Legal Aid, Sentencing and Punishment of Offenders Bill

It is a great pleasure to follow the right hon. Member for Blackburn (Mr Straw), who put his case so comprehensively and convincingly. I should like to speak briefly in support of the Government's position and to ask a question of clarification. Clearly, referral fees and how they work have contributed enormously to the insurance costs of people in Blackburn, East Hampshire, middle England—wherever that is—and everywhere else, and change is needed. We had a strange mini-debate in the Public Bill Committee evidence-taking session on whether there was a compensation culture in this country. Some Opposition Members suggested that there was not and cited the noble Lord Young of Graffham in defence of their case, which is rather a tricky one to argue. Anyone who has received those annoying automated phone calls and text messages, or who has even a glancing familiarity with daytime television, can say that it is intuitive and self-evident that there is a compensation culture. I understand that one of the original reasons for introducing referral fees was to allow an online market to develop—it was said that that would be a good thing because it might increase competition and access to justice. I shall come back to the online market element in a moment, but the claim that referral fees improve access to justice is at best grossly exaggerated. It might well be that approaching a solicitor with such a case was foreboding 20 years ago, but it is not now, following the development of no win, no fee cases and so on. It is difficult to say exactly how big the claims management company sector is, but it might be of the order of £0.5 billion, which is enormous. There is nothing wrong with making money, but from a public policy perspective, we must draw a distinction between activities that add value to the individual and those that just take a share of the value chain and ultimately push up costs for everybody else. That is combined with the natural distaste that we have for selling people's cases as some kind of commodity. The hon. Member for Stretford and Urmston (Kate Green) referred to the ability of industry players to shape-shift. I think that the new clause would effectively prohibit subcontracting, but not, of course, mergers and acquisitions, which would simply create a new form. I want, however, to talk specifically about the online marketplace. There is a sliding scale with referral fees: at one extreme, we have ambulance chasers, insurance companies and garages selling hot leads, while at the other end of the scale, we have a Google search, for which, in a sense, a referral fee is also paid. Somewhere in the middle are the trade unions, with the Labour party having, of course, enjoyed significant income from referral fees. However, I want to talk about the online aspect. Presumably, nobody would object to a Google search fee as a marketing cost, but it is in the nature of these industries—we see it with cost comparison websites, for example—that consolidated intermediaries emerge who pay the search engines a certain amount of money, but then charge the customer, which in this case would be the law firm, a greater amount of money. Does that count as a referral fee? Given that technology for consumer targeting improves over time, it might be possible, on social media for example, to identify people likely to have had a recent accident. That would involve a much higher marketing cost per contact, but would it count as a referral fee? I hope that the Minister can clarify exactly how the regulations are intended to work. Obviously, that would be a matter for the regulator, but I am keen to hear the Government's intention.