Mesothelioma Bill [HL]

Debate between Lord Freud and Lord Wills

Wednesday 17th July 2013 Lords Chamber

[Lord Freud]

My Lords, I think that how we do this will go into secondary legislation. We are well covered. If we need to make an adjustment at primary level, clearly we will have an opportunity in the other place. However, my desire here, for reasons that noble Lords will understand, is not to have ping-pong between the two Houses, because I do not want to lose the extra weeks that could be taken up. If I am wrong in saying that this does not need primary legislation, I will write to the noble Lord. However, that is my view, without checking.

I turn to Amendments 1, 3, 7, 9, 10, 14, 31 and 33.

[Lord Wills]

I, too, thank the Minister for the work that he has done so far on the Bill. It represents an enormous step forward, for which the House is extremely grateful. The noble Lord, Lord Wigley, raised a very important point. It is infinitely preferable not to have to resort to primary legislation in future should changes be necessary under the review process. If the Minister feels that the Bill is not adequate in giving powers to the then Secretary of State to introduce any changes by secondary legislation, will such provisions be introduced at Third Reading or in the other place?

[Lord Freud]

Perhaps noble Lords will indulge me and allow me to reply to that question a little later this afternoon. It is a very technical question and I will double-check that my answer was reliable. I will come back to it. We will have another chance.

If there are no further interventions, I will turn to the rather drier amendments in this group. A number of noble Lords present today tabled amendments in Committee to require the rules establishing the payment scheme to be made by statutory instrument rather than having them simply published by the Secretary of State. The amendments in this group are aligned with a recommendation of the Delegated Powers and Regulatory Reform Committee. Again, I acknowledged the concerns behind these approaches. Today I am pleased to announce that this set of amendments aims to establish the diffuse mesothelioma payment scheme by statutory instrument rather than by publication by the Secretary of State.

Having made this change, a number of consequential amendments fall to be made to other clauses, so that previous references to “regulations” will now refer to “the scheme”. Before noble Lords suggest that I am taking a backward step by amending the Bill so that it refers to “the scheme” instead of “regulations”, I should add that the combined effect of the amendments will be that where “regulations” has been changed to “scheme”, it will mean the scheme as set up by regulations.

We have also removed the ability of the Secretary of State to amend, replace or abolish the scheme, or publish the scheme as amended from time to time, as these matters will now be dealt with in regulations—as will the definition of a “specified payment” in Clauses 2 and 3. In addition, provisions for the amount of a scheme payment, for payment amounts to be dependent on age, and for the division of scheme payments between dependants are all now to be determined in accordance with scheme regulations. The same applies to the circumstances in which a person is or is not to be treated as able to bring an action against the relevant employer or any relevant insurer for civil damages. These will now be dealt with in scheme regulations.

Amendment 31 provides for the first regulations setting up the scheme under Clause 1 to be subject to the affirmative resolution procedure, where the regulations must be approved by a resolution of both Houses of Parliament and for subsequent regulations to be subject to the negative resolution procedure. This approach follows a recommendation from the Delegated Powers and Regulatory Reform Committee. I thank noble Lords for their well informed views when we addressed this matter. I beg to move.

--- Later in debate ---

[Lord Wills]

My noble friend makes an extremely important point. In Committee, he made some very telling points about all the ways, not just the direct financial ways that he has just calculated, in which insurers have benefited during the very long period when legislation such as this was not in place.

We then have to ask whether these increased costs can be justified. We should be looking at the expectations not of insurers but of victims. Victims certainly expected that the start date of a scheme such as this would be in February 2010. I hope that the Government will now satisfy the expectations of victims, not insurers.

I will speak briefly to Amendment 6, to which my noble friend Lord Howarth spoke very powerfully. We have heard all sorts of moving stories in this House, in Committee and elsewhere, of tragedies that have happened in precisely the way that he has described. I heard them in my own constituency surgeries when I was the Member of Parliament for North Swindon. My noble friend said—I hope I am quoting him correctly—that this amendment is necessary because the exposure of these people is a direct result of negligence by employers. I agree with him. It is a matter of common decency that these people should be covered by the scheme, and I hope that the Government will agree with this amendment.

