Compensation Bill [HL]

: My Lords, I declare my interest as a partner in the national law firm, Beachcroft Wansbroughs, in particular as chairman of the financial services division, and as chairman of the professional standards board of the Chartered Insurance Institute. The noble Baroness has clearly set out the Government’s two prime objectives in introducing the Bill; first, bringing clarity to the law of negligence, and, secondly, the regulation of so-called ““claims farmers””. We on the Conservative Benches share and support both of those objectives. In that spirit of good will, I pay my own tribute to Ministers and in particular to the noble Baroness, Lady Ashton of Upholland, whose open and constructive approach thus far has been commendable. If we are to see really sustainable reform, the Bill must command widespread support, well beyond the confines of the Government and the Labour Party or even this place. In getting to grips with tort law reform, breadth of support is not a luxury, it is a necessity. This matter is, and must be, above party. The willingness to engage and listen on the part of the noble Baroness, Lady Ashton, makes that far easier to achieve. Having said that, the fact is that many people have been disappointed by what they see as the very limited scope of the Bill. Every great journey though begins with a single step, and I have high hopes both of this step and of the journey that will follow. Surely no one can seriously imagine that any single piece of legislation could of itself reverse all the problems that have sprung up. The noble and learned Lord, Lord Ackner, had hoped to participate in this debate. He would have enumerated the many serious problems that he always warned would follow from the abolition of civil legal aid and the introduction of conditional fee agreements. The Prime Minister put it very well when he said that across the board we need the values not of a ““compensation culture”” but those of a ““common sense culture””. The noble Baroness wisely reminded us in her opening remarks that the Bill should not be viewed in isolation, nor should the Government be judged by this Bill alone. We are promised action on a broad front—on rehabilitation, on guidance to schools, and possibly even additional primary legislation. In a totally non-partisan spirit, I think that is to be welcomed so long as there is a really joined-up approach right across government and there is genuine and quantifiable delivery across that broad front. I know that the noble Baroness believes this particular Bill to be not only small but also beautifully made. That is an enticing thought, but having read the Bill closely, I do not think it can yet be said quite to have attained perfection. The principles behind the Bill, and the intentions of Ministers in introducing it, seem to me wholly sound and worthy. As my noble friend Lord Lucas pointed out, as so often, however, the devil is in the detail. As I will endeavour to explain, I am not convinced that we are quite home and dry with the Bill as presently drafted. In terms of column inches, Clause 1 may seem to be the lesser part of the Bill, but its implications are far-reaching. I mention some points now to which I expect to return in Committee. First, I would be interested to explore with the Minister why the word ““may”” is used at line four of Clause 1—the noble Lord, Lord Goodhart, read out that clause—rather than ““shall”” or ““must””. That appears to make application of the clause by the courts discretionary rather than mandatory. Will the Minister confirm that that is the Government’s intention and explain the reasoning behind it? There also needs to be clarity on the areas affected. Is Clause 1 intended to apply only to personal injury claims or will it extend to professional negligence and clinical negligence cases? What about breaches of statutory duty? My noble friend Lord Lucas mentioned the circumstances that gave rise to the decision of your Lordships’ Appellate Committee in Tomlinson v Congleton Borough Council whichconcerned a pool into which John Tomlinson dived and where he sadly struck his head hard on the sandy bottom with very serious consequences. So far as breach of statutory duty is concerned, that case was all about the Occupiers’ Liability Act. As I understand the position from Ministers, the intention behind Clause 1 is to codify the judgment in Tomlinson. Yet although there were a number of significant judgments, Tomlinson was all about breaches of statutory duty. My next comment deals with the point that my noble friend raised. One of the finest judgments I have read is that of the noble and learned Lord, Lord Scott of Foscote, who said:"““Of course there is some risk of accidents arising out of the joie de vivre of the young. But that is no reason for imposing a grey and dull safety regime on everyone””." Of course, we shall explore that matter further in Committee. Furthermore, when we speak of desirable activities, what do we mean? Is it only claims related to an educational or recreational activity deemed to be socially desirable that will be affected, or will road traffic accidents and accidents at work be affected too? In other words, what is the thinking behind this notion of desirable activities? Is there a legal source of any kind for the phrase ““desirable activities””, because if there is I have not found it? Are all those activities desirable that are not undesirable, and who is to decide? I put it to Ministers that that will require clarification and I may come forward with some suggestions on that