My Lords, this has been an extensive and interesting debate. I think it would be helpful to set out the reasons the Government seek to make this change. The recent report by my noble friend Lord Young of Graffham, Common Sense, Common Safety, and Professor Löfstedt’s independent review, Reclaiming Health and Safety for All, confirm that the perception of a compensation culture generates a fear of being sued. This, together with the confusion created by myths about health and safety, drives businesses to overimplement the law in an effort to protect themselves.
My noble friend Lord Phillips and the noble and learned Lord, Lord Hardie, asked about consultation—or rather the lack of consultation. In preparing his report, my noble friend Lord Young consulted 132 wide-ranging organisations representing relevant professionals, including personal injury lawyers, businesses and associated organisations. He also spoke to more than 100 individuals, including health and safety professionals, Members of Parliament, councillors and leading academics in the field of law.
The problem lies not with the legislation but with the way it is interpreted and applied. Illustrating this, in response to Professor Löfstedt’s review, the Engineering Employers’ Federation said:
“The current compensation system is serving the needs of neither employees nor employers and is the source of many of the media stories and public concern about excessive health and safety. It is slow, expensive and places far too much emphasis on record keeping rather than practical action to control risk.”
I am very grateful for the anecdotal evidence raised today by the noble Earl, Lord Errol, in this respect.
The noble Lord, Lord Browne, raised the issue of record-keeping. I believe he stated that record-keeping will not change, and still does what the law requires, so I think that he was asking what the problem is. I reiterate that there is clear evidence that business overimplements, going well beyond what the law actually requires.
Overimplementation does not lead, therefore, to better protection of employees. It means that employers are spending significant time and effort on activities which are not necessary or far in excess of legal requirements, resulting in significant additional unnecessary costs. Concern about the consequences of “getting it wrong” and confusion about what the law actually requires discourage businesses from exploring new opportunities to expand and diversify and consequently from taking on new employees, a point that I made in Grand Committee.
The Federation of Small Businesses stated in its response to Professor Löfstedt:
“A wider problem for small businesses is that many do not feel confident that they are compliant owing to confusion about what is absolutely necessary, and so feel the need to gold-plate the law to protect them”.
Examples of such gold-plating, according to a recent Better Regulation Executive survey, include a hairdresser unnecessarily paying £1,000 a year for portable electrical appliance testing, a micro-business paying £3,800 for a specialist health and safety consultant to do its basic risk assessment, and an electrical contractor paying £1,000 a month to a health and safety adviser. The impact therefore falls disproportionately on smaller businesses, often run by owner-managers who have less time and resources. This impact is significant for growth because such micro-businesses with fewer than 10 employees account for 96% of UK businesses and around 7 million jobs.
Some noble Lords have suggested that we should not introduce legislation merely to tackle a perception—a matter raised by the noble Lord, Lord Browne—but, as I have explained, the perception causes real problems which we believe require positive action. Clause 62 is one of a range of government reforms to tackle this perception of a compensation culture and to restore a common-sense approach to health and safety.
Amending the Health and Safety at Work etc. Act so that it will be possible to bring claims only for negligence is designed to ensure that responsible employers who have taken all reasonable steps to protect their employees will not be held liable to pay compensation for an accident that they could not reasonably have done anything about. Claims are a burden on employers not just because of the financial costs but due to the time and resources required to deal with them and, importantly, their negative impact on the wider reputation of a business.
This measure will not lower standards. Let me be clear: every death and serious injury at work is a tragedy for the individual, their family and friends. Happily, our record in the UK is a good one. In the 10 years from 2000 to 2010, the rate of fatal injuries fell by 38% and major injuries by an estimated 22%, and our overall performance is better than that of many other European countries. However, there is no room for complacency and we are committed to continuing to improve health and safety standards.
The Government do not accept the argument that this measure sends the wrong signal about the importance of complying with health and safety legislation; in fact, quite the opposite. This is about giving employers the reassurance to focus their attention on the things that have a real practical effect on controlling risks. In Grand Committee and again today, concerns have been expressed that this change represents a backward step by placing the burden of proof on employees and will make cases more difficult and costly to prove—the noble Baroness, Lady Turner, emphasised her views on this.
To be clear, the fact that someone has been injured at work does not and should not mean they are automatically entitled to compensation. Many health and safety duties require the injured employee to show fault on the part of their employer. Currently, claimants do not recover compensation in about 30% of claims. The cases that will be most significantly affected by this change are those which would have previously relied on an absolute or strict statutory duty, a point raised by some noble Lords today. In claims for negligence,
the claimant will have to show that the employer failed to take reasonable steps to avoid reasonably foreseeable risks to their health and safety, which led to the injury.
However, unlike in the days before the Health and Safety at Work etc. Act, there is now a codified framework for health and safety at work and a great deal of evidence and guidance in the public domain about hazards in the workplace. Employers are expected to take account of this in carrying out their risk assessments, and this body of information will form an important part of the evidence in this aspect of a claim. This means that injured employees are in a very different and much better position to obtain information about their employer’s actions than they were when the right to sue for breach of statutory duty was first established in the 19th century. I hope that this answers the question raised by my noble friend Lord Phillips in this respect.
