§ 3.28 p.m.
§ Report received.
§ Clause 1 [Payment for hospital treatment of traffic casualties]:
§ Earl Howe moved Amendment No. 1:
Page 1, line 24, at end insert ("; or
(e) a payment made in respect of an accident caused by a vehicle which is not required to be insured by virtue of section 144(2) of the Road Traffic Act 1988.").
§ The noble Lord said: My Lords, perhaps I may start our proceedings on Report by expressing my thanks to the Minister and to his noble friend Lady Hayman for the very full letter I received a few days ago which answered many of the points of detail that arose in Committee. It was an extremely helpful letter. As a result, I can tell the House that I shall not be moving some of my amendments.
§ In Committee I asked the Minister to explain why Crown vehicles were not caught by the Bill as drafted. I understand that there are over one million such vehicles, some conventionally insured on the market despite the exemption they enjoy from that legal requirement. In reply, the Minister stated that the premise of the Bill was simply to collect existing charges but to do it better and not to extend the scheme or to introduce new charges. I really have to challenge that answer because it clearly is not true. The Bill extends the recovery of charges to a very significant new category of driver; namely, those who are uninsured or untraceable. It does that, of course, through the Motor Insurers' Bureau.
§ My substantive point is this: there appears to be no reason in logic or equity why the victims of accidents caused by Crown vehicles should be treated any differently from the victims of accidents caused by other vehicles. If the Government believe that it is appropriate to recover the costs of treating victims of uninsured drivers from honest, premium-paying motorists, and to extend the scope of the Bill to do so, I do not see why they should not include Crown vehicles in the scheme as well. I beg to move.
§ Lord Hunt of Kings Heath
My Lords, I thank the noble Earl for his kind remarks about the explanation sent to him following the Committee stage.
I start by reiterating that the purpose of this Bill is to introduce a system to collect existing charges, but to do it more effectively than in the past. There is no intention to extend the scheme or introduce new charges. The existing charges are only due where compensation is paid by an authorised insurer in respect of a claim against a motor insurance policy.
The bodies listed in Section 144(2) of the Road Traffic Act 1988 are not required to carry compulsory insurance and therefore have no obligation under the current law to meet NHS charges. Amending the law to bring those bodies into the net of obligations associated 1560 with compulsory vehicle insurance goes much wider than this Bill, concerned as it is with collecting existing charges more effectively.
The noble Earl raised today, as he did in Committee, the issue of the Motor Insurers' Bureau. I should like to make two points in that regard. First, the MIB can and does meet the cost of private sector medical treatment in cases where the accident victim opted for care in the private sector. The private sector hospital can require the MIB to settle the patient's medical bills directly. The Bill intends that the NHS should be able to do likewise.
Secondly, it is worth pointing out that in the time of the previous administration, in 1992, it was proposed by the then government to recover state costs from the MIB. One must ask why it is wrong to seek to give the NHS parity with private sector hospitals. The MIB acts in exactly the same way as any other authorised insurer. It should meet the same risk as those insurers.
I listened carefully to the noble Earl and, while I do not want to offer him any expectations, I should like to reflect on what he said. On that basis I hope that he will feel able to withdraw his amendment.
My Lords, I am grateful to the Minister. I understand the point in relation to parity in so far as it affects the Motor Insurers' Bureau and its existing liability to pay for private treatment. But my point today can be summed up in one word: equity. Why should Crown vehicles escape the net? I realise that they are not in the net at the moment and that the Bill is largely designed to improve the current system for those who are liable for charges. That is a substantive point. I am grateful to the Minister for saying that he will consider the matter and I understand that that is without commitment. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 3 [Information contained in certificates]:
§ Earl Howe moved Amendment No. 2:
§ Page 3, line 31, after ("out") insert ("in").
§ The noble Earl said: My Lords, Amendment No. 2, which I tabled in Committee, addresses itself to a simple point of drafting. Clause 3(2) of the Bill does not make grammatical sense. If the phrase between the two commas is removed, it is clear that the word "in" has been omitted.
§ In Committee the Minister seemed to think that I was being a little over-pernickety and argued that what really mattered was that the sense was clear. My strong feeling is that that is not good enough. Of course we know what the wording means, but we should not knowingly pass a badly drafted section of a Bill into law. I am happy to say that that point was supported in Committee by at 1561 least two other noble Lords. I therefore bring back the amendment in the hope that the Minister will reconsider his reply. I beg to move.
§ Lord Hunt of Kings Heath
My Lords, well-spotted! The noble Earl pointed out that the wording of the Bill can be improved. I accept that and am prepared to accept his amendment.
My Lords, I am extremely grateful to the Minister. This is a major triumph for the Opposition and I express my gratitude to him and his colleagues for all the deep thought that must have gone in to that reply.