[Lord Freud]

My Lords, I thank noble Lords for these amendments, which all share the same broad aim: to widen the scope of the scheme to get more people into it. I will take the amendments in turn and address first those tabled by the noble Lord, Lord McKenzie, and the noble Baroness, Lady Sherlock, regarding the start date for eligibility. I will then address the amendments tabled by the noble Lord, Lord Howarth, on the self-employed and household members.

We discussed the start date of the scheme at some length in Grand Committee. Clearly, it has received a lot of focus and continues to do so today. Under Amendments 4 and 8, once the scheme comes into force all living people who were diagnosed with diffuse mesothelioma on or after 10 February 2010 would be eligible for a payment from the scheme. They would also provide that any living dependant of a person with diffuse mesothelioma who had died on or after 10 February 2010 would be eligible for that payment.

Although it hurts to do this, I have to reject these amendments and ask that the noble Lord and the noble Baroness do not press them. I say that in the knowledge of the strength of feeling among all of us in this Chamber that the Bill should go as far as possible to help as many people as possible. The core issue is that this Bill was the subject of intensive negotiation. On top of that, it has been shaped by what I have felt to be innumerable obstacles that we have had to work around, and I need to restate why we cannot move the date as the amendments propose.

The start date of 25 July 2012 has been criticised for being arbitrary, but it is the date on which we announced that a scheme would be set up and it is the most legitimate date on which to commence eligibility. It is from that date that eligible people and insurers alike could expect that the scheme would be set up.

The proposed date of 10 February 2010 relates to the date when the previous Government published their consultation paper, Accessing Compensation: Supporting People Who Need to Trace Employers’ Liability Insurance. If noble Lords will allow me to correct myself, in Committee I said that that was published on 11 February, but other noble Lords were correct and it was in fact published on the 10th of that month. This was a consultation, not a decision in any particular direction, and did not create any expectation that people would be likely to get any sort of payment over and above what the Government provide for people with diffuse mesothelioma. I therefore cannot see that it is an appropriate start date for eligibility, and I fear that, were we to use it as such, it could be more reasonably criticised for being arbitrary than the existing start date.

We touched on the reasons why it took so long from the consultation being published to the scheme being announced to Parliament, so I will revisit them only briefly. I would have liked to have announced the scheme much sooner than 25 July 2012, but the issues involved were complex. We worked closely with stakeholders, including the insurance industry, claimant groups and solicitors, and all in all the process took longer to deal with than I had hoped. In addition to creating an expectation among people with mesothelioma, the announcement gave insurers notice that we intended to bring forward the scheme. From that date, those insurers will have had to factor the cost of the levy into their financial forecasts and plans.

There is one more point to mention that supports using the date of the announcement. Given that the insurers who are paying the levy to fund the scheme are not necessarily the same ones who took the premiums that paid for the historical insurance policies, we have to be able to demonstrate that the costs to them are fair and proportionate. Simply put, the earlier the start date, the higher the costs. If the scheme started on 10 February 2010, the extra costs, as I said earlier in response to the question from my noble friend Lord Avebury, would be £75 million.

Again, I need to take noble Lords from the figure of £119 million that I used in Committee. That figure was based on paying 100% of average civil damages to all claims, regardless of age. The £75 million figure that I am providing now is based on a tariff of 75% of average civil damages, which I have already talked about today, and takes the age of those making a claim into account. I think I owe noble Lords an apology to the extent that I have created any confusion.

I have spoken before about the risk that we take in raising the costs of the scheme. A litigious industry such as the insurance industry could easily delay the scheme with legal challenge if the costs were perceived as unfair. The other risk is that higher costs would be passed on to employers. I know that noble Lords would like us to do more, and indeed the Government would like to do more, but we cannot ignore these risks.