in Committee. I now move on to the second part of the Bill. I agree with the noble Baroness that the activities of some claims farmers are a national disgrace and I am delighted that their activities are to be regulated. At their worst claims farmers deliberately and knowingly create utterly false and unrealistic expectations in the minds of some of the most vulnerable people in our society. They also do no favours at all to those who have genuine and legitimate claims, which can all too easily get lost if the system is clogged up. The unregulated activities of claims farmers in recent years have left a complicated and in many ways unhappy legacy for a great many people, not least those whom they were supposed to help. I pay tribute to the work done by those who have campaigned on the issue over the years, including notable contributions from leading insurance companies. I have a couple of points to make following the speech of the noble Lord, Lord Goodhart. I share his concern and the concern of the Delegated Powers and Regulatory Reform Committee about the powers that would be vested in the Secretary of State by the legislation and the volume of secondary legislation that it might well spawn. It raises both important constitutional issues and practical questions. The noble Lord, Lord Brennan, made a number of important points which we will have to consider in Committee. Unregulated claims farmers are a clear and present danger. I am worried about timescales. Is there any prospect of immediate action or will we have to wait months, or even years, before anything concrete is done? Furthermore, the activities of these claims farmers extend beyond the confines of the personal injury arena. It is important that this legislation should do so as well. Both as a parliamentarian and as a partner in a national law firm, I am only too aware of how disordered the loose ends have become. Indeed, it is far too simplistic to talk of different sides here. Many organisations that operate in what we loosely term the claims farming arena have welcomed these proposals. Knowing that the activities of the cowboys give them a bad name, they no longer wish to be tarred with the same brush. Yet even if we do manage to come to a consensus and get the legislation right—as I hope we shall—there is a tangled web out there that still needs much unravelling. So, in addition to preventing repetition or recurrence of past problems, we must not lose sight of the need to sort out the messy legacy of the chaos that has reigned up until now. In all of this, the role of the proposed new regulator will be critical. We need to hear from the Minister on the tricky question of who or what the regulator may turn out to be. The regulator must not only be independent; he or she must also be seen to be independent. I suggest that there are three ““I””s which might be applied: independence, impartiality and integrity. I am also quite disappointed that the Bill contains no regulations dealing with advertising standards, or the transparency of charges and commissions received for the services being regulated, as was pointed out by the noble Lord, Lord Brennan. After all, it is principally these that have driven the behaviour that has, in turn, generated so much satellite litigation. We have a good opportunity ahead of us to refine the Bill. I hope that everyone will respond positively to that challenge. Our consideration in Grand Committee will require everyone to adopt a thoughtful and, perhaps, less confrontational attitude than sometimes occurs, as everyone in this country has a vested interest in our work on this Bill. The process of parliamentary scrutiny and amendment that lies ahead must not result in this legislation emerging as an emasculated, lowest common denominator Act of Parliament. The Compensation Bill must become a crucial part of a robust, sustainable answer to the challenges of our time. We therefore have some work to do. Other elements of this revolution may then follow in due course. Ministers will not be surprised to hear that I shall take particular interest in any consultations or proposals relating to rehabilitation and occupational health. Earlier this month the noble Lord, Lord Warner, intimated that health Ministers are still seriously considering reform to Section 2(4) of the Law Reform (Personal Injuries) Act 1948. I hope that that will come to pass and that, in conjunction with the department represented by the noble Baroness, we will have some fundamental reform which improves our rehabilitation system. To conclude; exactly a year ago, both the Norwich Union and Citizens Advice published major reports which set out a series of observations and proposals that are well worth revisiting. Although the Minister mentioned the Citizens Advice report, I think that the Government have not really responded substantively to the contents of either report. The Norwich Union report, A Modern Compensation System: Moving from Concept to Reality, advocated a number of measures, including raising the small claims limit for injury claims from £1,000 to £5,000. It also advocated a general streamlining of the system, with an important emphasis on putting claimants first and on ““mending the person””. I hope that we shall see serious consideration of all such points. As I said earlier, this must be above and beyond party. For this Bill, the Grand Committee system provides us with an ideal opportunity to achieve precisely that. We on these Benches agree to play our part, constructively and positively, in this important and ongoing process.