New Clause 1 — Specified conditions for exemption

Orders of the Day – in the House of Commons at 6:15 pm on 17 July 2006.

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Votes in this debate

'The Secretary of State shall make regulations about the specified conditions for exemption in section 5 and any Code of Conduct issued in connection with such conditions.'.— [Mr. Heald.]

Brought up, and read the First time.

Photo of Michael Lord Michael Lord Deputy Speaker (Second Deputy Chairman of Ways and Means)

With this it will be convenient to discuss the following: New clause 2— Offence of contravening specified conditions—

'(1) A person commits an offence if he contravenes the specified conditions in section 5 and any Code of Conduct issued in connection with such conditions.

(2) A person who is guilty of an offence under subsection (1) shall be liable—

(a) on conviction on indictment—

(i) to imprisonment for a term not exceeding two years,

(ii) to a fine, or

(iii) to both; or

(b) on summary conviction—

(i) to imprisonment of a term not exceeding 51 weeks,

(ii) to a fine not exceeding level 5 on the standard scale, or

(iii) to both,

(3) An offence under this section is "an offence committed under this Part" for the purposes of section 7.'.

New clause 5— Injunction restraining exempt person—

'(1) The Regulator may apply to the court for an injunction restraining an exempt person from providing regulated claims management services if he is in contravention of the specified conditions in section 5 or any connected Code of Conduct.

(2) In subsection (1) "the court" means the High Court or a county court.'.

New clause 10— Disapplication of Part 2

'The provisions of Part 2 of this Act shall not apply to legal services offered or arranged by Trades Unions for the benefit of their members or members' families.'.

New clause 11— Compensation for coalminers—

'(1) Where costs have been paid by the Government under the schedules of any prescribed claims handling agreement, any additional monies levied from individual claimants shall be repaid immediately by the receiving agent to the claimant.

(2) For the purposes of this section—

"claims handling agreement" means—

(a) the 1999 agreement between the Union of Democratic Mineworkers (UDM) and the Government on chronic obstructive pulmonary disease,(b) the 1999 agreement between Vendside Ltd and the Government on vibration white finger, and(c) the 1999 agreements on vibration white finger and chronic obstructive pulmonary disease between the claimants' solicitors group and the Government;

"additional monies" includes membership fees, money in lieu of membership fees, marketing fees or other related charges;

"receiving agent" means the solicitor or claims handler who received monies from the individual claimant.'.

Government amendments Nos. 11 and 12.

Amendment No. 15, in clause 14, page 9, line 8, at end insert—

'(6) The first order made under section 5 may not be made unless a draft has been laid before, and approved by resolution of, each House of Parliament.

(6A) An order under section 5 which has the effect of removing or restricting an exemption from section 3(1) may not be made unless a draft has been laid before, and approved by resolution of, each House of Parliament.'.

Amendment No. 16, in page 9, line 9, in clause 14, leave out 'an' and insert 'any other'.

Amendment No. 5, in the schedule, page 12, line 13, at end insert—

'(1A) A code of practice issued under subsection (1) shall include details of the advertising standards for providers of claims management services.'.

Photo of Oliver Heald Oliver Heald Shadow Secretary of State (Justice), Shadow Secretary of State

New clause 1 would ensure a statutory basis for the conditions in clause 5, so that a decision to exempt an individual or body from the regulation to which claims farmers are subject would have statutory form. The amendments give teeth to the code of conduct that the Minister proposes for those who are exempt from regulation.

I agree that some bodies need to be exempted from part 2, and it is right that organisations that are covered by other regulators—for example, insurance companies, insurance brokers and their agents are covered by the Financial Services Authority—should be exempted, because there is no point in having duplicate regulations for one body. However, we should ensure that everyone plays by the same rules and is subject to similar standards. We need a clear set of conditions to follow when deciding on the issue of exemption; it should not just be the say-so of the Secretary of State.

In January, in a written answer, the Under-Secretary confirmed—and Baroness Ashton said the same—that the Government intend to exempt trade unions by means of secondary legislation. The Constitutional Affairs Committee criticised that decision in its report, "Compensation culture". It said that it did not "see any benefit" in exempting trade unions, and I agree, but the Minister has said that the Government will not go down the route of regulating trade unions. There will be a different system for them—a code of conduct, which will be voluntary.

I accept that trade unions play an important part in society and that they have, like many who manage claims, helped numerous people to obtain the justice that they deserve. However, like some claims management organisations, some trade unions have abused their clients' trust for their personal gain. I am not alone in thinking that. John Mann has referred to his constituent, Mrs. Beckett, who approached Raleys, a firm of solicitors. She was told:

"'NUM funding is available only through this firm'".

Mrs. Beckett had nothing to do with the National Union of Mineworkers. She had not gone through the NUM; she just contacted Raleys using the Yellow Pages. As we heard from the hon. Gentleman, she was told:

"'You are of course at liberty to explore other types of funding arrangements, however we cannot guarantee that they will protect you from the need to pay any expenses or from the amount that your solicitor may recover from your compensation'"— to which the hon. Gentleman said, "Not true!" He referred to another of his constituents, Mr. Dunstan, who was told:

"'If you do not wish to take up the option of Union backing then it will be necessary for us to consider alternative funding arrangements. If you are not eligible for legal aid then it will be necessary to discuss funding your case by either private funding or through a conditional fee agreement.'"—[ Hansard, 8 June 2006; Vol. 447, c.482.]

We should not forget the other examples provided by the hon. Gentleman, who concluded that they showed that the scandal of the miners' compensation continues.

Mr. Jones was explicit about the problem. He agreed with me:

"Mr. Heald asked whether trade unions should be covered by the Bill if they act as claims handlers. I believe wholeheartedly that they should be." —[ Hansard, 8 June 2006; Vol. 447, c.495.]

Last November, The Times published an article that exposed the deceptive and disingenuous actions of the NUM and stated that

"elderly men suffering from chest diseases and a crippling hand condition were advised to allow the National Union of Mineworkers to fund their legal claims in return for paying part of their eventual compensation to the Union. But what the miners were never told was that in reality, the Government—and not the union—was paying the legal bills for successful claims."

Photo of John Gummer John Gummer Conservative, Suffolk Coastal 6:30, 17 July 2006

The regulations from which the trade unions are exempt are not onerous, but they are necessary to protect the public and the individuals concerned. Why should the regulations not apply to trade unions, if they are suitable for everyone else?

Photo of Oliver Heald Oliver Heald Shadow Secretary of State (Justice), Shadow Secretary of State

I fully accept what my right hon. Friend says. The Select Committee took the view that everybody who acts as a claims handler should be treated in exactly the same way. However, we argued about the subject in Committee, and I lost the vote. The Government said, "No, we are not prepared to do that; we will exempt trade unions, on conditions." That is what clause 5 allows: exemptions on conditions.

The Minister has told us that a code of conduct—of which I have seen a draft—will apply to trade unions, but the problem is that there is absolutely no method of enforcement, whereas under the regulation, criminal offences are created. The police could intervene, and there are powers of investigation, search and seizure, which are necessary to investigate a case in which money is taken from the most vulnerable people in our society. However, the code of conduct for trade unions, we have been told, is simply to be administered by the Trades Union Congress. If an allegation is made, it appears that Brendan Barber will investigate it. Whatever one thinks about Brendan Barber—I believe that he is a fine servant of the union movement—the fact is that he is not a skilled investigator, and he will not have any powers of investigation.

By all means let us have a code of conduct, but let us make it statutory. If there is a breach of the code, let us make it an offence. The Bill should say that an injunction can be passed to stop a union continuing to handle claims if it treats its claimants in an inappropriate or improper way. I believe that that is a fair response to the Minister's point of view.

Photo of Kevan Jones Kevan Jones Labour, North Durham

I agree with some of the hon. Gentleman's points, and I have some criticisms to make of the draft code of conduct, because it is full of holes; I shall refer to that later. As I said to the hon. Gentleman in Committee, it will not just be left to Brendan Barber to enforce the code of conduct, because if people fall foul of the code of conduct to which they have signed up, they will be subject to regulation and the full force of the Bill. I agree with the hon. Gentleman that the code of conduct should say that specifically, because it does not do that at the moment.

Photo of Oliver Heald Oliver Heald Shadow Secretary of State (Justice), Shadow Secretary of State

Yes, the penalty on which the Minister relied was the notion that if there were breaches of the code of conduct, Ministers could act and subject the trade unions to regulation. Of course, the problem is: how does one uncover the breaches if there are no teeth and no regulatory powers? May I ask the hon. Member for Bassetlaw how easy he found it to obtain information, documents and things that he needed when he was investigating Vendside and the Union of Democratic Mineworkers?

Photo of John Mann John Mann PPS (Rt Hon Richard Caborn, Minister of State), Department for Culture, Media & Sport

When reading the code of conduct, it is always good to put in the words "Union of Democratic Mineworkers/Vendside" instead of "union" and see how it reads. The hon. Gentleman said that the regulator would be the TUC and Mr. Brendan Barber. In the draft code that I have seen, far from the TUC regulating, unions such as the Union of Democratic Mineworkers would appoint or even pay their own self-regulator.

Photo of Oliver Heald Oliver Heald Shadow Secretary of State (Justice), Shadow Secretary of State

The hon. Gentleman is right. I was simply quoting what the Minister told us about the TUC in Committee. It is not even as good as that, as the hon. Gentleman says. Inspector Barber is not the answer. If one looks at the sort of cases that have come before the Solicitors Disciplinary Tribunal, where we have seen the NUM banking £10 million from the compensation scheme on the basis that solicitors had been representing that it was funding actions which it was not, one can see that there is a real problem that needs addressing.

Geoffrey Williams QC, who represented the Law Society, told the tribunal:

"It is not accepted that the only way in which these men could be represented as they were was by union agreement. They may have chosen to do so, but I say that was not an informed decision."

He went on to say:

"The claims documents triggered the retainer and there was complete failure to explain at the outset why the arrangement with the union was either necessary, which I say it was not, or for their benefit, in which case the benefits were not explained."

Mr. Barron has described that as

"a scam from day one."

He is a former senior NUM official, and he said:

"The NUM has not put a penny into fighting these cases".

There is no justification for unions not to be properly regulated. The Minister acknowledged that trade unions have abused their position. She said:

"I know of and agree with the genuine concerns about the activities of a small number of trade unions"—[ Hansard, 8 June 2006; Vol. 447, c. 428.]

If that is the case, is it satisfactory to have an unenforceable code of conduct with the arrangements left to the trade unions, when others who are in exactly the same position will be faced with the full panoply of the law, proper investigators, the police, charges, powers of entry—all the things that I have mentioned?

New clause 2, the second of my new clauses in the group, would make it a criminal offence to breach the conditions for exemption, or the code of conduct, for an exempted body. If a body breaches the code of conduct, those involved would face penalties similar to those faced by a regulated claims management company. In Committee Paddy Tipping admitted that the trade unions had acted immorally. He said:

"I make no apology for UDM/Vendside, or for some sections of the NUM. I think that other trade unions have acted irresponsibly as well."—[ Official Report, Standing Committee E, 27 June 2006; c. 118.]

As I mentioned, the Minister acknowledged that the trade unions had acted irregularly. The hon. Member for North Durham made a passionate and persuasive speech outlining the numerous cases of abuse. Many Members from all parts of the House accepted that the manner in which the trade unions had conducted themselves was, at least, disappointing.