§ On Question, amendment agreed to.
§ Lord Clement-Jones moved Amendment No. 3:
§ Page 3, line 43, leave out ("2nd July 1997") and insert ("1st April 1998").
§ The noble Lord said: My Lords, in the wake of that major concession my hopes are rising by the second. I join with the noble Earl in thanking the Minister for his considerable courtesy in writing a letter which, even to my jaded brain this morning, made sense and influenced the approach of these Benches to some of the amendments we tabled. It was a model of clarity.
§ However, Amendment No. 3 is still a bone of contention between us. I read carefully what the Minister said in Committee on 18th February and it still appears to be a Bill containing many elements of retrospection. We believe that the principle should be that the insurance company should only pay out the amount of charge that was known at the time the premium was paid.
§ What we see on the Marshalled List today represents a compromise from that position to some degree because one needs to set a date and perhaps it is unduly onerous to set a date that is the passing of this Bill. However it is abundantly unfair for insurers to have to accept the date of the Budget in July 1997 when it was not possible for them to ascertain what the charges should be. I know that the Minister said discussions had taken place with the insurance industry and it appeared to accept this point. But it appears to me to be somewhat "Sicilian" negotiation with the insurers—"This is really an offer you cannot refuse"! It would be far preferable to move to a different date.
§ It seems that the current date of July has either been taken as a Budget or, in a sense, it is two years back from where we are now because that is the assumption as to the amount of time it takes to settle an accident claim. Either way, it is extremely arbitrary. We should therefore like to see some movement from the Government. In particular, it would be useful to know the precise estimated difference in the cost between the date of April 1998 and July 1997. What is the impact on the NHS of taking the two different dates? I beg to move.
My Lords, in Committee, alongside the noble Lord, Lord Clement-Jones, I argued that the Bill's retrospective nature was undesirable in principle and 1562 practice. It is undesirable because retrospection should not be incorporated into new law without good reasons, and in this case no such reasons exist other than a blatant desire on the part of the Chancellor to defray NHS running costs to the latest possible date.
As the noble Lord rightly pointed out, there is no way that insurers who wrote motor policies between 2nd July 1996 and 2nd July 1997 could have budgeted for the additional costs to which the Bill will give rise. It is also wrong that the Government are legislating for a period even before they were elected to office. Replying to me in Committee, the Minister made no attempt to answer those fundamental points, which is not surprising as there are no satisfactory answers.
Insurers who are no longer writing motor business will he particularly severely affected. That category, faced with a claim, would be most unlikely to recoup any costs imposed arising from policies written during the period in question. The Minister was unable to answer that point and the response he made was extremely weak—that it takes up to two years for charges to feed through to the NHS, so setting a date of 2nd July 1997 for the provision to apply was not unreasonable. That wholly fails to address whether 2nd July 1997 is a fair starting point. To put the matter at its starkest, some motor policies priced on the old basis will have continued in force for more than one year after the Chancellor's announcement. That cannot be fair.
The amendment seeks to strike a fair compromise. The Minister indicated in Committee that the insurance industry is content with a starting point of 2nd July 1997, but my information is that that is not the case. The industry was only prepared to acquiesce with extreme reluctance. A starting date of 1st April 1998 would not entirely eliminate the Bill's retrospective impact but would allow a reasonable period after the Chancellor's announcement for insurers to factor in the new risk to motor policies written after that date. I ask the Government to think again.
§ Lord Hunt of Kings Heath
My Lords, I thank the noble Lord, Lord Clement-Jones, for his acknowledgement of the clarifying letter from my noble friend Lady Hayman.
There has been a great deal of discussion about retrospection. The noble Lord referred to Sicilian negotiations. I am not sure what he meant but I am certain that that is not an accurate description of the discussions between the Department of Health and the Association of British Insurers, which suggested that applying the higher rate of charges to NHS treatment from 2nd July 1997 would be reasonable. The insurers' representative body sought a meeting with the Secretary of State precisely because it wanted to discuss when the new charges for NHS treatment would be introduced. That meeting was held one year ago to the day—on 2nd March 1998, when insurers themselves advanced the date of 2nd July 1997 as being reasonable and fair for the new higher rate charges to take effect.
1563 At that stage, the insurers had eight months' notice of the intended changes. They have had a further full year to adjust their practice. The average time taken to process a claim for compensation is two years. NHS charges are due when compensation is paid. In April 1999, when the new scheme should begin, some of the compensation payments coming through will relate to accidents in 1997 but many will relate to accidents after that time.
