My Lords, I draw the Committee’s attention to my entry in the Register of Members’ Interests. I am a non-practising member of the Faculty of Advocates of Scotland. I have not practised for in excess of 15 years and I have no pecuniary interest in this piece of legislation. However, I have some knowledge of the application of the duties imposed by the Health and Safety at Work etc. Act 1974 and regulations made thereunder. I support the question in the name of my noble friend Lady Turner for many reasons, most of which have already been articulated.
My noble friends have produced valid arguments about the effect of the Government’s proposed change to the Health at Safety at Work etc. Act. It will shift the burden of proof in a significant number of cases following almost a century of struggle to establish a fair division of the burden under the law. As we have heard, it will—I may come back to this in a moment and pose some specific questions to the Minister—in future shift the burden of supporting many people who are injured in accidents at work from the private insurance industry and compulsory employer’s liability
insurance on to the state. That seems to me significantly at odds with the Government’s overall ambition in relation to where the burden of costs should lie in the long term in relation to the public and private sectors.
Given my own practice and the information that many of us have obtained from those who still practise in this area, I believe that the measure will have a significant effect on the complexity that faces anybody who is injured in many accidents at work in the future. I think that the actual numbers are in dispute, but I will come back to the specific figures that have instructed this change. I understand from the Government that the relevant figure is 20,000 cases but I have no idea where that figure came from. As the Minister will realise in a moment when I draw his attention to some of his own publications, the Health and Safety Executive also has no idea how many cases this measure will affect but it will certainly shift a burden of complexity on to people. It will result in much more complex cases coming before the courts.
The information we have been given from the Association of Personal Injury Lawyers indicates that the measure will affect many thousands of cases, which will put a significant burden on the courts. We are already aware of the challenges faced by the courts in delivering public services and the delays that are being incurred. As I say, all the arguments that have been made are valid and I do not intend to repeat them. I certainly do not intend to repeat the argument made so effectively by my noble friend Lady Donaghy who mentioned the terrible circumstances in which people may be left, with no opportunity for redress in terms of placing the responsibility for compensation where it ought to lie following the sort of accidents that routinely happen in our workplaces.
The noble Baroness, Lady Brinton, is absolutely right: there needs to be a balance. However, with respect to her, I am not sure that the case that she brought to our attention had anything to do with the Health and Safety at Work etc. Act 1974. I am not sure that the individual case was exactly relevant, but that was not the point that she was making; her point was that there needs to be a balance. I agree with her, and would argue that, broadly, the balance is struck in the right place in relation to health and safety at work legislation between those duties that lie on employers for which the principle of reasonable practicability applies and those duties where there is strict liability.
The reason why it lies broadly in the right place is that this area of law has developed over a century. The HSE and all those who have worked in this area over that century have a real sense of where that balance should lie, broadly. It is not that difficult to explain why it is necessary. As my noble friend Lady Donaghy made clear, the relationship between employers and employees is not one of parity. There are very few workplaces where employers can say, “I’m worried about that machine and I’m not going to use it”, or alternatively, “I’m not going to use this piece of equipment you’ve given me, or these materials”. That is not how workplaces work; they work, normally, on the basis that people have an assurance that their employers will comply with the law and, if they are asking them to do
inherently dangerous things, there will be a strict liability on them and the employer will carry the can if it goes wrong—maybe criminally, but certainly in terms of civil liability. Because that may be an unfair burden on an individual employer, we pool the responsibility. All employers accept all these responsibilities, and we have a principle called employers’ liability compulsory insurance. It is compulsory; you have to insure yourself for millions of pounds in possible liability to your employee. So we share the burden across society by that process.
Interestingly, over the years of employers’ liability compulsory insurance, the information that the HSE has published indicates that in 2010 it cost in total about £800 million, out of about £30 billion of general insurance in this country. So it is a comparatively small amount of money and the insurance industry has never made any money out of it. In fact, when I was Minister for Employment in 2004, it was in crisis, because the industry sought to do something with it that it had not done for some time and disaggregate it from the package of insurance that it was selling employers. The industry discovered that it was not making any money and that it was a loss leader. But it made a lot of money off the rest of the insurance, so they sell employers’ packages.
