Legal Aid, Sentencing and Punishment of Offenders Bill

I welcome the banning of referral fees, and I congratulate the Minister and the Government on doing it. The scandal is that, frankly, it should have been done years ago. My hon. Friend the Member for Bassetlaw (John Mann) and I campaigned hard to expose the scandal surrounding the miners compensation scheme, which created a feeding frenzy not just for solicitors but for claims management companies. As I have said before—and to answer the hon. Member for Harrow East (Bob Blackman)—I frankly do not care if they all go bust, because they are not needed in this process. If people need legal advice, they go to a solicitor. Claims management companies have acted like parasites on the access to justice model that we have had in this country for many years. I find it ironic that my right hon. Friend the Member for Blackburn (Mr Straw) said that I was referring to Blackburn as a middle-England constituency, because I was not. The fact of the matter is that my hon. Friend the Member for Bassetlaw and I, along with one or two other Members, argued hard about the scandal surrounding the miners compensation scheme. One of the key points was referral fees and the amount of money received not only by solicitors but by unscrupulous trade unions and unscrupulous claims handling companies. The issue was regulated in 2004, with referral fees being made legal. However, in the case of the miners compensation scheme it was quite obvious that referral fees were being paid and that the Law Society was turning a blind eye—I always refer to the Law Society as the best trade union in the world, because it does such a good job of protecting its self-interest. In the case of the miners compensation scheme, it was an absolute scandal that claims managing companies were springing up like the morning dew, but then disappearing as soon as they had, as it were, harvested the claims in an area, which they did in two ways. There was no internet in those days—many communities do not have access to the internet—so the companies used cold calling to target poor widows and people who were seriously ill, in many cases claiming to be solicitors. Many of my constituents signed up with claims management companies, but anyone who asked them which firm of solicitors they were with would be referred to the claims management company. It came as a great surprise when it was pointed out that the company in question was not legally qualified. However, the claims management scandal surrounding the miners compensation scheme could not have continued were it not for solicitors being implicated. I find it ironic that the Law Society and solicitors should more or less stand back and say, ““This problem's got out of hand because of these nasty claims management companies””, because they have also been part of the system and have fed the process. Do I think that there is any need for claims management companies? No, I do not. Indeed, some companies involved in the miners compensation scheme lasted only 12 months, because they were wound up once they had harvested an area. Banning referral fees is a welcome step forward. Would I criminalise the practice? Yes, I would, because the principle that those who are injured in any way should receive compensation is right, yet those seeking access to justice—I am not talking about ““the consumer””—are not helped by claims handling companies, which just feed off the process. We in the Labour Government introduced the claims regulation authority. I disagree with my hon. Friend the Member for Hammersmith (Mr Slaughter), speaking from the Front Bench, because I believe that was the right step forward. I pay tribute to Kevin Rousell and others who helped to set that organisation up, because they introduced regulation for the first time in an area where there was none at all, as well as seeing off some of the most unscrupulous claims handling companies that were feeding off the back of the miners compensation scheme. However, I suppose I have some issues with the referral fee being banned, and I would like to give an example: the scandal of the Durham Miners Association and its association with Thompsons solicitors, which I have referred to in the Chamber before. One could argue that a referral was not paid in that case. However, the way the scam worked—I have described it before as a ““scam””, and I shall continue to do so—was that people had to pay a £20 fee to join the Durham Miners Association. They then had to sign an agreement whereby if they were successful, 7.5% of their compensation was paid back to the Durham Miners Association, even though every penny of the fees in such cases were paid by the Government. I want some clarity from the Minister on whether such cases would be covered by the provisions dealing with referral fees, because although there was no direct payment by the Durham Miners Association to Thompsons solicitors, there was, in fact, in the sense of the firm getting the cases, because on no occasion were its would-be clients told that they could have gone to any other solicitor and received the same advice and support for absolutely nothing. I would therefore like the Minister to clarify whether that practice will be outlawed under these proposals, because that case involved a lot of people being misled. I was pleased that, following pressure from the claims regulation authority and others, Thompsons had to pay back quite a lot of money—I think the total came to several million pounds—to claimants from whom money had been taken. Indeed, when they heard that they were paying fees for absolutely nothing, many of my constituents were shocked. I would therefore like some clarification on that issue. The other issue on which I would like some clarification is the role of the Law Society and its regulations. As I have said, we have all known that the scandal has gone on for many years, including before 2004, but if the change is to be robustly enforced, the Law Society has to send the clear message to its members that it will not sanction such practices. Another issue on which I would like clarification is that of selling insurance. The scandal of the miners compensation scheme related to referral fees being paid to industrial injuries claims companies such as IDC of Ashington. Many of my constituents thought that that was a firm of solicitors, but in fact it was selling on the claims to individual solicitors firms. Part of its scam was that people had to buy the insurance policy that went with the service. The claims handling company was getting a fee from the solicitors, as well as a payment from the insurance premiums. I congratulate the Minister on banning referral fees, but he must ensure that the multitude of scams that existed to hide the way in which referral fees were being paid before 2004 does not re-emerge. If this is going to work, he must ensure that those who dream up inventive ways of charging referral fees are looked into. I suggest that he talk to the claims management regulator, because it will have seen most of the scams that came to light in relation to the miners compensation scheme. My right hon. Friend the Member for Blackburn has also highlighted some of the scams, or inventive ways in which people can get round the regulation of referral fees. I welcome the ban on referral fees, and I wish the Minister's proposals well. I would, however, issue a word of warning in that he will need to look out for the various scams that people will come up with in order to get round it.