Mesothelioma Bill [HL]: Impact

Debate between Lord Freud and Lord Wills

Tuesday 25th June 2013 Lords Chamber

[Lord Wills]

To ask Her Majesty’s Government what assessment they have made of the impact on insurance companies’ balance sheets of paying mesothelioma sufferers 100 per cent of the compensation to which they are entitled under the terms of the scheme set out in the Mesothelioma Bill [HL].

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

My Lords, over the first 10 years of the scheme, a tariff set at 100% of average civil compensation would total £451 million. That is £129 million more than the current proposals, which are forecast to cost £322 million.

[Lord Wills]

I thank the Minister for that Answer. Indeed, I thank him for all that he has done personally to advance the cause of all those suffering from this dreadful disease. However, does he recognise the deep frustration felt by many in your Lordships’ House, and many outside as well, that the Medical Research Council seems unable to launch fundamental research into this dreadful disease, even when the insurers are prepared to pay millions to fund it? Does he also recognise the deep sense of injustice felt by so many that the insurers are refusing to pay 100% of all claims to all those who are entitled to them?

[Lord Freud]

My Lords, the point about research is that it is pretty complicated, one reason being that the Medical Research Council is constrained by the quality of the research proposals presented to it. There is a bit of a chicken-and-egg situation going on, as I see it, and I am working with my noble friend Lord Howe and the British Lung Foundation to break that situation. We are hosting a seminar on the importance of mesothelioma research shortly to try to stimulate the proposals for funding. As for the second aspect of the question, clearly there has been much debate on the exact level of compensation. In the end, this has been a very complicated and intricate deal to make sure that we can get good sums of money. We are getting an average of £87,000 a head to people who suffer from this terrible disease who have not been able to find any compensation whatever.

Mesothelioma Bill [HL]

Debate between Lord Freud and Lord Wills

Wednesday 5th June 2013 Grand Committee

[Lord Freud]

I thank the noble Lord, Lord Howarth, for these amendments. Clearly, their intention is to make the payments under this scheme available to a wider group. The two groups, specifically, are the self-employed and those who caught it on a secondary basis by living in the same household as a person exposed to asbestos.

The way in which Clause 2(1)(a) works is that it requires the person with diffuse mesothelioma to have been an employee of an employer who was required, at the time of the person’s exposure to asbestos, by the compulsory insurance legislation to maintain insurance covering any liability arising because of exposure to asbestos, or who would have been had that legislation been in force at the time. I hear my noble friend Lord Empey saying, “Solve the whole thing once and for all”, but this Bill is, regrettably, designed to fix a market failure. There is a failure of insurers and employers to retain adequate records of the employer’s liability insurance, and to make sure that those employees who cannot trace through in order to bring a civil claim actually get a payment. So, widening the list of people who receive payments beyond the legal position would impose a disproportionate burden on the employer liability insurers who will fund the scheme through a levy.

[Lord Wills]

When the Minister talks about a disproportionate burden, does he accept that for years and years, those insurers—quite properly, because of judicial decisions—avoided making payments which we all now agree that they should have been making and which the Bill is designed to ensure that they will make in future? When he talks about a disproportionate burden, has his department made any estimate of how much money those insurers saved for all those years?

[Lord Freud]

My Lords, there is a deep and difficult history to this of which, I suspect, everyone in this room is aware. We are trying to ensure that we can get money to that group who have missed out. I am as dismayed as many of your Lordships that that has not happened earlier, but we are where we are. We are doing it now in a way to ensure that we can get those payments flowing rapidly. I apologise if I seem to be making a Second Reading speech. The problem is that this is such an emotive issue—the disease is so horrible—that it is very hard not to do so.

We have to come back to what is a specific deliverable. It is awful to sound so legally defensive, as I know that I am sounding here, but I am trying to get a deliverable, to get as much money as possible to people. I shall answer the specific questions. I know that I will not have the noble Lord, Lord Howarth, resounding with pleasure, as he wanted to be, but that is the underlying reason. My motivation is to get as much money as I possibly can safely, without risk—legal risk, in particular—to people.