The noble Lord, Lord Wigley, and the noble Baroness, Lady Turner of Camden, both raised the important point of whether the provision covers fatal and serious injury. The Health and Safety Executive will continue to investigate fatal and serious injuries. The existing statutory requirements will still be relevant as evidence in claims for negligence to help determine whether the employer’s approach was reasonable. The Health and Safety Executive will also continue to take a range of enforcement action in accordance with its enforcement policy statement, including serving notices of contravention and prosecution against employers who seriously breach the requirements of the criminal law.
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The noble Lord, Lord McKenzie, stated that we have not conducted a proper review, as did my noble friend Lord Phillips. The review proposed in Amendment 80B is similar to that suggested by Professor Löfstedt. This review would require detailed analysis across more than 200 health and safety regulations and would be complex to achieve as health and safety duties are variously expressed in the extent to which they are qualified. The likely result would be different approaches to civil liability being applied across the regulatory framework. This would add a layer of complexity to the existing system, leading to greater uncertainty for not only employers but employees about the duties that apply in respect of compensation claims.
The approach adopted to make a single change to the Health and Safety at Work etc. Act avoids these difficulties and provides a consistent approach to civil litigation across all health and safety legislation. This will be simpler for all to understand and is therefore likely to have more impact in tackling the perception of a compensation culture. On that note, extensive work has been done to update and simplify health and safety guidance to help employers, particularly in small firms, to better understand what the law requires and the practical steps they need to take to comply. For the reasons I have set out, the Government do not accept that the conduct of such a review would be beneficial and it would simply delay an important part of the Government’s wider package of reforms to the civil litigation system.
However, I should also remind the House that the clause contains the power to make exceptions. It is already planned to use this power to make an exception for pregnant workers. In the light of comments made today, I can confirm that we would be prepared to look at the possibility of other exceptions to deal with cases that noble Lords consider may present particular difficulties. This may give some comfort to the noble and learned Lord, Lord Hardie, who raised a question in this respect.
This measure is not about reducing the number of claims or reducing standards of protection. It is about establishing the principle that employers who have done nothing wrong should have the opportunity to defend themselves on the basis of having taken all reasonable precautions. We believe this is an important and necessary reassurance for employers that will help them manage health and safety risks in a sensible and proportionate way, while giving them confidence to develop their businesses into new areas and take on new employees.
The Engineering Employers’ Federation last week supported the reform as,
“a step in the right direction to help reverse the current civil litigation compensation culture”,
and helping to,
“reduce the perceived health and safety regulatory burden on business”.
In these challenging times it is important that we restore a common-sense approach to health and safety to support business growth without compromising the necessary protections for employees.
A number of other questions were raised by noble Lords. The noble Lords, Lord McKenzie and Lord Browne, raised the issue of potential challenges concerning European Union law. A number of legal points have been raised about this in debate, both in Grand Committee and today. I can reassure the House that the Government take these issues very seriously and that the legal position has been carefully considered. The Government’s view is that this amendment is consistent with our obligations under EU law. I reiterate that I wrote an extensive letter to the noble Lord, Lord Stevenson, on this matter. A copy of the letter is in the Library.
Under European law specifically, member states can generally decide what sanctions and remedies to put in place to enforce EU obligations, subject to certain rules. In Great Britain, health and safety obligations are backed by various enforcement powers and criminal sanctions, as well as the opportunity to claim for compensation in the civil courts, which will remain through the right to sue for negligence.
The noble Lord, Lord Wigley, raised the issue of negligent companies that may try to avoid their responsibilities. He may have some anecdotal evidence of companies that he would judge to be negligent. It is true that we do not have information about how many cases arise where employers have attempted to avoid their responsibilities when an accident occurs, but, depending on the circumstances, employees would be able to seek assistance from their trade union or make a complaint to the relevant enforcing authority. Allegations relating to breaches of health and safety legislation made to the Health and Safety Executive are investigated
in accordance with the HSE’s published complaints handling procedure. In some cases, the Advisory, Conciliation and Arbitration Service—ACAS—may also have a role.
The noble and learned Lord, Lord Hardie, tackled me on the numbers involved and the impact. I reiterate, as I did in Grand Committee, that there is indeed considerable uncertainty about the financial impact of this change and it has not been possible to quantify it. That directly addresses the question raised by the noble Lord, Lord Browne. This is due to the unavailability of relevant data, for example on the number of claims made that rely on strict duties and the level of damages awarded. In addition, a wide range of factors influence whether a claim is pursued, whether it is settled at an early stage—or, indeed, out of court—or defended, and the actions employers take to comply with the law. However, a small reduction in the number of claims made is anticipated.
The noble and learned Lord, Lord Hardie, raised an important question about the impact that that might have on the value of benefits that could be recovered with a view to those people who fall between two stools, if I may put it that way. It is true that I have said that those numbers would be very small, but we cannot precisely quantify that. Because the number of cases anticipated is small and many claims are low in value, the impact on the amount of benefits that can be recovered is also expected to be limited. It is not possible to disaggregate the amount because the benefits paid that would be subject to recovery on a compensation payment being made will depend upon the individual circumstances of the injured person.
Benefits paid as a result of an injury or disease for which compensation was paid are recovered for a period of five years or until a final settlement of the claim, whichever is sooner. NHS care costs can also be recovered and are subject to a tariff according to the amount of treatment. The amount that can be recovered is subject to a cap, currently £45,153. NHS charges are not recoverable in disease claims.
I thought it was important to address those important and direct questions directly. Having covered all the points, it is for those reasons that I hope that the noble Lord will withdraw the amendment.