It is wrong to refuse to face the facts and to argue that the trade unions should be exempted simply because there are a small number involved. If I, as a lawyer, said, "Very few firms of solicitors misbehave. They should not be regulated at all, and we would not have any of the disciplinary powers that the Minister is pressing upon the legal profession in her draft Legal Services Bill", I would be laughed out of court. It is risible. Are we to be able to say one thing of lawyers and another of trade unions? If these are responsible organisations, surely they ought to be regulated in a responsible and sensible way.

Photo of Kevan Jones Kevan Jones Labour, North Durham

Some would suggest that the Law Society has been the best trade union in history in terms of looking after its members and avoiding people being brought to book when they should be. Does the hon. Gentleman agree that the scandal that has gone on in Durham and other places could not have gone on had it not been for the collusion of the people in his profession to whom he is referring?

Photo of Oliver Heald Oliver Heald Shadow Secretary of State (Justice), Shadow Secretary of State 6:45, 17 July 2006

It is true. To its credit, the Solicitors Disciplinary Tribunal has heard those cases and made those findings, and there are more to come. Given that that system exists for solicitors and is to be tightened up, which we all accept is necessary, is it right to argue that nothing of that sort should apply to the trade unions? One union has trousered £10 million through just one firm of solicitors.

Photo of John Mann John Mann PPS (Rt Hon Richard Caborn, Minister of State), Department for Culture, Media & Sport

The hon. Gentleman mentioned decisions of the Solicitors Disciplinary Tribunal. Does that not highlight the need to strengthen the law whereby a consumer complaint can go through a caseworker, to an adjudication panel, to a solicitors disciplinary tribunal, as is the case with Raleys—and now it has the option of appealing to the High Court—whereas the consumer has no option but to appeal to the legal ombudsman at the very first stage? Should there not be more powers to allow the Law Society immediately to strike off solicitors such as Raleys, who refuse to abide by the Solicitors Disciplinary Tribunal's decisions?

Photo of Oliver Heald Oliver Heald Shadow Secretary of State (Justice), Shadow Secretary of State

The hon. Gentleman and I do not have much of a dispute. We agree that there should be firm punishment, but I think it needs to apply to everybody who is involved in the business of claims management services.

Photo of John Gummer John Gummer Conservative, Suffolk Coastal

Does my hon. Friend take the point made by John Mann, which is a good one? If one substituted something else for the words "trade union", what light would that throw on the legislation? If one put in the word "solicitors" or the names of particular trade unions, such as the NUM or the UDM, the whole sense becomes clear: a particular group is being exempted from even cursory coverage by the law when there is no reason or rationale for that. It is not because they are subject to some other regulation; it is simply because the Government do not want to upset them. That worries me, and many other people, a great deal.

Photo of Oliver Heald Oliver Heald Shadow Secretary of State (Justice), Shadow Secretary of State

My hon. Friend and the hon. Gentleman make an important point. If we put any other class or category of organisation in that bracket, it would look extraordinary.

New clause 5 gives power to the regulator to apply to the court for an injunction against any exempted individual or body to stop it providing claims management services where it has broken the exemption conditions or the code of conduct. That would ensure speedy protection for the consumer and fits in with what would apply to a regulated body. I believe the approach that I am adopting fits in with the concept of rights and responsibilities that the Prime Minister so often talks about. If a body abuses its exempted position, it has clearly failed to act responsibly towards its consumers. If that is the case, the regulator should have the power to ask courts to issue an injunction.

Photo of David Hamilton David Hamilton Labour, Midlothian

I have listened carefully to the hon. Gentleman. Can he give me an example of any other panhandlers or lawyers who raise cases on behalf of the work force that they represent? For example, it took a lot of money for the NUM to go to law on industrial deafness and vibration white finger cases. The NUM has raised £1.2 million in certain areas—remember, it is a federation of unions—and requires £2.4 million for new litigation. What organisations other than unions do that?

Photo of Oliver Heald Oliver Heald Shadow Secretary of State (Justice), Shadow Secretary of State

The hon. Gentleman should come with me to the annual awards for the Legal Aid Lawyer of the Year. There he would see some very inspiring, passionate lawyers who have taken on cases, often for free, to help people. That is a fine thing. Insofar as the trade unions help people, that is an excellent thing and nobody would dispute it. Many people do excellent things, but they are still regulated. That is what is wrong with the Bill—the idea that the unions are being let off.

Mr. Dismore has suggested in new clause 10 that there should be a complete exemption for

"legal services offered or arranged by Trades Unions for the benefit of their members".

Perhaps he did not realise that the Bill already contains such an exemption. He has worked for claimants' solicitors for many years and knows about the matter. I understand that he worked for many years for one of the firms that has been most heavily criticised.

If one examines what has happened to those firms of solicitors, it is a sad story. A trade union solicitor in league with Durham NUM has argued in a briefing to Members of Parliament that such solicitors and trade unions should be exempt, but the hon. Member for North Durham, who knows the area and the circumstances, has explained that they are involved in worrying activities. Millions of pounds have been taken by unions and solicitors.

In an example provided by the hon. Member for North Durham, solicitors offered people the opportunity to pay £20 to become associate members of a union, which does not provide any of the rights of union membership and simply allows people to be known as associate members. People then signed a form saying that 7.5 per cent. of their final settlement would go to the union; the money is not kept by the solicitors but is passed on to the union, which received £10 million in one case. The form stated that that was done to indemnify the individual against any costs, but the Government pay all the costs. The situation is extraordinary.

Why would the Government do that? We know that they have close relationships with the trade unions and at least one of those firms of solicitors, because in recent years the Labour party has received £90,000 in funding from the NUM and £75,000 from a firm of solicitors, Thompsons. Against that background, it is worrying that such people are being exempted.

Photo of Kevan Jones Kevan Jones Labour, North Durham

May I clarify what the hon. Gentleman has said about £10 million? I suspect that in the case of Durham, the figure is about £3 million. If his point about donations to the Labour party is correct, that is very bad business on the part of any party, because that firm may have given the Labour party £75,000, but the Government have given it nearly £100 million in fees.

Photo of Oliver Heald Oliver Heald Shadow Secretary of State (Justice), Shadow Secretary of State

Perhaps I am too suspicious. I accept that the figure of £10 million relates to Raleys and the example in The Times. The hon. Gentleman is right: £3 million is the figure that he put on what happened in Durham—but that is still a lot of money. The way in which the matter is working out is extremely worrying.

I will be interested to hear the hon. Gentleman's explanation for new clause 11, which is an important contribution. As I have said, it is not right to exempt anybody, but if one does so, it should involve a proper statutory scheme and proper enforcement—some teeth. The Government proposal does not include any enforcement, which I believe is quite deliberate.

Amendment No. 5 concerns the advertising code of practice. The Bill provides that there should be a code of practice to cover claims management services. Much of the advertising used by claims management companies is targeted at the less well-off, and the document, "Better Routes to Redress", which was prepared by the Better Regulation Commission, includes examples. One advertisement featured a young women looking at a sports car and saying, "I've always wanted one of those, and now I've had an accident I can have one." The document rightly concludes that such advertising is entirely inappropriate in personal injury cases, where damages are limited and aimed at putting clients back in the position in which they would have been if they had not suffered wrong. I can provide numerous other examples, and I hope that the Minister will assure us that the code of practice for claims management companies will cover the sort of appalling advertising to which I have referred.

Photo of John Mann John Mann PPS (Rt Hon Richard Caborn, Minister of State), Department for Culture, Media & Sport

I shall start by rebutting the tongue in cheek but mischievous remarks made by Mr. Heald, who has tried to relate union money for the Labour party to this Bill and exemptions—good, bad or otherwise.

I am uniquely positioned to rebut the hon. Gentleman. In 1996, The Sunday Times described me as "the bagman" between the unions and the Labour party. The unions played a particularly valuable role in removing the hon. Gentleman's party from office in 1997 by ensuring that union money, which is determined in statute by legislation on political levies and political ballots, was channelled into the choices of union members. I appreciate that he is sore about that, but it has nothing to do with the issues before us.

I want to refer to the draft regulations that the Minister has been considering. I appreciate that she has rightly spent her scarce but valuable time on new clause 13 on mesothelioma, which means that she has not had the opportunity to put time and effort into the draft. Hon. Members on both sides of the House are thankful that mesothelioma has been her priority, but it means that the draft contains some weaknesses.

There is one matter that the Minister can easily clarify, which would solve a core problem with the draft. The introduction discusses exempting trade unions in relation to services provided to their own members. If the definition of "members" is specified, many of the problems will disappear, because union members, as defined by law, have a series of forms of redress that are not available to other consumers. First, they have the certification officer, who is a regulator to whom they can go on matters that they are unhappy about. Secondly, they have the structures of their union and the ability to participate in decision making and democracy, which is unlike any other organisations that we have discussed and which, again, is covered by statute. Thirdly, they have a form of redress—the common law and an injunction—under the Employment Act 1992, if they feel that their union is acting outside its rules. The union member, as currently defined in statute, has a particular series of rights, which are not available to any other consumer. I put it to the House that the combination of those three factors is greater than any regulatory powers.

Photo of Kevan Jones Kevan Jones Labour, North Durham

Does my hon. Friend agree that this is a crucial point, given that certain unions—for example, Durham NUM—have abused the system by inventing associate members, a category that has no legal definition in law, leaving people with no recourse under the trade union legislation?

Photo of John Mann John Mann PPS (Rt Hon Richard Caborn, Minister of State), Department for Culture, Media & Sport

My hon. Friend is absolutely right. The scandal of what happened with miners' compensation is that union members got the service for free but non-members, of whatever category, did not. UDM members, for example, got the service expressly for free. The people who had rights of redress got it for free, but the rest had to pay. The joining fee, under different guises, became the contribution that the UDM attempts to justify. By clarifying the question of membership, the Minister will make her life, the life of her Secretary of State, and the lives of their successors significantly easier. It is not true that there is a big problem with unions and union members in relation to the handling of industrial injury and industrial disease matters. There are not even small problems in relation to how other unions are handling it. We have to deal with this scandal and with another scandal—currently theoretical but potentially actual—that is important in this context.

Will the Minister clarify whether a regulator is to be appointed immediately? That would help us easily to define what falls inside self-regulation and what falls outside it. If that does not happen, the Minister will have a series of continuous problems.

We start, however, with the draft code. I am not sure who worded it, but paragraph 3(1) is interesting. It states:

"The involvement of any subsidiary companies in handling a member's claims (whether owned wholly or partly by the Trade Union) should be disclosed."

What use is that? I have here a sheet of paper from a subsidiary company called Vendside that is wholly owned by a trade union—the UDM. In other words, as drafted, the code would legitimise the practices of the UDM and Vendside, because it is disclosed that the member will be going through Vendside and paying their fee to it. Disclosure is an issue, but it is not the key issue. The key issue is whether the money should be deducted. Paragraph 3.2 says:

"The information given by a Trade Union to a member about arrangements with third parties should be as comprehensive and clear as possible, but need not involve the disclosure of commercially sensitive information."

That creates a catch-all whereby all relationships with solicitors, even beyond scandalous organisations such as the UDM and Vendside, can be hidden away. Why should not the member know what is going on? The catch-all of commercially sensitive information creates an enormous loophole in the draft code.