The argument has been made that insurers selling policies in 1997 would not have been aware that they could include exposure to the new higher rate NHS charges and that insurers must find additional money to meet that demand. Claims against motor vehicle insurance policies have risen over 10 years—using figures supplied by the Association of British Insurers—from £2.2 billion in 1986 to £5.1 billion in 1996. In 1996, the NHS recovered only £13 million in respect of treatment following road traffic accidents, which is one quarter of 1 per cent. of the money that insurers paid out on motor vehicle insurance policies.
Insurers selling motor vehicle policies in 1997 would have taken into account the possibility of a claim against that policy under the current provisions of the Road Traffic Act 1988 whereby an insurer could have faced a maximum charge for in-patient treatment of £2,949. That would have been part of the insurer's consideration. Under the new higher rate charges, the insurer can face a daily rate charge for the same accident of £435 per day, although admittedly there is a maximum charge of £10,000.
The average length of stay in an NHS hospital following admission after a road traffic accident is just over eight days. At the new higher rate charge, that average will produce a bill of about £3,500—a difference in cost in an average case of about £500. Given that the insurer could also be made to pay for treatment received in the private sector and must have allowed also for that possibility when setting premiums in 1997, the increase in NHS charges is only a small part of the insurer's cost.
I do not accept that our proposals are anything more than a small element in the insurance industry's calculations. It is interesting to view in parallel the implementation of social security benefits recovery legislation. That provides a system whereby the compensator is liable for the full amount of benefit paid up to the date of the compensation payment, subject to a five-year maximum. That certainly may reduce the compensation payable to the injured person, but only where benefits and compensation have been paid for like need.
Recovery of benefits legislation introduced by the previous administration applied from the beginning to compensation payments made after the legislation came into effect, irrespective of when the injury occurred. That relates both to the 1989 legislation, which affected victims, and the 1997 revision of the scheme, which affected compensators. The government of the day announced that they would move to introduce legislation 12 months before the 1989 Act was passed. In a subsequent case brought under the European 1564 Convention on Human Rights, that period of notice was accepted as reasonable and the Commission rejected a claim that the Government's action was retrospective.
We are considering now legislation where the intention to act was announced one-and-a-half years ago. The expectation that the new scheme would raise about £100 million each year was announced by the Treasury in October 1997£16 months ago. The actual range of income that the Department of Health considered feasible was made known to the Association of British Insurers in January 1998—more than 12 months ago.
We have been asked to consider the compromise position of 1st April 1998. For the reasons given, that is not more acceptable than the date agreed with the insurers of 2nd July 1997. For many years the NHS missed out on income that was its due. We were on record as saying that we wanted to rectify that position as soon as possible and move to charges that better reflect the costs of treatment. We have an agreed date with the insurers for so doing.
Any delay such as that proposed in the amendment in implementing the higher rate charges would be at further cost to NHS hospitals. The noble Lord, Lord Clement-Jones, asked me to quantify this. It is hard to give him an exact figure. However, putting the starting date for higher rate charges back from 2nd July 1997 to 1st April 1998 would be likely to reduce the direct income to hospitals providing care for accident victims by around £30 to £40 million. That may not seem to be a great deal when set beside the billions of pounds that insurers pay out every year in car-related claims, but clearly it is a very significant sum to NHS hospitals. The real boost to hospital incomes comes from the fact that we begin for the first time to pick up all the claims that are made and to raise NHS charges in all of these cases. The move to full costs is a long overdue step, but one that I think should not attract undue attention out of proportion to its real effect on insurers. On that basis, I invite the noble Lord to withdraw the amendment.
§ Lord Clement-Jones
My Lords, I thank the Minister for that most interesting response. Indeed, there was a great deal of meat in it, especially as regards the cost and the difference between the two. I believe that it deserves considerable reflection between now and Third Reading. I must thank the noble Lord for the care that he took in responding. It is a difficult matter because obviously there are issues of principle versus the question of cost to the NHS. One needs further reflection in order to resolve some of the issues that have emerged. Nevertheless, I thank the Minister for his reply and, in the meantime, beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 4 not moved.]
§ Clause 9 [Appeal to the court on point of law]:
§ Lord Clement-Jones moved Amendment No. 5:
§ Page 6, line 36, leave out ("Regulations may provide that").
§ The noble Lord said: My Lords, I should like formally to move this amendment because my own amendment is so closely cognate to it. The letter which I received 1565 from the Minister is unclear and needs a little clarification. However, despite the fact that my brain was working superbly this morning, it may be me rather than the wording of the letter. I do not quite understand the impact of Order 55. Not being a litigation lawyer, it is not entirely clear to me whether that order will still operate to allow an appeal under the Bill, despite the fact that no regulations may be made.
§ If the Bill simply provides that regulations "may be made" and, in the event, they are not made, what impact would that have in those circumstances? For example, would Order 55 override that to allow an appeal, or would regulations need to be made in order to allow an appeal? The letter is not entirely clear in that respect.