There is no reason to believe that from the point of view of any one individual employer the shifting of this burden from strict liability to reasonable practicability will make a jot of difference to any individual employer in terms of the regulatory burden of having to pay his insurance premium. It will not go down, because he is already getting it for less than it costs the industry. So we will not reduce regulation in any way by shifting this burden. All that we will do is shift the cost of the consequences of these accidents from that part of the market on to the public purse, which will have another consequence for the Government. I am sure that they have thought about it and that the Minister will be able to tell us his assessment of it.
At the moment, we have a set of laws in this country that mean that if you have an accident and you become a burden on the public purse for a period and then settle the claim, you have to pay back the benefits. So we have a Compensation Recovery Unit. In the last year for which there are statistics, 2011-12, the unit recovered £75,245,271.28 from accidents involving employer-employee relationships. In total, it recovered about £138 million, and some of those may also have been health and safety at work claims. But somewhere between £75 million and £138 million is being recovered by the Government from compensation that is paid because of health and safety at work claims. How much of this will now not be recovered because the claim cannot be made? Apart from the possible burden on the National Health Service and on local authorities in caring long-term for people who are injured, how much will that cost? How much of the Compensation Recovery Unit’s £75 million to £130 million a year will not be recovered by the Government because of this change. What estimate did they make of that?
Another point is: why are the Government doing this? We are given different arguments. One of them is that there is a compensation culture. I have made some
references already to what the Health and Safety Executive has said about these changes but I draw your Lordships’ attention to the document I have in my hand, which is an impact assessment, Strict Liability in Health and Safety at Work Legislation. It is by the Health and Safety Executive itself. I assume that this document, which I got from the net, was presented to Ministers in the process of their assessment as to whether they should proceed with this change. It is not clear whether it was, because it is not signed or dated by the responsible Minister where it should be, but at the top it is dated 11 June 2012. It is a very instructive document because it goes through and assesses, in some detail, not only all the arguments for this possible change but all its potential consequences and tries to estimate them. It fails in every single regard.
I will read just one paragraph for the erudition of the Committee to make my point. It is paragraph 34, which is very germane. The Health and Safety Executive said:
“We assume in the absence of robust evidence that the existence of strict liability duties may contribute towards any over-compliance that exists as a result of the general perception of a ‘compensation culture’. We are however also aware that the network of influences on attitudes and behaviour towards risk is complex”.
In that one sentence, it shoots the feet from the only argument that the Government have to date put into the public domain as to why this is necessary. It is not that there is a compensation culture, because the Health and Safety Executive says in the introductory paragraphs of this report to the Government—and it is the Government’s agency—that is not clear whether this actual culture exists. Paragraph 2 says:
“The ‘compensation culture’ (or the perception of it) in the UK has been the subject of several reviews over the last few years, but no clear evidence has been presented for its existence”,
so it kicks into touch the idea of a compensation culture and then says that it is a perception of that culture that is the argument.
As I understand it, the argument from Professor Löfstedt, which the Government have adopted, is, first, that even if there is not a compensation culture there is a perception among some employers out there that there is. They are overcomplying in relation to health and safety legislation, where there is strict liability, because they are concerned about the possibility of a compensation culture that they think exists. We are starting off on the basis that there is no proper evidence for the fundamental underpinning of this argument in the first place—at least, there is none that the Health and Safety Executive can find in the almost 40 pages of its impact assessment report to Ministers.
Secondly, if the problem is that some employers, particularly those whom Professor Löfstedt spoke to, have a perception that there is such a culture and that that is affecting the way they behave, the answer is to educate them. Of course, that is part of what Professor Löfstedt recommended. What is conspicuous by its absence in response to Professor Löfstedt’s report is a serious programme of educating employers not to be afraid of a compensation culture, which apparently does not exist, but to apply the law in the way in which they ought to.
What is the consequence of this? It is that Professor Löfstedt says, “There is a perception of a problem here”, and that if the problem is right we need—
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