Let me give one example to show how bad it could get—that of the UDM. A third party that was never disclosed to the members as commercially sensitive, one might say, was a firm called Indiclaim. Money belonging to a swathe of UDM claims victims—non-members who have gone through the UDM—has gone from the solicitor to a firm called Indiclaim, but the victims knew nothing about it. The money was paid by the solicitor, but they might want to question what the marketing and vetting fee was. They might wonder about this firm, Indiclaim, which was vetting their claim. If they were to probe deeper they would find that it is owned by one of the employers—the manager of Vendside. If they had happened to stumble on various minutes meetings involving the UDM, Beresfords—the precursor to Indiclaim—and a company called Walker and Co., they would see a swathe of financial arrangements between the solicitor and UDM Vendside of which they were unaware, with money going in six separate ways. Again, that could be described as commercially sensitive information. That loophole needs to be removed.

Photo of Kevan Jones Kevan Jones Labour, North Durham 7:00, 17 July 2006

Does my hon. Friend agree that that could also extend to the relationship between trade unions and solicitors in terms of payment of referral fees and other inducements for a trade union to put work with a particular solicitor, thereby negating the whole idea of a code, which would be the openness, honesty and transparency of the relationship between a recognised trade union and a solicitor?

Photo of John Mann John Mann PPS (Rt Hon Richard Caborn, Minister of State), Department for Culture, Media & Sport

My hon. Friend is correct. Indeed, transparency is in the interests of the trade union and the solicitor. The whole idea of a loophole as regards commercially sensitive information is a non-starter—there is no rationale for it whatsoever.

Paragraph 5 of the code refers to a third party. Who determines the identity of the third party, who appoints the third party, and who pays the third party? That would create a problem for any decent trade union, never mind a rogue trade union. Who would the UDM appoint as the third party to look after consumer complaints? One could come up with various suggestions. I suspect that if a union is doing something fundamentally wrong—in this case, ripping off tens of thousands of elderly miners and widows—it is unlikely to appoint a third party to handle complaints that is anything other than particularly well connected and sympathetic to it and to its aims. The ability to appoint a third party without further definition is a weakness.

I remind Members that, whether we like it or not, the UDM is a certificated trade union and falls within this definition. We therefore need to ensure that the Bill and the codes of practice that go with it will fit the bad apple as well as the other 98 per cent. with whom there is nothing wrong. That is the dilemma that we face. We cannot afford to allow a renegade union such as the UDM, which has systematically been robbing my constituents and others, to get away with it—and even potentially to be able to justify it, and to have their expensive solicitors justify it—because of a lack of tightness in the wording of the draft code.

The next problem with the code concerns redress. I have here the solicitors practice rules from 1990, with 38 pages of detail. Labour Members, and perhaps others, have been critical of the Law Society. I have seen a significant improvement in how it has handled complaints over the past year, particularly since I had to refer it and certain cases to the legal ombudsman, who produced a very critical special report. I made a whole series of complaints on behalf of my constituents about a firm of solicitors called Moss—one of the UDM solicitors. We not only need details about the regulations but about rights of redress. There is no point in having regulation without a clear right of redress. If, under the new regulatory regime, with self-regulation built in through the code, someone wants to challenge deductions that were wrongly made, it is essential, especially for people falling within self-regulation, that the regulations are watertight. That means having the right of redress, which is a basic consumer right. The Law Society learned that over the years and now specifies the amount of redress and how it should be funded.

These cases are unusual. The volume of cases going to the Law Society is, to be fair, very unusual and the sheer volume has caused great problems. There will not be a great volume, however, in respect of ordinary, decent trade unions, which do not have many such complaints. Few complaints are made to the certification officer in the first place, irrespective of whether they are listened to and acted on. Other than the scandal of miners' compensation, we are not talking about a large volume. That should be borne in mind when we are deciding whether to go for self-regulation or to impose regulation. A consensus should emerge within the House that unnecessary regulation and too much Government regulation do not represent the way forward.

As I have argued on several occasions in the past and certainly in respect of an organisation such as the UDM, the definition of membership should provide the ability to ensure that claims handling is regulated by the regulator and that whatever is done for the real members defined by law is covered by self-regulation. I would be satisfied with that. My definition of claims handling for trade unions would arise where they go beyond their existing members and start to scout out, as the UDM and Vendside did, for further people—perhaps for ex-members or members of a former union or widows. Straightforward definitions help to solve many of the problems that lie within a code of conduct, however it is worded.

Photo of Oliver Heald Oliver Heald Shadow Secretary of State (Justice), Shadow Secretary of State

Is the hon. Gentleman arguing that where membership does not include associate members, all the abuses that we have heard about—including the £20 associate members—would be perfectly okay and would not require any regulation at all?

Photo of John Mann John Mann PPS (Rt Hon Richard Caborn, Minister of State), Department for Culture, Media & Sport

No, the issue is very straightforward. The UDM charged a fee. Let me explain how it worked, as it is very interesting. As it was challenged, that union tried to twist its way into getting additional legal advice. I have with me a form from one of my constituents. It says that if the claim is successful,

"I will pay to Vendside Ltd, who administer these Claims, a fee, to cover the cost of pursuing this Claim on my behalf", and it then spells out the fee rates. Yet Vendside Ltd and the UDM were not paying anything towards the costs. They dealt with the cases under the claims handling agreement and registered automatically. For reasons that have never been explained to me, they even had their own claims handling agreements: one for vibration white finger from January 1999 and one for chronic obstructive pulmonary disease from September 1999. No one has ever explained at all—let alone to my satisfaction or even my dissatisfaction—why that union should have had separate claims handling agreements and why a Minister chose to sign them. I do not even know which Minister signed them. Nevertheless, I shall keep burrowing away with questions on the issue; who knows, one day I might get to the truth of the matter.

Photo of Michael Clapham Michael Clapham Labour, Barnsley West and Penistone

Does my hon. Friend agree that the signing of that separate agreement was the basis of many of the problems that arose under the coal claims handling scheme?

Photo of John Mann John Mann PPS (Rt Hon Richard Caborn, Minister of State), Department for Culture, Media & Sport

If one were always the optimist, one would say that signing that agreement led directly to the Compensation Bill, so there is some light at the end of the tunnel—except perhaps if one is running Vendside. I would certainly expect my constituents to bring in many claims. Just as a policy decision allowed the backdating to 1999 of complaints for double charging against solicitors under the miners' scheme and made complaints admissible to the Law Society, so it is important to clarify whether the regulator, in setting a regime for claims handling, would be expected to take cognisance of comparable bodies—in this case, the Law Society. I would be grateful if the Minister clarified that.

The Vendside case is particularly important. About 15 to 20 per cent. of the people involved, because of the agreement that the Government signed, never went through a solicitor. Uniquely, the claims handler, Vendside, took the claims forward, so the only remedy has been civil law. There has been no Law Society remedy, even though it was beginning to work very satisfactorily for all other cases. I do not envisage further civil actions against anyone other than the UDM and Vendside, but 15 to 20 per cent. of people did not have access to justice or consumer rights.

The Bill becoming an Act is fundamental to allow those 20,000 to 30,000 people the same access to justice and consumer rights as would have applied if their cases had been handed to a solicitor. As far as cases dealt with by Moss, Ashton Morton Slack and Beresford solicitors are concerned, no one can move in my office for all the cheques arriving from companies to pay my constituents who had paid the Vendside fee in circumstances where it was wrongly and deliberately suggested to them in writing that the UDM was paying costs of their claims. Those people are now getting justice and I want the Bill to provide an exact parallel for the minority of people whose consumer rights have been denied and who have had only the remedy of civil action.

Where an organisation is more than happy to spend large amounts of money on expensive lawyers, it is important to remember the small man or woman. We may be talking about a retired miner in his 80s or a miner's widow in her 90s who have wrongly had money deducted and who have to fight against the might of Vendside, with all the money it acquired. Vendside is quite happy to throw its money away to try to stop the individual. What Vendside actually did—following legal advice, I suspect, but who knows; perhaps it will write and tell us—is change the forms. In fact, the forms changed five times; I have seen five variations. At some stage, it became a fee in lieu of membership.

That is where the question of membership is fundamental. My constituents who were not members of the UDM, who worked in another trade or had retired or who were not classified legally as members got stung in different ways, but the principle is the same. The point was to put money into that organisation for nothing. The Bill must immediately resolve that sort of consumer complaint and allow people a remedy so that they can pursue justice for themselves.

Mining cases are not the only ones. We are talking theoreticals, but this is not an absolutely theoretical, because a political party—the British National party—has attempted to jump on the back of industrial injury claims. In this case, we are talking about ceramic industry claims from the Potteries. Other hon. Members may have more up-to-date information than I have, but I understand that there is an intention to form a trade union. Whether it gets certified is out of our hands, because it will be determined by a certification officer. It is probably theoretically possible for the BNP to set up a trade union that could be certified. The BNP attempted with Beresfords solicitors to take claims and act as a claims handler in order to recruit through the union rather than straightforwardly to the BNP, as it had tried before. That is a real danger and we need to ensure that we do not fall into it. That is particularly the case in respect of a letter from Beresfords about what had happened in Committee. Beresfords immediately wrote to me to spell out that it had

"formed no connection with the BNP at the time, we certainly had no intention of forming such connection in the future."

That actually makes matters worse, because Beresfords had obviously been hoodwinked by the BNP: the BNP was advertising its name, and it did not even realise that that was happening, as it spells out in the letter. That could happen in the context of the BNP setting up a trade union and attempting to get it certified, so defining what are claims handlers and what are not is vital, as is defining membership.

I also want to make some remarks about all the people who had money deducted in miners' compensation claims, because there are many of them. Tens of thousands of people have had money deducted—certainly more than 50,000 and, although it is hard to give an accurate estimate above that, there are probably many more. Let us take the example of my own constituents. I have already had money paid back by solicitors to more than 600 of them, and that number is increasing rapidly week in, week out. The list of solicitors who have been forced to pay back money—some, certain people would say, as a voluntary good-will gesture, others following Law Society adjudications—is phenomenally long. Almost 40 firms of solicitors have now had to pay back money.

Photo of Kevan Jones Kevan Jones Labour, North Durham 7:15, 17 July 2006

I concur with my hon. Friend's comments that the Law Society is getting better, but is not one of the problems with it that many firms of solicitors only pay back money to people who complain, and there are possibly tens of thousands of people who do not know that they have been hoodwinked—robbed, in my opinion—by a firm of solicitors? They will never get that money back unless someone forces those cowboys to pay it back.

Photo of John Mann John Mann PPS (Rt Hon Richard Caborn, Minister of State), Department for Culture, Media & Sport

My hon. Friend is right. The reason for that is that many people fear that, when they sign a contract, it is legally binding. Some such people are taking on large firms of solicitors who directly deducted money for themselves—we are not talking about third parties. Let me give some examples of those who directly deducted money for themselves: Thompsons solicitors took £285 from one of my constituents, and Richmonds solicitors took £500 from another. There is a whole range of others: Irwin Mitchell deducted £289. Those are major firms of solicitors. Many smaller firms of solicitors also stumbled into this, such as Frank Allen Pennington, Donne Mileham and Haddock, and Colemans. They were also deducting moneys, some for themselves, some for a third party such as other claims handlers, including PR and Associates, Union and General Services—which quickly went into liquidation, so it could not be pursued through the civil courts—and IDC. There is a plethora of such claims handlers.

People have to go through a process to get their money back. I will give an example of how that works, because I have today responded on behalf of a constituent to the Law Society. The complaint was put in two years ago. No assessment is made of the literacy, illness or other vulnerabilities of such people. Some of the people I am representing are in their 90s. Some have good literacy, others have very limited literacy, and they get sent large wodges of documents. Some get visits at home from solicitors when they make a complaint; some had visits from the managing partner of solicitors. Some have been taken to hotels for meals to discuss their complaint with a managing partner. Some are rung up and told, "You are liable, because you have signed," and others get letters saying that. Those are the kind of people who are complaining.