§ I accept the fact that Schedule 1 to the rules of court is, so to speak, a temporary schedule, whereas the rules themselves now seem to be fairly fixed. Therefore, there are some further issues involved. I still feel rather uncomfortable about an appeal not being enshrined in the Bill and simply being allowed under regulations. If the Minister could clarify the question as to whether an appeal is available even if regulations are not made, that would be most helpful. I beg to move.
§ Lord Hunt of Kings Heath
My Lords, I understand the concerns that led to the moving of this amendment. There is the particular concern that, while those in Scotland will have on the face of the Bill a right of appeal to a higher court, people in England and Wales will have that right only through subordinate legislation. I should like to make it very clear at the outset that there is no question but that a right of appeal will be available to the High Court in England and Wales. Placing that right in regulations is simply a practical arrangement designed to cope with the fact that provisions governing what happens to an appeal are currently being reviewed. The review affects England and Wales only.
The noble Lord, Lord Clement-Jones, was certainly correct to say at Committee stage that, as part of the review, the main rules of court had already been published. They have and they will come into effect on 26th April 1999. The provisions which appear in the schedules to the rules, however, re-enact existing court rules. The schedules are still under review by the Civil Procedure Rules Committee.
The provisions which will govern appeals from the High Court in England and Wales are found in Schedule 1. They, in turn, re-enact provisions found in Order 55 of the Rules of the Supreme Court. Order 55 applies to cases where an appeal lies by or under any enactment. They are general provisions covering many types of appeals from courts, tribunals and other decision makers. We are particularly interested in the provisions which govern what the High Court may do with an appeal. The provision of Order 55 enable the court to give judgment or to remit the matter for rehearing and to make further orders. Order 55 specifically provides that its provisions have effect subject to any other provision made by or under an enactment. We do not at this stage anticipate making 1566 any further provision for NHS charges appeals to the High Court, because the provisions in Order 55 cover the matter.
It would, however, be unfortunate if NHS charges appeals were always bound to follow general provisions without the flexibility to ensure that the system properly meets the needs of parties to the appeals and the court, especially when we do not know how the provisions found in Schedule 1 to the rules will look in the future. An important element of the scheme is that we want to work with insurers to ensure that it operates well for all parties. Removing the flexibility about appeals would endanger that aim.
Some concern was expressed in Committee that the provision in Scotland is somehow stronger than the provision which applies in England and Wales. I hope that I have satisfied your Lordships as to why there is a need for regulations in England and Wales. However, I understand that in Scotland it is simply not necessary to make provision for the Court of Session to remit the matter being looked at by the court to a tribunal; it is part of a court's inherent jurisdiction. So the Scottish rules of court do not deal with the matter at all, nor do they need to. As a consequence, regulating powers are not necessary for Scotland.
I conclude by repeating that there is no question but that a right of appeal will be available in England and Wales to the High Court.
§ Lord Clement-Jones
My Lords, I thank the Minister for his reply which was extremely clear; indeed, it even amplifies the terms of the letter to which I referred. In making that clear to me, he has effectively answered in the affirmative the question of whether or not it would be possible to have a right of appeal despite the fact that regulations may not be made. Therefore, on that basis, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 6 not moved.]
§ Clause 11 [Provision of information]:
§ [Amendment No. 7 not moved.]
§ Clause 14 [Regulations governing payments into court, etc.]:
§ Earl Howe moved Amendment No. 8:
§ Page 9, leave out lines 19 and 20.
§ The noble Earl said: My Lords, in speaking to this amendment I should like simply to make one comment. In Committee I raised the issue of payments into court because it seemed to me that Clause 14(2) of the Bill was saying that regulations would treat all payments into court as though they were compensation; in other words, all payments into court would trigger the 14-day period within which the NHS charges had to be collected. However, I now understand that that is not the case. Indeed, I am grateful once again to the noble Baroness for what she said in her letter about this matter.
§ I now realise that the regulations which will be brought forward will distinguish between instances where a payment into court does constitute a compensation payment and instances where it does not.1567
§ Having said that, I should like simply to add that I am entirely content. We await perusal of the terms of the regulations when they emerge. I beg to move.
§ Lord Clement-Jones
My Lords, I follow the noble Earl in thanking the Ministers for the letter on this subject. I am very impressed by the sheer ingenuity displayed within the Department in terms of their approach to the payments into court. We had quite a discussion in committee about the whole issue and it was a little difficult to see quite how regulations would bite on payments into court. This does clarify it and it is reassuring that it will be enshrined in this level of detail in the regulations. On that basis I would agree that these amendments are unnecessary.
§ Lord Hunt of Kings Heath
My Lords, perhaps I may simply thank the noble Earl and the noble Lord for their comments. These possibly quite complicated matters will be covered in the regulations.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 9 not moved.]