in the past, and there may very well be in the future unless we have an amendment to this effect in the Bill. As I understand it, there is a case outstanding at the present time, the case of McCaffrey, in which the claimant has ended up with a net figure less than the payment into court once DSS benefits are deducted; moreover, the claimant was ordered to pay the costs from the date of the payment into court. As I understand it, that case is currently before the Court of Appeal. It indicates clearly that there can be injustices to accident victims in such instances.

Amendment No. 37 is grouped with Amendment No. 38, the intention of which is to apply the same procedures to Scotland, because, as the Bill is currently drafted, as it says here: This section does not extend to Scotland".

In this amendment we seek to insert the following: Any reference in this section to 'payment into court' shall be construed as if the word 'tender' was inserted in its place, in relation to any case being pursued in a court in Scotland".

That is because "tender" is the wording usually used in relation to payment into court in Scotland.

I hope that the Minister will accept that what we propose here is to the benefit of claimants and will prevent injustice of the kind indicated in the McCaffrey case occurring in future. I beg to move.

Lord Mackay of Ardbrecknish

The first issue raised by the noble Baroness cuts across departmental boundaries and relates to the rules of court, which are generally the responsibility of my noble clansman, the Lord Chancellor.

As the noble Baroness has pointed out, this is an issue which was recently appealed to the Court of Appeal in the case of McCaffrey v. Datta. We shall want to study the judgment in that case before contemplating any amendment to the clause. In any event, the regulation-making powers provided in Clause 16 give us considerable flexibility. Subsection (3), in particular, allows for the rules of court to make provision governing practice and procedure in cases involving benefit recovery and payment into court. I therefore do not think it necessary to set out on the face of the Bill any of the rules for determination of costs where a payment into court is made. We shall want to study the Court of Appeal judgment in the case to which the noble Baroness referred to see if we require to do anything.

Turning to Amendment No. 38, the noble Baroness asked me about the position in Scotland and pointed out that the clause does not extend to Scotland. That is quite deliberate; indeed, it does not extend to Scotland. The reason is that the Scottish procedures are a little different from the English procedures. In Scotland there is no provision for payment into court; instead, a minute of tender may be lodged, fulfilling a similar function to a payment into court. As I understand it, the lodging of a minute of tender does not require the defendant to make payment at that time; he makes an offer, but no money changes hands. It is necessary to make special provision in relation to payment into court in England and Wales in the Bill as it is possible that the payment into court may be accepted and ultimately become a compensation payment, triggering liability for the full amount of benefit. If a minute of tender is accepted in Scotland, however, it will still be the case that no payment is made into court. Any payment will be made to the party who accepts the offer in the minute of tender. Once the offer has been accepted, settlement takes place. It is only when such a payment is made that any liability will be triggered.

I am grateful to the noble Baroness for drawing this matter to the Committee's attention. I hope that I have been able to reassure her about the Scottish position and that no provision is required in respect of minutes of tender.

Baroness Turner of Camden

I thank the Minister for that explanation. I am not familiar with the procedures in Scotland and we shall have to consider what he said. Our advice is that we do not need to do anything in the Bill in relation to minutes of tender in Scotland, for the reasons that the Minister stated.

I am glad that the Minister says that it is the intention to study the Court of Appeal decision in relation to the McCaffrey case. I am sure that he understands that we do not want to have, as a result of there being no provision in the Bill to cover payments into court, a situation in which claimants end up with no money at all because of the costs. I shall consider carefully what the Minister said. I am glad that he will give consideration to what we have said in Committee. I do not intend to press the matter further at this stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 38 not moved.]

Clause 16 agreed to.

Clause 17 [Benefits irrelevant to assessment of damages]:

Lord McCarthy moved Amendment No. 39: Page 9, line 4, leave out subsection (2).

The noble Lord said: The Minister has conducted a wonderful tutorial tonight. He has given us all kinds of information—things that we did not know before. It has been most enlightening. I hope the Minister will be enlightening with regard to this amendment.

We come now to Clause 17, Amendment No. 39. This amendment deals with Clause 17 which refers to: Benefits irrelevant to assessment of damages".

Clause 17(1) says, quite sensibly and realistically: In assessing damages in respect of any accident, injury or disease, the amount of any listed benefits paid or likely to be paid is to he disregarded".

That seems sensible. One might as well ask the court to take into account money left by Auntie Margaret or the chance of marrying well in the future. If ever something in the assessment should be taken out, it should be "listed benefits". I should have thought that was an unqualified statement except, of course, that it is qualified. It is qualified in subsection (2) and I hope that the noble Lord will enlighten me. Subsection (2) says: This section is subject to any"?

—it does not say that there is one and perhaps the Minister does not know where it is— contrary provision in any other enactment".

My question is: Goodness gracious me! What enactment is that? I beg to move.

7.30 p.m.

Earl Russell

This is a very curious passage in the Bill:

This section is subject to any contrary provision in any other enactment". Saving your Lordships' presence, I cannot help but be reminded of the Abbé Sieyès' comment on the Second Chamber: either it is useless or else it is pernicious. Either there is no such enactment, in which case this is a quite extreme example of belt and braces and in that case one might well remember the observations of the noble and learned Lord, Lord Simon of Glaisdale, on the danger of cluttering up the statute book; or it is a way of saying that the provisions of this Act in effect will be governed by some previous enactment or other which the Minister has not specified to us. Thinking of the noble and learned Lord, Lord Simon of Glaisdale, I am reminded of his famous example of the company formed during the South Sea Bubble "for a purpose hereafter to be disclosed". So if the Minister knows of any such enactment, I hope that he will disclose it while there is still time for us to do something about it.

The passage also infringes the principles of statutory construction. Normally, unless there is some clear reason to the contrary, I believe I am right in saying that the latest statute takes precedence over the earlier one. Why, in this particular case, should a well established rule of statutory construction be disregarded? It is the kind of thing that tends to cause courts considerable practical difficulty.

One may do that for well considered reasons and compelling motives but I feel that the Minister ought either to tell us what those compelling reasons are, so that we can judge them, or to withdraw the clause if it is belt, braces and chainmail all rolled into one.

Lord Mackay of Ardbrecknish

I am pleased that the noble Lord, Lord McCarthy, appreciates that we have had an enlightening tutorial this afternoon. I thought that giving enlightenment was exactly what Minsters were for. I was deeply grateful to him for confirming that I had been successful.

The noble Lord and the noble Earl invited me to explain the circumstances in which I envisage that this particular fail-safe provision would be needed. I am afraid that I cannot do so. Therefore, I accept the noble Lord's amendment.

Lord McCarthy

Let me take one second to thank the Minister. It is quite remarkable. The noble Earl, Lord Russell, was reminded of various people. I am reminded of Macbeth who discovers too late about the significance of the Burnham Wood clause. We seem to have ruled that out and it is a very good thing. I thank the Minister.

On Question, amendment agreed to.

Clause 17, as amended, agreed to.

Lord Lucas

On that high note, I beg to move that the House be resumed. In moving the Motion, I suggest that we move immediately to the Port of Tyne Authority (Transfer of Undertaking) Order, with the agreement of all parties—although I note that not everyone who wishes to speak on that order is present—and that the Committee stage begin again when consideration of the order is completed, but in any event not earlier than 8.35 p.m.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.