The vast majority of those people have had no previous contact with solicitors. Many of them tell me that they regarded solicitors as people whom they would need only if they were on the wrong side of the law, and they are therefore delighted to have had no contact with solicitors. They say to me time and again, "We have had no contact with solicitors before." Many of them are dealt with by their solicitors over the telephone rather than face to face, even for industrial hearing loss claims. Many are dealt with over a great distance, and the solicitors never see them—or see them only once.

How are such people to know, other than by MPs campaigning on the matter, that they have a genuine complaint that can be addressed by the Law Society in getting their money back when it should never have been deducted in the first place because, in this great scheme, the Government paid the solicitors' fees? If they are getting £8,000 or £10,000 in compensation and a solicitor says, "The charge to you is £1,000", they might think that to pay £1,000 to get £10,000 sounds reasonable. It sounds reasonable to me, and I know that it sounds reasonable to my constituents, because no one told them that the Government, through the scheme, were paying all the costs. These are the sums in respect of some of the solicitors involved: for Thompsons, more than £100 million; for Rayleighs, more than £55 million. The total is more than £500 million and increasing. The sum in respect of Beresfords is £80 million, and more than £100 million in potential claims costs are still to come. Those are phenomenal sums of money, and only now are people realising that those solicitors were being so appropriately generously—so to speak—paid by the Government. That was the deal that was done, and I have no criticism, as things can go in different ways. What I criticise is the fact that my constituents have to go through me one at a time to get their money back. Even with the Law Society, things have to be done one at a time.

Today, I dealt with a firm of solicitors called Wake Smith—again, one of the UDM solicitors. It is one of a small handful of firms that have failed to agree to pay people back. Only a few are still resisting, and Wake Smith is one of the worst. It puts standard responses in the post—20-page legal documents full of legalese that my constituents are meant to read and understand—and it keeps getting things wrong. In a case I addressed today, it gave a 20-page document about the UDM—defending the UDM and its right to take money, and then claiming that it had virtually no relationship with the UDM. In fact, the money in question had been deducted to IDC, but it had obviously just hit the computer button and printed that off; it had not given any care and attention to the fact that this was an individual complaint from a former client of theirs—a real person who had a consumer complaint.

I shall give another example; it is a classic. In correspondence sent to one of my constituents, a paragraph has been added in bold. I read and responded to it this morning. This particular consumer complaint has been going on for two years. It is stated in bold that it should be dismissed because I had no appropriate authority from "him"—I stress that "him"—and that I had not provided any, but that the firm involved had a client satisfaction form from him that it claimed to enclose. It was not included in the papers, and although I have asked for a copy I suspect that I will not receive it, as this was a deceased claim from a widow; her husband died 20 years ago.

That highlights the kind of people we are dealing with. They not only wrongly take the money—in this case for the UDM, and also, if Wake Smith is the firm involved, probably for Indiclaim as a marketing fee as well. A fee of perhaps about £500 would be paid to Indiclaim, and there would also be a fee that it has helped the UDM and Vendside to get. But when my constituent has the temerity to complain, Wake Smith claims that it has a client satisfaction letter from her husband who died 20 years ago and who has—strangely—failed to sign an authority from me to represent him. When that sort of thing is going on, I have to ask whether the Government should not insist on automatic repayment to those people. Taxpayers' money is going to the solicitors, so either the Government or my constituents and others have been fiddled. The double charging is straightforward—it is on top of Government fees. Either the Government should consider legal action to claw back the money from the solicitors and use it to recompense the individuals or the law should be changed so that the solicitors—and Vendside Ltd, which are claims handlers—are automatically forced to repay. That is natural justice.

Photo of David Taylor David Taylor Labour, North West Leicestershire 7:30, 17 July 2006

What my hon. Friend describes so vividly and helpfully is possibly legal but morally reprehensible and should be tackled. However, does he acknowledge that thousands of claims in constituencies such as mine have been handled not through the Union of Democratic Mineworkers but a large local firm of solicitors—I spent some hours with them last Friday—and through the local branch of the National Union of Mineworkers, and that the position there is not as sinister and unacceptable as the one that he describes?

Photo of John Mann John Mann PPS (Rt Hon Richard Caborn, Minister of State), Department for Culture, Media & Sport

If my hon. Friend's constituents are happy, that is all right. If the firm is Moss solicitors, I have received a prodigious number of complaints about it. Those complaints went to the legal ombudsman and led to the special report from that ombudsman. Every single case involved Moss solicitors, which is one of the most disgraceful firms in its handling of my constituents and my ability to represent them. It is the sort of company that is prepared to ring people at home. People who have never had dealings with a solicitor before making a complaint and who are rung up by solicitors feel highly intimidated. That is what my constituents tell me. It suggests that overall action should be taken against those solicitors. The Government have paid that firm many millions of pounds in fees for its work. Yet it wants to take other moneys to hand to people who have given it the claims—uniquely, it has worked for both the NUM and the UDM. The two unions allegedly do not talk to each other, but they clearly do with Moss solicitors.

Photo of Kevan Jones Kevan Jones Labour, North Durham

Does my hon. Friend agree that it is not only a scandal of solicitors and specific unions that have deducted money from people's claims but of some solicitors using the claims as if they were operating a sausage machine, and processing them without doing a great deal of work on them? In several cases, they have under-settled a claim when a competent solicitor would have pursued it and the claimants could have got more.

Photo of John Mann John Mann PPS (Rt Hon Richard Caborn, Minister of State), Department for Culture, Media & Sport

My hon. Friend is right. However, a disparity exists. Some of the solicitors who charged have provided a good service compared with others, and some solicitors who did not charge have provided a bad service. We are therefore considering quality to ascertain if, for example, a services claim has been included. Some of my constituents are taking negligence cases against solicitors and winning significant sums of money from appalling solicitors.

Sometimes one finds a direct correlation between bad service and solicitors who charge. We have found that, when a firm of solicitors, the UDM or Vendside Ltd have handled many claims, the average settlement is well below that of the better companies. There is no good explanation for a significant variation in the average settlement when considering a large number of claims. If the number was small, statistical oddities might skew matters, thus making the sample statistically unreliable. However, in the case of tens of thousands of claims, it is straightforward and valid to make comparisons. Some firms have been taking money and performing poorly, though others have performed well and still wrongly taken money.

Photo of David Taylor David Taylor Labour, North West Leicestershire

Does my hon. Friend see a parallel, in the links and good relations that apparently exist between the UDM and parts of Government—perhaps the civil service—between what we are discussing and the UDM's negotiating poorer deals for the equal pay claims? When the NUM negotiated better deals, those of the UDM were retrospectively increased. That does not appear fair and open.

Photo of John Mann John Mann PPS (Rt Hon Richard Caborn, Minister of State), Department for Culture, Media & Sport

I am not sure whether my hon. Friend made the point that he wanted to make because, in the case of the equal pay claims, the NUM left plenty in the filing cabinet and there are plenty more that the UDM under-settled. The canteen workers, the cleaners and the equal pay claims constitute a separate issue, into which I do not want to stray now.

I want to refer to some of the claims handlers and what they said. Union and General Services Ltd boldly stated that it would "assist" with

"the costs associated with the Claim" and took a large cheque. Although Robinson King solicitors lost a week ago at the solicitors disciplinary tribunal, they still refuse to pay people back. Four out of the six cases that went to the solicitors disciplinary tribunal involved my constituents. We are considering sums of money that approach £4,000 which was wrongly deducted. There is some dispute about whether Union and General Services Ltd received the money that it was supposed to get for funding the claim. It did not fund the claim and the solicitors conspired with it. That is why the Bill is vital—it is also vital that we get it right.

P. R. and Associates is still in existence. I have an example of its "form of agreement" for "common law claims" for

"help, advice, instruction, representation, travelling costs, and administration... on pursuing my Common Law Claim."

However, the claim to which it refers is not a common law claim. It went through the claims handling agreement. If it had been a common law claim, which entailed a risk, it would be perfectly fair for a union or non-union organisation to charge a percentage or a fee, provided that it was transparent, because it bore the risk. The scandal of the miners' claim is that there was no risk.

We are not being irrational. We do not say that people—whoever they are—should bear risk for no reason or no reward when there is transparency. However, when people have been deceived, they should get justice and their money back.

Perhaps the most astonishing example is that of Industrial Diseases Compensation Ltd. Its agreement form states:

"The Company shall pay... all of the cost of The Claim to include legal fees and medical examination costs".

It did not pay a penny. It went through a solicitor on its panel and through the claims handling agreement and did not pay a penny. Its form has a clause 6(i), which outlines what happens if the

"Claimant deliberately misled The Company".

I shall end with that. The Bill and the law should deal with cases when the company has deliberately misled the claimant.

We must ensure that everyone has access to justice. That is crucial for that minority who did not go through solicitors with miners' claims but went only through Vendside Ltd. They have no redress through consumer complaints to the Law Society and the system that I believe now works well, from evidence in the past three or four months. The minority who went only through Vendside Ltd should automatically and immediately have full consumer rights so that they can complain the moment the measure receives Royal Assent.

Photo of Simon Hughes Simon Hughes Shadow Attorney General, Shadow Lord Chancellor and Shadow Secretary of State for Justice, Party Chair, Liberal Democrats

The speech of John Mann means that I do not need to comment on new clause 11. I guess that a further speech in support of it will be made—an excitement to anticipate.

Obviously, there is a serious point behind all the issues that have been raised. That militates in favour of new clause 1, which Mr. Heald tabled and to which I added my name. The Government appear to be intent on exempting trade unions as a category and there must therefore be regulations to govern that. Like others, I have examined the draft code of practice and the rules, which the Under-Secretary kindly supplied. There are some weaknesses in it, which others have already pointed out. The early sight of the draft regulations for the rules of conduct does not reassure us sufficiently.

Photo of Lembit Öpik Lembit Öpik Shadow Secretary of State for Northern Ireland, Northern Ireland Affairs, Shadow Secretary of State for Wales, Welsh Affairs

I have been considering the arguments that have been put forward on exemptions, and I wonder whether my hon. Friend has a view on the matter of strategic importance raised by one of my constituents, Graham Owen, who is a chartered insurance practitioner. He has suggested that small suppliers of such services should be exempt because, with a turnover of, say, less than £5,000 a year, they are unlikely to be ripping people off on a large scale or indulging in the kind of scams that we have been hearing about. He has suggested that there should be a turnover threshold of, say, £5,000 a year in respect of the total of the five categories that the Minister has identified, below which a company should be exempt from the regulations. Does my hon. Friend have a view on that? Would he, like me, be interested to hear what the Minister has to say about that suggestion?

Photo of Simon Hughes Simon Hughes Shadow Attorney General, Shadow Lord Chancellor and Shadow Secretary of State for Justice, Party Chair, Liberal Democrats

That is a perfectly proper question for my hon. Friend to ask. My view is always that there ought to be a threshold so that very small practitioners are not governed by regulations. That should also apply to VAT and other provisions. If we want to enable small business people to carry on their businesses, we ought to establish a lower threshold. I have not yet had an exchange with the Minister on that issue, but I hope that she will be able to give us a helpful reply at the end of the debate. My specific and formal answer to my hon. Friend is that there is nothing in the Bill that would prevent the establishment of an exemption for small traders, and the Minister could introduce an exemption for such a category.

Photo of David Hamilton David Hamilton Labour, Midlothian

If there were an exemption for small companies whose turnover was below a certain threshold, what would happen to individuals, such as those involved in the cases cited by my hon. Friend John Mann, who have been screwed by their lawyers? There should surely be recourse for such individuals, no matter what the size of the company.

Photo of Simon Hughes Simon Hughes Shadow Attorney General, Shadow Lord Chancellor and Shadow Secretary of State for Justice, Party Chair, Liberal Democrats

We need to discuss that balance. I understand the hon. Gentleman's point. Looking at this from the point of view of the consumers of the service, if they have been conned, they have been conned; it does not matter whether they are the company's only victim or not. This matter would depend on whether the definition involved the value of the service offered or the cost of the service, as they might be different. If the cost of the service were only 10 quid, there could be quite a lot of 10 quids, which would soon add up. I hope that the Minister will address this issue.

The other amendment to which I have added my name is amendment No. 5, which has also been tabled by the hon. Member for North-East Hertfordshire. This is a linked amendment, which the hon. Gentleman addressed in passing in his introductory speech. It proposes that

"A code of practice issued under subsection (1) shall include details of the advertising standards for providers of claims management services."

One of the concerns that has been aired in the debate is the need for clear regulation of the advertising involved, whether it is advertising on hoardings or in the local paper, or the kind that comes through the letterbox or is given away outside shopping centres or railway stations to try to get people to buy the services on offer. I hope that the Minister will give us an assurance that our proposal will be accepted.

May I make a formal request, Mr. Deputy Speaker, that, if—as I hope and expect—the Government are willing to accept amendments Nos. 15 and 16, we might have a chance to vote on them before Third Reading at 9 o'clock? I want to flag up that request now, if I may. Those amendments come from amendments that I tabled in Committee, on which the Minister said that she would reflect, and they involve a simple proposal.

Clause 5 sets out the procedures for providing exemptions, and, at the moment, they allow only for the use of the negative resolution procedure in the House. So the Government could lay regulations, and only if we prayed against them would there be the opportunity for a debate and a vote on them. The procedures governing exemptions are controversial, in this House and elsewhere, and they are important, in that they could be used to exempt trade unions, either generally or in part, or any other group of organisations. For that reason, I proposed in Committee that there must be an automatic debate in both Houses of Parliament on any proposed exemptions. That would be the time to discuss whether trade unions should be included or excluded. We have had a long discussion on that issue tonight, to which the hon. Member for Bassetlaw has contributed at some length, as well as other hon. Members. The history has not been a glorious one, and the wise thing for us to do now would be to ensure that we had to return to the issue. If the Government were to go ahead with their proposal to exempt trade unions as claims management organisations as regulated by the Bill—the opposite of what Mr. Dismore is proposing—the House should be able to debate and vote on the matter.

Photo of Oliver Heald Oliver Heald Shadow Secretary of State (Justice), Shadow Secretary of State 7:45, 17 July 2006

Will the hon. Gentleman accept my joining him in his plea that we be allowed to vote on these amendments, if necessary, at the appropriate time?

Photo of Simon Hughes Simon Hughes Shadow Attorney General, Shadow Lord Chancellor and Shadow Secretary of State for Justice, Party Chair, Liberal Democrats

I am grateful to the hon. Gentleman for that intervention, which I am sure that you have heard, Mr. Deputy Speaker.

The proposition, which is a result of discussions with the Minister and her officials—for which I am grateful—is that the first time an order is made under clause 5, we should have a debate and vote on it in both Houses, and that we should also debate and vote on any subsequent order that would have the effect of removing or restricting an exemption.

Some very dubious practice has clearly been applied in relation to certain claims. Although trade unions may logically have a strong case for being exempt when acting for their members, the wider concern is that they should be included, so as to prevent similar abuses from recurring. In any event, I hope that the Minister will agree that we should have the opportunity to vote on the amendments later.

Photo of Andrew Dismore Andrew Dismore Labour, Hendon

I rise to speak to new clause 10, which stands in my name. I have no objection to claims handlers being regulated. Indeed, I first started campaigning for that almost 20 years ago, when handlers were first invented, as I recognised that this could be a growing problem. However, I approach the matter from a very different point of view from that of my hon. Friend John Mann. Perhaps he should come along to the Chamber on a Friday, given the way in which he set out his case in such detail earlier. I hope to be able to put my case, from a different point of view, rather more briefly.

Trade unions have had a rather bad deal out of this debate so far. There has been no problem with trade union legal schemes for decades. Most of them date back to before the second world war, and trade unions have historically played a major role in ensuring that people who were injured at work got justice and compensation—for example, under the old workmen's compensation scheme, before they had common law claims.

My hon. Friend the Member for Bassetlaw has clearly had a very bad experience arising out of the administration of one particular scheme. However, we must not throw the baby out with the bathwater by losing sight of all the excellent work that the trade unions have done for hundreds of thousands, if not millions, of people over the years in which the trade union schemes have been in operation.

Historically, trade unions have fought difficult, ground-breaking cases, often with contributions from successful cases, in perfectly legitimate schemes. That kind of scheme was starting to die out when I was in practice; very few unions still operated them by then. However, the trade union schemes and the contributions involved were operated for the benefit of the members. They were not operated for profit. They were used to support difficult, complicated, and often expensive cases.

I ran many test cases myself when I was in practice, including some of the early cases involving post-traumatic stress disorder and pension loss. Some cases went to the House of Lords. I remember one in particular, against the Home Secretary in the then Conservative Government, which ended up in the House of Lords. It involved cuts in the criminal injuries compensation scheme, and it was backed by a consortium of about a dozen trade unions and involved several hundred thousand pounds worth of costs. Schemes covering vibration white finger, pneumoconiosis and deafness were all developed with the support of the trade unions, and I believe that we now run the risk of losing sight of the very good work that they have done.

Photo of Michael Clapham Michael Clapham Labour, Barnsley West and Penistone

I take my hon. Friend's view that trade unions have been agencies for the betterment of society. As he has heard in the discussion with my hon. Friend John Mann, much of the problem started with a separate agreement given to the Union of Democratic Mineworkers, which was not available to other unions in the mining industry. Does he agree that all the problems seem to have stemmed from that?

Photo of Andrew Dismore Andrew Dismore Labour, Hendon

I agree with my hon. Friend. The fact is that the UDM was a rogue union to start with, and has behaved like one ever since it was founded.

Photo of Andrew Dismore Andrew Dismore Labour, Hendon

My hon. Friend has had plenty of time to make his point. I am going to try to make mine briefly.

Generally, since the Access to Justice Act 1999 and conditional fee agreements were introduced, it has been possible to do without deductions. Occasionally, however, they are required, especially in test cases involving group litigation, which are not party to parts of schemes but are often involved in major, complex and expensive litigation. Of course, deductions are nothing new. Under the civil legal aid scheme, before it was removed from personal injury cases, deductions were made, for instance, for disbursements not recovered or payments in. After-the-event insurance schemes that operate now still apply deductions in exactly the same way.

Regulating trade union schemes does not affect the dodgy law firms that we have heard about or the claims handling company, as those would be caught under the new arrangements anyway.

In relation to the definition of members, we should also take into account that many trade union schemes extend to members' families. I remember the debate in my old law firm in the 1980s about whether we could afford to offer such a scheme to trade unions for the benefit of members' families, as was eventually provided. Trade unions are already regulated under the Trade Union and Labour Relations (Consolidation) Act 1992, unlike claims handlers, who are not. The certification officer has a right and a duty to inspect trade unions' accounts. Details of trade unions' officers have to be filed, and any complaints over breach of rules, including over legal services, can be investigated by the certification officer.

Of course, the trade union rule book, of which union legal schemes form part, is a binding contract between the member and the trade union and can be independently enforced through the courts if necessary. Unlike claims handlers, trade unions have their own internal appeals and complaints systems, which can include whether cases are being turned down. Trade unions do not encourage their law firms to turn cases down but to fight on, unlike claims handlers. They also use specialist law firms, which generally know what they are doing.

The only beneficiary of regulation will be the insurance industry, because trade union legal systems will not operate as effectively as they have done over decades to provide justice for trade union members. I very much hope that the Government will see sense, as they seem to be doing, and accept that trade unions have generally provided an excellent service for a long time. We should not allow one bad experience, albeit involving a lot of people, to affect the whole system of trade union legal support.

Photo of John Gummer John Gummer Conservative, Suffolk Coastal

I declare an interest as the independent chairman of the Association of Independent Financial Advisers, which has an interest in the Bill but not this part of it. The first Bill that I tried to put through the House, nearly 30 years ago, was opposed by solicitors because they said that they needed none of the regulation that I was suggesting for them. The issue involved was that of fake directories where solicitors used to write letters to frighten people into paying bills that they had no duty to pay and had not incurred. I remember the anger and opprobrium cast at me by Sir Gerald Kaufman and his then hon. Friend who is now in the other place, Lord Clinton-Davis, when I suggested that some solicitors might need such controls.

I therefore have a long history of not being entirely enthusiastic about solicitors and their being unregulated by people outside. I agree with many of the elements of the Bill and consider it a valuable contribution in many ways. I therefore hope that it will not be taken amiss if I suggest that there is a problem in relation to trade unions that has been misunderstood by many.

First, trade unions and their members, as defined in all our minds, come under a category that is already subject to regulation. We should not regulate—or try to do the same thing—twice, as that is both otiose and annoying. My hon. Friend Mr. Heald has made an important point. Some aspects of the way in which the exemption is to work do not give adequate protection to the consumer.

I say to the Minister that it is important for the Government to be seen to be even-handed when dealing with trade unions. I am sure that she is trying to be so, but perception is vital in relation to that issue. If she is not to be thought partial, she must be seen to treat trade unions in the same way as she might treat other organisations. Without straying outside the debate, the Government ought to strive not to be seen to be swayed in a partial manner. I therefore ask her to reconsider her approach so far.

We must protect even members of trade unions by ensuring that the code of practice is—at least in the limited way suggested by my hon. Friend—justiciable. If the Minister thinks that it is important to have a code of practice, it is manifestly true that it ought to be able to be enforced. To have a code of practice that cannot be enforced is merely a fig leaf and is subject to the likelihood that people outside here will feel that the Government are being partial.

Secondly, I thought that John Mann put the argument clearly, and Mr. Dismore was a bit hard when he said that he went on. Actually, he did not repeat himself once, and everything that he said was of interest to this House, which was not the case with the shorter speech of the hon. Member for Hendon. The hon. Member for Bassetlaw's point was not contrary to trade unions—he was saying that there are circumstances in which the protection of members, or those called members, of trade unions, was not sufficient, and that people were misled and dealt with unacceptably. It was right to bring that to the House's attention. As it came from a Member who has such a history of support for the trade unions, it seemed to me that it was not properly treated by those who suggested that he was being antagonistic to trade unions. What he was saying, and what I am saying, is that good trade unions deserve the support and protection of a properly written law that enables them to feel properly defended against the activities of those who bring trade unions' name into disrepute.

Not only do we want to be assured about the meaning of "member", which is important, but that people who are embroiled in circumstances in which the trade union acts as a claims organiser—but not as a trade union—to someone who is not a trade unionist will not have their protection removed. That is all that we ask. As the Minister has refused to include trade unions within the definition—for reasons that, I think, are comprehensible—the easiest solution is to accept the amendments tabled by my hon. Friend the Member for North-East Hertfordshire. Those amendments are not meant in any way as antagonistic to trade unions but as protection for the customer. That is perfectly reasonable.

There seems to be a cross-party view on this matter. It arises from a desire to ensure that people outside perceive the Bill to be even-handed, a desire to protect every one of Her Majesty's subjects so that they all have equal rights of protection, and above all a desire to make certain that decent trade unions are not besmirched by the activities of what have turned out to be two trade unions in particular circumstances. I should have thought that those were interests common to us all, and if the Minister is unable to move in our direction, I believe that the Government will lay themselves open to the charge of partiality even if, deep down, that was not their reason for behaving in this way.

Photo of Kevan Jones Kevan Jones Labour, North Durham 8:00, 17 July 2006

As someone who was a full-time trade union officer for 13 years, I am fully aware of the vital work that trade unions have done—not just their daily representation of their members in the workplace, but their work in the context of test cases—and I am afraid that I will take no lectures from former solicitors about trade union principles.

Mr. Heald quoted me as saying in Committee that if trade unions acted as claims handlers, they should be treated as such. My view on that has not changed, but I support the Government's proposals relating to the code of conduct. Under those proposals trade unions will be exempt if they observe the code, but if they fail to do so they will be covered by regulation and subject to the same restrictions, penalties and scrutiny—and under the same spotlight—as rogue claims handlers.

As I have said, I fully recognise the value of the work done by trade unions. My hon. Friend John Mann mentioned a case to which I too will refer. Some firms of solicitors, including Thompsons—for which Mr. Dismore used to work—

Photo of Andrew Dismore Andrew Dismore Labour, Hendon

Will the hon. Gentleman give way?

Photo of Andrew Dismore Andrew Dismore Labour, Hendon

On a point of order, Madam Deputy Speaker. As the hon. Gentleman has made that point, I want to explain to him that I never worked for Thompsons. I used to work for a firm that eventually became Thompsons.

Photo of Sylvia Heal Sylvia Heal Deputy Speaker

That is not a point of order for the Chair, but at least the correct information is now on the record.

Photo of Kevan Jones Kevan Jones Labour, North Durham

The hon. Gentleman has made the point for me. He has a clear connection with Thompsons, a company that has not acted in the best interest of its members, certainly in the case of the Durham branch of the National Union of Mineworkers.

Photo of Kevan Jones Kevan Jones Labour, North Durham

That may be so, but the hon. Gentleman has been a good advocate on the company's behalf tonight. I am here as an advocate for my constituents, many of whom—poor and vulnerable individuals—have been ripped off by unscrupulous solicitors using sharp practices in a firm that should know better. If the hon. Gentleman wants to be associated with that firm of solicitors, he should feel free to be so, but I have no such wish.

I support what the Government are doing with the code of conduct. It is a sensible way of not overburdening trade unions with legislation. My hon. Friend the Member for Bassetlaw pointed out that trade unions are already regulated by the certification officer, and members can have redress following complaints to the certification officer about the way in which the organisation operates. I think that that is right, but I also think there are problems with the draft code. For instance, the definition of "members" should be tightened up. The Durham NUM's scam was to enlist people as associate members. Those people have no legal right to complain to the certification officer, because they are not actually members—and let me point out to the hon. Member for Hendon that that was done with the connivance of Thompsons. "Members" must mean "members" as defined in the Act that covers the certification officer. That may close the loophole. But if "members" means associate members, that should be clarified in the code. Another issue that needs to be clarified is the status of retired members. They may not still be making contributions, but I think that they should still be covered because of their years of contribution and their association.

Photo of David Hamilton David Hamilton Labour, Midlothian

In many cases throughout the United Kingdom, that will apply not only to retired members but to their widows and families. In my part of Scotland many retired members have passed on, but the union still deals with their widows and families, at low cost.

Photo of Kevan Jones Kevan Jones Labour, North Durham

I have no problem with that. It is a good example of a trade union not just supporting its retired members, but doing sterling work in supporting widows and others in the community. Unions should be congratulated on that, but alas, it is not what has happened in Durham. That is why it is important for the code of conduct to include a definition enabling trade unions to do the great work that my hon. Friend has described.

There is also the issue of funding. Paragraph 2 of the draft code states:

"A Trade Union should give a member relevant information about the funding of their claim, including details of any fees payable by the member and any fees being received by the Trade Union in respect of the claim."

That is fine, but if a fee is to be deducted, members should be told on what it will be spent. It is important to avoid misapprehension or, indeed, the lies that have been peddled in, for instance, the Durham NUM case. It was said that the fee was being deducted to fund the case when that was clearly not so.

As has been said, in nine cases out of 10 trade unions provide the cheapest way for people to obtain justice in court when accidents have befallen them, but if there is a cheaper way, it should be explained to people so that they can decide what to do. I realise that nowadays, given conditional fee agreements and insurance, there is no reason why any trade union should charge individuals anything, but I think it vital to make clear to clients how cases are to be funded and what alternatives may exist.

Paragraph 3 of the draft code of conduct deals with arrangements with third parties, and I must tell the Minister that I think it contains certain minefields. It seeks to deal with the relationship between a trade union and a third party, which may be a claims handling company. It also refers to solicitors. I think it important to explain to trade union members the exact relationship between a trade union member and a firm of solicitors, to avoid any misapprehension if a success fee, or other fee, is paid to the firm.

I am surprised that Members who are advocates of trade unions, and great champions such as the hon. Member for Hendon, have not homed in on paragraph 4 of the draft code, which I think is a bit draconian for unions. It refers to the competence of employees and volunteers. I do not agree with the sentiment, but paragraph 4.2 states:

"A Trade Union should have in place an appropriate quality assurance process to monitor the quality of advice given to members."

I think that that will impose on many trade unions an additional burden that they will not welcome.

I accept that the volunteers to which the code refers should be trained, but people must recognise that a lot of people who give trade union advice, as lay members in workplaces elsewhere, may not be trained and their knowledge comes from many years of working in particular industries. Therefore, paragraph 4 needs to be tightened so that it is not too onerous for trade unions and does not debar some people who are doing very good jobs in workplaces from giving initial employment advice. In parts, the provision is quite draconian.

Photo of John Mann John Mann PPS (Rt Hon Richard Caborn, Minister of State), Department for Culture, Media & Sport

My hon. Friend makes an excellent and pertinent point. Does he agree that, as a consequence of that particular provision, volunteers within trade unions such as shop stewards or branch secretaries may be unwilling to proffer even indicative advice about where people should go, for fear that complaints will be lodged against them under a regulated system? Therefore, it will be harder to get volunteers to do anything.

Photo of Kevan Jones Kevan Jones Labour, North Durham

I agree totally with my hon. Friend. It is important that during the consultation trade unions think carefully about the consequences of that part of the code of conduct. It could put off branch secretaries and other trade union volunteers, who do a sterling job on behalf of their members, from giving "legal advice". In the worst case scenario, shop stewards will refuse or be afraid to give advice, so that matter needs clarifying.

The last point in the code again tries to deal with the issue but goes half way and does not answer a lot of the points. It is about complaints and redress. I am not clear, because there is no reference here, how the provision on complaints by trade union members links with the legislation in respect of certification officers. Clearly, as a trade union member—not an associate or other type of member such as I spoke about earlier—the individual member has the recourse of going to the certification officer. That needs to be welded into this part of the complaints and redress system. Otherwise, there could be a conflict between the code and existing trade union law that governs regulation of trade unions by the certification officer.

Paragraph 5.2 says:

"Where a complaint cannot be resolved to the satisfaction of the member within a reasonable time, it should be referred to a third party for termination."

There is no reference to who the third party would be, and there are no explanatory notes. I would be very resistant if the third party were to be, for example, the union's solicitors, if they were involved. It would have to be some independent body—perhaps the certification officer, as I have outlined.

This is a good first stab at the code of conduct, but it needs to be updated and refined and some of the points that my hon. Friend the Member for Bassetlaw and I have raised need to be taken on board. However, it is better than bringing trade unions into the Bill; there is existing law to protect trade union members. It is odd that it is Labour Members who are arguing for less regulation and the hon. Member for North-East Hertfordshire and other Conservative Front Benchers who are arguing for more regulation. No doubt I will use that as a good example when I am being lectured by Conservative Members to the effect that the Government are all about more regulation rather than less.

What has been put forward by the Government is a compromise that will protect people. More importantly, it will ensure that organisations that do not abide by the code of conduct will come under regulation. We had the discussion in Committee. The solicitors Thompsons, in their briefing to Committee members before the Committee stage, took the line that has been taken by the hon. Member for Hendon: all trade unions should be exempt. That would include the UDM and others. I pointed that out to a member of the Trades Union Congress, who said "No. We can just have TUC-affiliated organisations." I was not sure how the Bill could exempt TUC affiliates alone. I think that what the Government have put forward will work if we can get a tougher version of the code to clarify the points that other hon. Members and I have raised.

I now turn to new clause 11 and the scandal that my hon. Friend the Member for Bassetlaw has already referred to in respect of the COPD scheme. The Government should be proud of bringing compensation to many tens of thousands of miners and their families, who were denied it for many years. However, that has been plundered by unscrupulous solicitors and, I have to say, certain trade unions. Is it a scandal? Yes it is. It has been given some attention by some national newspapers, but not a great deal. If the scandal had taken place in the leafy suburbs of Surrey, I am sure that it would have been on the front page of every national newspaper throughout the country. It is worth bearing in mind that it is because it has taken place mainly in poor former mining communities that it has not received a lot of attention, although I, and other hon. Members, have tried to publicise the issue.

There are two separate aspects of the scandal. The first is about the way in which certain solicitors have seen this as a quick way to make a lot of money. I first raised the case of Mark Gilbert Morse over three years ago. Those people were not content with getting their fees paid by the Government; they added 25 per cent. on top as a success fee, and they got people to sign agreements saying that they would have the money deducted. As my hon. Friend the Member for Bassetlaw said, the reaction of many constituents was, "I've signed the agreement so I have to pay that money." Well, they did not have to pay it.

I am pleased to say that Mark Gilbert Morse quickly decided to pay the money back, but I am still not satisfied. That company and a number of other companies have said that they have paid it back. We have their word, but I suspect that unless someone has complained about the fee being deducted, the money will not have been returned. That is why the new clause is important. We should force solicitors to pay back all the money that has been deducted unlawfully.

I give credit to the Law Society individual case officers, because some are very good and work very hard in pursuing some of the rogue elements involved in those scandals, but as my hon. Friend said, that can be done only if someone makes an individual complaint; otherwise, people will not get justice. Some firms of solicitors have started paying money back, irrespective of whether complaints have been received. Obviously, they feel guilty and think that they will be exposed later, but we are not talking about small amounts of money; we are talking about millions and millions of pounds. That has been taken by firms of solicitors regulated by the Law Society. Clearly, self-regulation has not worked. That is why I have been one of the strongest advocates for independent regulation of solicitors. I am glad that the Government are taking that on board.

The Bill will cover two other consumer rights issues that need to be addressed. I am not afraid to say this about claims handling companies: I hope that the Bill kills off that industry altogether, because in my opinion there is no need for those companies. They are simply middlemen that have preyed on people and take a cut. If people want legal advice, they should go directly to their solicitors or their trade unions. That should be the best way forward.

To date, there are no ways of getting at claims handling companies, apart from going to their solicitors. The only way to get at the solicitors is through the Law Society, case by case, because many claims handling companies are still holding on to money that was deducted unlawfully. I took up the case of one of my constituents, Mr. Jobes, who had been contacted by Industrial Disease Compensation, now FreeClaim IDC. Ironically, it was one of the founder members of the Claims Standards Council, which was set up supposedly to regulate the sector. I am pleased that my hon. Friend the Minister has not fallen into the elephant trap and allowed the CSC to be the regulatory body for claims companies.

IDC took £3,600 from my constituent, but all it did was get him to sign a form—which purported to indemnify him against legal costs, when the company knew full well that he would not need to lay out any money at all under the COPD scheme—and pass it on to a firm of solicitors in Liverpool, Silverbeck Rymer. The case went through the process, the money was paid out and the solicitors deducted £3,600 and passed it on to IDC. What did IDC do for that money? It did nothing except pass on the information. It had led Mr. Jobes to believe that he was being indemnified against legal costs.

Mr. Jobes and the other constituents who have come to see me are not, with no disrespect to them, used to dealing with solicitors. Some are widows, others are in very poor health—including Mr. Jobes—and do not know what to do with legal documents they get sent. Some have even been sent threatening letters saying that if they withdraw from the agreement they will end up with huge liabilities. That is a disgrace.

I pursued Silverbeck Rymer through the Law Society, which ruled that it had to repay the full amount. Silverbeck Rymer lost the appeal and had to pay the money back, but I hate to think how many other cases there have been in which money was deducted by solicitors and paid to IDC. How much money is sitting in the coffers of IDC for which it did nothing?

IDC knew that it was doing something wrong. Not long after the publicity on the issue, it changed its agreement so that all that was payable was an administration fee of £100. It was still doing nothing for that £100 except passing information on to solicitors.

Another scandal remaining to be unearthed is the collusion of former NUM officials and others who had access to membership lists. They prostituted any trade union principles that they had by going to work for IDC and helping it to make a quick buck out of the COPD scheme. The scandal of the £100 administration fee is that all IDC did for the money was pass on information to solicitors, who deducted sums from the final award to pay to IDC. I am pursuing several cases with the Law Society, questioning the role of the solicitors in acting as collection agents for claims companies. These scams have cost people tens of thousands of pounds, but they could not have happened without the collusion of solicitors' firms, including some well known high street names. I would have thought better of those firms.

As well as acting as collection agents, the solicitors are failing to advise their clients that there is no need to pay the £100 administration fee. In fact, if people had gone direct to the solicitors, they would not have paid any fee. The solicitors were not acting independently. They saw IDC and the other claims handling companies as a way to gather hundreds of claims and paid the £100 fee with no questions asked.

Another issue is quality of service. IDC's website talks of a panel of solicitors, as though they have been vetted or specialise in such claims. In fact, they are high street solicitors who are looking for work. That has meant that not only have some people been ripped off by the fees, but some of the solicitors have taken a sausage machine approach to the cases. They have put the claims through their administration system and, in many cases, accepted the first offer from the Department of Trade and Industry. The work has not been checked and so the firms have settled the cases for much less than other solicitors could have achieved. That is another scandal that the Law Society should address.

Photo of Philip Hollobone Philip Hollobone Conservative, Kettering 8:15, 17 July 2006

I agree with the hon. Gentleman that the Bill would be successful if it drove unscrupulous claims management companies out of business. However, does he agree that there are some honourable exceptions, not least the National Accident Helpline, which is based in my constituency? I believe that he has been sent details of how it operates, and it has helped thousands of people successfully settle claims for compensation.

Photo of Kevan Jones Kevan Jones Labour, North Durham

No, I do not. If people want legal advice, they should go directly to solicitors and cut out the middle man. There is no need for such organisations. Trade unions can be a good source of advice and support for people seeking access to justice, and most people have legal insurance through their home contents insurance. I look forward to the day when the Bill puts claims handlers out of business.

Another scandal involves the way in which some trade unions have acted. I know that 99 per cent. of trade unions do a fantastic job. They pioneer work and they secure access to justice for many thousands of people that they would not get if they were not members of a trade union. However, Durham NUM and Thompsons solicitors have acted as claims handlers. They are not providing support to existing or retired members but operating a scam in which people who have very little connection with the NUM—often widows of former members—but with a COPD case were asked to pay £20 a year to become an associate member of Durham NUM. I have asked what an associate member is, and it is clear that such members have no rights under the trade union legislation. Thompsons told me that it gives people access to the NUM's legal aid scheme, but that does not seem to exist. It appears that people pay £20 a year to Thompsons solicitors, who deduct another 7.5 per cent. from their compensation, if their case is successful. People are never told that they could go elsewhere to pursue their case. Even worse, the NUM and Thompsons have sent out letters telling people that if they stop paying their £20 a year, their case will be withdrawn, and that is just not true.

I have been denounced in many quarters, some of which I shall refer to shortly, for feeling so strongly about all this. I feel so strongly, though, because the ladies and gentlemen who have come to me have no connection whatever with the NUM, are often very poor and are not used to dealing with solicitors. Yet the NUM has acted as a claims handler, joining people up for a success fee, which is all that that 7.5 per cent. is. The £20 a year is nothing other than an access point to justice.

I commend the work the NUM has done in some areas, and there is a contrast in the north-east between Durham and Northumberland, where the NUM does not charge anything. It does not matter there who anyone is—an existing member of the NUM or, as my hon. Friend Mr. Hamilton said, a member of the community—because they can go to the NUM without it costing them a penny. If they want to make one, Northumberland NUM asks for a voluntary donation afterwards. That is fine: what people do with their compensation after they get it is up to them—they can give it to a cats home, give it to an individual or spend it, but if they want to make a contribution back to the NUM, that is laudable.

That is not what happens in Durham. There, 7.5 per cent. is taken off the compensation by Thompsons solicitors, then passed to the NUM. It is being suggested that that 7.5 per cent. will fund future litigation and keep the NUM going. I have no problem with that, but Thompsons, who seem to act differently in Durham as compared with other areas, has had nearly £100 million out of the Government in costs.

Photo of Kevan Jones Kevan Jones Labour, North Durham

And more, as my hon. Friend says. I cannot see why Durham NUM could not have received a success fee or other fee from Thompsons. I think it totally wrong that poor individual claimants should have to fund Durham NUM.

I understand I have been denounced in several quarters, including in the upper House last week in a debate on miners' compensation by Lord Sawyer, a former general secretary of the Labour party. To be fair to him, he says:

"Since standing down from my main roles in the labour movement, I have become the non-executive chair of the supervisory board for Thompsons Solicitors and I declare that interest."

That is fine, and I have to say I agree with much of his speech, which attacks the way in which unscrupulous solicitors have deducted moneys. However, he went into the territory of the Durham NUM, on which he has certainly never spoken to me, making comments for which the evidence, I have to say, is weak to non-existent. He says that funds are being used in the Durham area to fight miners' knee cases and possible surface worker cases that have not yet been funded. I am aware of only one case that Durham NUM has funded for surface workers, but the red herring about miners' knee cases seems to have come up only since I began to raise these issues.

Lord Sawyer seems to condemn what has been said here:

"In reading the debates in another place on this issue and looking at some recent comments, it is possible to think that this is all about individual consumers in cases against big employers or insurers without trade union backing. That would be a big mistake. Let us condemn law firms and claims companies who exploit workers' cases by all means, as we are doing tonight, but let us not in the process damage trade unions and their trusted lawyers who are, at the end of the day, the only ones with the commitment, capability or expertise to fight the major cases".

It worries me that Lord Sawyer is an individual who is supposed to be on the supervisory board of Thompsons solicitors but who has not even taken the trouble to see how those solicitors are acting with the NUM in Durham. If he was doing his job properly, he would be asking the questions I am asking. That raises the question of what he is being paid for—I assume he is paid—as a member of the supervisory board; or is he just being paid to be an advocate for Thompsons solicitors in this place?

Photo of David Hamilton David Hamilton Labour, Midlothian

For clarification, let me say that the issue of knee litigation has been on the cards for some years. The Scottish NUM, south Wales NACODS, Derbyshire NUM and, I think, Durham NUM are four unions that have combined to raise £1.2 million on that. I do not see Northumberland among them, and I do not see the other areas.

When we talk about the trade union movement, we mean more than 6 million trade unionists. Tonight, we are talking about the Compensation Bill, and it clouds the issue to talk about single areas within the NUM. We should talk, as my hon. Friend did, about 99 per cent. of the trade unions being extremely good. That was the correct thing to say.

Photo of Kevan Jones Kevan Jones Labour, North Durham

I agree. I have no problem with that, but I challenge Durham NUM to publish a breakdown of what it has done with about £3.5 million, which it has had under the scheme. I also ask why, if Thompsons solicitors is so good and pioneering, it is not contributing, too. It has done very well out of the mining industry in the past 10 years.

I take exception to a point made by Lord Sawyer:

"If there is a dispute about deductions by the union in any mining community, it should be resolved within that community rather than be made into a political football, as it has been by some." —[ Hansard, House of Lords, 11 July 2006; Vol. 684, c. 662-64.]

I have tried to resolve this issue in the mining communities, as the noble Lord would know if he had taken the trouble to speak to me. I wrote to the general secretary of Durham NUM, David Hopper, on 3 February 2005; to date, I have had not a reply. In that letter, I finished by saying that if he wished, or his executive wished, for me to address them in any way, they should please contact me:

"I am more than willing to speak to either yourself or your committee."

To this day, I have not heard anything.

What I have heard is many mutterings behind the scenes in the trade union movement about how Kevan Jones is selling out the movement and his past. I was also, apparently, condemned, by name, from the podium last week at the Durham miners' gala. The gutless individuals who could do that there are not prepared to meet me or talk to me directly about the issues.

It is vital that we press the new clause. I want assurances from the Minister that if she cannot accept it, she will undertake on behalf of the Government to put the utmost pressure on the solicitors and claims handlers who have deducted moneys to pay it back. My great fear is that without pressure from the Government individual solicitors will hang on to the money and give it back only when complaints are made, and that claims handlers who have already deducted money will not be prepared to pay it back. At the end of the day, those who will suffer will be individual consumers, for whom my hon. Friend has been a strong advocate throughout the passage of the Bill, and who are the reason for its introduction.

Photo of Simon Hughes Simon Hughes Shadow Attorney General, Shadow Lord Chancellor and Shadow Secretary of State for Justice, Party Chair, Liberal Democrats

On a point of order, Madam Deputy Speaker. I am conscious of the fact that we have had debates on two groups of amendments and that there are three groups to go. Would you be prepared to accept an amendment to the timetable motion to allow us to continue consideration and start Third Reading later if it had the agreement of all three parties represented in the House?

Photo of Sylvia Heal Sylvia Heal Deputy Speaker

I understand the point that the hon. Gentleman is making, but it is not within the power of the occupant of the Chair. The timetable motion is not before the House this evening; it has already been decided.

Photo of Bridget Prentice Bridget Prentice Parliamentary Under-Secretary, Department for Constitutional Affairs

Concern about trade union exemptions has been a key issue in our debates on Second Reading, in Committee and again today. If we are to protect consumers it is vital that an effective and proportionate mechanism apply to those who provide claims management services. We believe that the best approach is to exempt independent trade unions that provide claims management services to their own members and their members' families, but the exemption will be subject to the condition that trade unions comply with a code of practice that we will develop in consultation with the TUC.

We have taken a risk-related approach because we believe that full regulation is an unnecessary and disproportionate burden on both trade unions and the not-for-profit sector. Regulation is aimed at commercial claims management companies. The Better Regulation Task Force recommended that course of action and the regulator's initial focus will be on authorising companies that provide a regulated claims management service and tackling companies that attempt to evade it.

The code outlines the key principles that would apply where a trade union deals with a claim on behalf of a member, and it covers the key issues raised in earlier debates. We have had constructive engagement with the TUC general secretary and his colleagues on the issue, but obviously there is much more work to do. Nevertheless, I hope that the draft gives Members some indication of the approach we are taking.

May I point out to Mr. Heald that the code of practice will be issued by the Secretary of State? The Secretary of State will be the judge of the union's behaviour in relation to the code; the TUC and the unions will have a vital role in policing union activities, but the ultimate decision about exemption will be for the Secretary of State. Those principles are fundamental to provide a good service to trade union members, and we shall hold consultations about the code later this year.

We believe that the enforcement provisions are effective. If an exempt trade union falls below the standards outlined in the code of practice, the Secretary of State will withdraw the exemption. Once the exemption is withdrawn, the trade union concerned will have to stop providing the services unless it successfully applies for authorisation by the regulator. If it carries on providing the services, or even offers to provide them, without authorisation, it will be committing an offence and will be liable to prosecution.

Once the exemption for an individual trade union or any other organisation has been withdrawn, the full range of enforcement powers in clause 7 will be available to the regulator. If the organisation is suspected of continuing to provide services, the regulator can require the provision of information and documents, seek a warrant to enter and search premises and apply for an injunction restraining the organisation from providing the services. I hope that reassures Members that the full force of the law will be available to the regulator if people fall below the standard required. The actions of a very few unions, which have been well described during the debate, should not detract from the excellent work of the overwhelming majority of trade unions on behalf of ordinary hard-working people.

Photo of Oliver Heald Oliver Heald Shadow Secretary of State (Justice), Shadow Secretary of State

As the Minister knows, if complaints are made against ordinary claims handling companies—not trade unions—a whole range of investigatory powers come into play, such as search and so on. Why does she think they are unnecessary for trade unions?

Photo of Bridget Prentice Bridget Prentice Parliamentary Under-Secretary, Department for Constitutional Affairs

I thought that I had just made it as patently clear as I possibly could that, if the trade union falls below the standard set out in the code and continues to offer the services, all the enforcement powers under clause 7 would apply to it, too.

New clause 1 is unnecessary because we do not need further definition of the criteria in legislation and it would militate against the purpose of exemption. It would be too rigid and might mean, for example, that an individual citizens advice bureau would have to be assessed against the criteria. That would be unnecessarily bureaucratic and disproportionate.

New clauses 2 and 5 are also unnecessary. As I have explained, if the behaviour of an exempt organisation falls below the required standard, the Secretary of State can withdraw the exemption. Once it is withdrawn, an exempt organisation that continues to provide the service without authorisation will be committing an offence under clause 6 and can be prosecuted. The separate offence that the hon. Member for North-East Hertfordshire proposes is superfluous, as is a separate power to seek an injunction—it is already contained in the Bill. What he proposes would also make the penalty for failing to comply with the code of practice attached to an exemption more stringent than the penalties for authorised persons who break the rules. That seems to be to be the wrong way round.

I agree with my hon. Friend Mr. Dismore that trade unions play an extremely valuable role in assisting ordinary hard-working people. They have a long history of championing the rights of workers in relation to health and safety at work and employment. They are also among the most regulated organisations in the country, which is another reason why it is unnecessary to make them immediately part of the regulatory issue in the Bill. However, we have to recognise the concerns that my hon. Friends the Members for North Durham (Mr. Jones) and for Bassetlaw (John Mann) raised about a small number of trade unions in relation to the coal health compensation scheme. I take those concerns very seriously and have been working with them and the Law Society to ensure that those issues are resolved. I hope that my hon. Friend the Member for Hendon understands the reasons for this approach. We want to do something that is proportionate for trade unions, but we also want the power to protect union members in the rare cases where the service that they receive is not up to scratch. On that basis, I hope that he will not press his new clause.

On amendment No. 5, the hon. Member for North-East Hertfordshire spoke of his concerns about inappropriate and misleading advertising. I agree with him that some of the advertising is outrageous and has to be condemned absolutely. An essential part of the claims management regulatory framework will be rules governing the conduct of authorised persons. Compliance with those rules will be a condition of authorisation and any authorised person who does not comply will face disciplinary action by the regulator. That can include attaching conditions to their authorisation—for example, preventing them from providing a particular type of service or from handling client money. It can also involve suspending their authorisation or cancelling it.

Advertising is a crucial area. The key issue is that it should not be misleading to consumers. That is covered by the codes of the Advertising Standards Authority and the authorised person's responsibilities can be reinforced in the rules with explicit reference to the ASA codes. The rules will help to ensure that authorised persons adhere to high standards across all their marketing activities, which will be enforceable by the regulator. The rules that we have issued set out what we expect the standards applied to authorised persons to be. That includes not making misleading or exaggerated statements; not using expressions such as "no win, no fee" without qualification, unless there is no possibility of the client having to meet any costs that he may have incurred in connection with the claim; and not offering an immediate cash payment or similar payment as an inducement for making a claim. I hope that that reassures the hon. Gentleman.

On new clause 11, the Law Society has taken action to deal with complaints about solicitors who have taken costs in addition to those paid by the Government under the terms of the coal health compensation scheme. The Law Society has assured me that it takes complaints made to it about the scheme very seriously and many solicitors have already been referred to the solicitors disciplinary tribunal for disciplinary action. I empathise with Members who have first-hand experience of the disgraceful behaviour of some of those solicitors. I hope that they take some comfort from the knowledge that action is being taken against those who breach the rules. I understand that some £3.6 million that was made from additional charges has been repaid. But, of course, that is not enough. I know that colleagues in this House are working hard on behalf of their constituents to get additional fees returned, and I welcome the fact that they will continue to do so. I will continue to monitor the Law Society's handling of these complaints.

I spoke in Committee about the requirement for claims management companies to provide the regulator with details about the information that they give to clients about fees. That is a key aspect of the authorisation criteria. The information that is given to clients should be clear and transparent. That is crucial and will be an important requirement of the rules.

It is our intention that the regulation should be effective and have teeth. The regulator will not tolerate attempts to mislead or misinform consumers, because that would be a clear breach of the rules with which all authorised persons will be expected to comply if they wish to provide a regulated claims management service. An authorised person who is found to be in breach of the rules will be severely reprimanded, and the sanctions will include the authorisation being suspended or cancelled. Given those stringent safeguards, I hope that my hon. Friends will not press new clause 11 to a Division.

Points were raised about the code of practice. We have an early draft of the code at present, and it is still being discussed in detail with unions, legal professionals and others. We can thus think about including a consideration of clarity about fees and funding in those discussions. I can tell my hon. Friend the Member for Bassetlaw that Vendside would not be subject to the exemption in the first place. As a separate company, it would have to be authorised if it wanted to continue to carry out claims management services. It is our intention that any subsidiary company, whether owned wholly or in part by a trade union, will not fall within the terms of the exemption. The only bodies covered by the exemption will be independent trade unions listed by the certification officer.

Let me turn to retrospection. Clause 8 will allow the Secretary of State to make transitional provision in regulations. For example, that will allow provision to be made for the regulator to use his discretion to investigate complaints relating to an authorised person in respect of conduct that began before the commencement of the Bill and continued after that commencement.

There will be a definition of a member in the exemption order. We have been absolutely clear that the exemption will be limited to members and their families. When trade unions act as claims farmers and pursue claims on behalf of non-members, they will have to be regulated. I have made it clear that we will ensure that there are no loopholes. Trade unions will not be able to sign up associate members only for the purpose of dealing with claims. However, retired members will be included in the exemption because they will clearly be part of a legitimate trade union activity.

Lembit Öpik made an interesting point when he asked Simon Hughes about minimum turnover requirements for smaller businesses. We are consulting on the fees payable by companies for their authorisation. However small a company's turnover, it is the consumer who needs proper safeguards to ensure that there is adequate protection. We are examining the situation so that there is as much balance as possible.

Government amendments Nos. 11 and 12 will put beyond doubt the fact that the Secretary of State could bring claims management services that were provided in relation to industrial injuries disablement benefits within the regulatory net. As well as listening carefully to hon. Members' concerns, we have continued to speak to many stakeholders about the introduction of the new regulatory regime. That has included discussions with Citizens Advice and Judge Michael Harris, the president of the social security and child support appeals tribunal, both of whom have raised concerns about claims management in relation to claims for industrial injuries disablement benefits and some other welfare benefits. Commercial intermediaries typically charge a flat fee for such a service, or take a percentage of the benefit payment if the claim is successful. Claims of that type would be made at a time when a person was already suffering from the trauma of the injury, which would make them more vulnerable. If consumers are being targeted, we want to be able to help by stepping in and providing appropriate protection.

We have considered further the definition in clause 3. Despite its breadth, there is sufficient doubt about whether claims management services for such claims would be covered to justify bringing forward the amendments. The amendments explicitly allow the Secretary of State to bring claims management services provided in relation to industrial injuries disablement benefits within the regulatory net by allowing an order to be made which defines these as claims for the purposes of part 2 of the Bill. The order will be subject to the affirmative procedure. That means that claims management services in relation to industrial injuries disablement benefits could be regulated by order under clause 3(2)(e).

The amendment is precisely targeted on industrial injuries disablement benefits, which are benefits of a compensatory nature. It does not extend to welfare benefits more generally, because that would be beyond the scope of the Bill. There is some limited evidence of organisations offering advice on claims for other social security benefits on a commercial basis, but they are most active in the area of industrial injuries benefits. Our debate will serve our consideration of the code of practice. All hon. Members should be assured that it will be taken into account.

I have reflected on the issues raised by the hon. Member for North Southwark and Bermondsey. Parliament should have the opportunity to debate the initial exemption order under clause 5 and any subsequent restriction or removal of exemption. We hope to capture almost everyone in the first order, but we are working with an unusually broad definition, so if a small number of organisations emerge that fall within the definition but on which it is not appropriate to regulate, subsequent orders can be used to tidy up anomalies. I would not want to take up valuable parliamentary time on those, but I am pleased to say to the hon. Gentleman that I am delighted to accept amendments Nos. 15 and 16.

Photo of Oliver Heald Oliver Heald Shadow Secretary of State (Justice), Shadow Secretary of State 8:45, 17 July 2006

I thank the Minister for her helpful assurances about advertising, which is an important issue. There have been some dreadful examples of advertising by claims handlers and it is welcome that she is to be so active on that issue.

I welcome the Minister's announcement about industrial injuries benefits take-up campaigns by commercial claims handlers, and the amendment that deals with that. It is welcome that she has agreed to the affirmative resolution procedure for the exemption orders.

I listened to what the Minister said about associate membership of trade unions and the abuse about which we have heard from Mr. Jones. She responded by saying that cases of associate membership will be regulated, and that is also a welcome move.

There is a lot to welcome, but as the Minister knows I have said from the outset that there should be a level playing field for trade unions and other forms of claims handler. I concede that she has responded to the particular abuse of associate membership, but as we heard from John Mann, there is still concern about organisations such as the BNP trying to convert to trade unions to benefit from the exemption. Over recent years, we have seen a certain desperation in particular sections of trade unions to get at the money in order to survive. Against that background, I am not as confident as the Minister that a purely voluntary arrangement for trade unions—exempting them specially—is the right way forward. I therefore ask my colleagues to join me in the Lobby in support of new clause 1, which is vital if we are to create a level playing field in this area.

Question put, That the clause be read a Second time:—

The House divided: Ayes 162, Noes 301.

Division number 290 Orders of the Day — New Clause 1 — Specified conditions for exemption

Aye: 162 MPs

No: 301 MPs

Aye: A-Z by last name

Tellers

No: A-Z by last name

Tellers

Question accordingly negatived.