Insurance Companies: Child Abuse Inquiries

– in the House of Commons at 4:32 pm on 16th July 2015.

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Motion made, and Question proposed, That this House do now adjourn.—(Simon Kirby.)

Photo of Ann Clwyd Ann Clwyd Labour, Cynon Valley 5:01 pm, 16th July 2015

I have campaigned for several decades to expose child abuse in Wales and will continue to do so until all the cover-ups have been exposed and justice has been served. I feel very strongly about this matter because children from my constituency of Cynon Valley in south Wales were taken to Bryn Estyn children’s home in north Wales, 130 miles away from their families and friends. All those young men have been damaged in some way. Their experience affected their future relationships with people. Some of them got into trouble with the law. Of the many young men who gave evidence to the Jillings inquiry, to the police or to the Waterhouse inquiry, a shocking number have committed suicide, have self-harmed or have been killed in mysterious circumstances.

Many people have expressed their concern at the adverse influence that insurance companies can exert on any inquiry or report into complaints about children in the care of local authorities—though that also applies to other areas such as churches, hospitals and so on. This influence, or cover-up, has been used in many previous inquiries—I am talking about the Kincora children’s home in Ireland, the Cartrefle inquiry in Wales, the Jillings inquiry in Wales and the Waterhouse report in Wales—preventing exposure of the problems, often redacting vital information and so failing publicly to uncover the truth for the alleged victims.

In February, the BBC’s “File on 4” carried out an investigation that found evidence that local authorities in England and Wales may have allowed fear of losing insurance cover to influence their approach to child abuse inquiries. There were also cases where insurers attempted to suppress information about abuse allegations.

In Rochdale, the then council leader, Colin Lambert, was shocked by a response from council officers when he proposed an investigation last year into a possible cover-up of child abuse at the Knowl View special school for boys. That involved the alleged sexual assaults by Rochdale’s former MP, the late Cyril Smith and others, in the 1970s, ’80s, and early ’90s. Mr Lambert says he was told that an inquiry could lead to problems with the council’s insurers. He said:

“I can recall a conversation with officers that this could lead to the insurers withdrawing cover…Holding an actual open inquiry would expose exactly who did know what—and therefore the council probably would have been liable. And that then opens up the insurers to claims.”

In Bedfordshire, Tim Hulbert, former director of social services, said that insurers “instructed” him on what to do when he was helping set up an inquiry into alleged child abuse at a children’s home in the early 1990s. He said:

“I had a phone call from the insurers who were anxious to influence the terms of reference of the inquiry so they didn’t actually produce circumstances which would increase the likelihood of claims.”

At another council, Hereford and Worcester, in the same period, former child protection manager Peter McKelvie said council lawyers warned him not to admit the authority’s liability at an inquiry into abuse at Rhydd Court school for boys, near Malvern. He said:

“I could talk about the abuse that children suffered, but I was not to talk about how it could have been prevented.”

Mr McKelvie believed that insurance concerns lay behind the instruction.

There have been a number of inquiries into serious sexual abuse in children’s homes run by the old Clwyd county council. I want to concentrate on two previous inquiry reports whose publication was prevented by the council’s insurers. The first, which became known as the Cartrefle report in 1992, was an investigation undertaken by Detective Inspector Cronin of North Wales police into allegations of sexual abuse at Cartrefle. Later reports found that Cronin undertook a thorough investigation to the best of his abilities, but that the investigation was restricted by a lack of co-operation by children’s services and social services. Cronin’s report found insufficient evidence to undertake a successful prosecution, but it was subsequently submitted to the council.

In 1992, Clwyd council was told by Municipal Mutual Insurance Ltd, which now operates under the name of Zurich Municipal, that publication of the first report, the Cartrefle inquiry, could amount to a waiver of public interest immunity or privilege and could become a contempt of court case in view of anticipated forthcoming criminal proceedings arising from the abuse.

The second inquiry, chaired by John Jillings, tried again to investigate abuse in Clwyd care homes after being commissioned by Clwyd county council in 1994. The panel met with considerable opposition over the course of its inquiry. For instance, the then newly appointed North Wales chief constable refused to meet the inquiry or help with access to the police major incident database. Some 130 boxes of material handed over by the council to the police were not made available to the panel. The Jillings inquiry said in 1994:

“We were disappointed at the apparent impossibility of obtaining a breakdown of data. We are unable to identify the overall extent of the allegations received by the police in the many witness statements which they took.”

In addition, the council did not allow the inquiry to place a notice in the local press seeking information, because this was considered unacceptable to the insurers. It is interesting that the insurers of the county council were also the insurers of North Wales police.

This resulted in the need to collect 70 duplicate and additional witness statements. I put a notice in my local paper, and six young men answered the advert. I took detailed statements from four of them who wanted to talk to me. I took a long time to interview them individually, and I found the allegations that they made and the descriptions of their experiences totally emotionally draining. If I felt like that, it is impossible to imagine what their feelings were.

The Jillings report commissioned at the time laid bare the north Wales child abuse scandal. It found a child care system in which physical and sexual violence were common, from beatings and bullying to indecent assault and rape. Children who complained of abuse were not believed or were punished for making false allegations. The report stated that the number of children who were abused was not clear, but at least 12 former residents were found to have died from unnatural causes.

The report stated that some staff linked to abuse may have been allowed to resign or retire early. It stated that allegations involving famous names and paedophile rings were beyond its remit and something best addressed by a potential later public inquiry. It concluded that its panel members had considered quitting before publication, due to

“the considerable constraints placed upon us.”

The final report’s appendices included limited copies of the key witness statements taken by North Wales police during their earlier investigation.

Despite such obstructions, the panel stuck to its brief to investigate child care in Clwyd, in the wake of a number of allegations and court cases involving care workers. Most of the allegations covered the period from 1980 to 1988, and a four-year police inquiry saw 2,600 statements taken and 300 cases sent to the Crown Prosecution Service. Eventually, eight men were charged and six were convicted.

Mr Jillings has made clear what he discovered back then:

“What we found was horrific and on a significant scale. If the events in children’s homes in North Wales were to be translated into a film, Oliver Twist would seem relatively benign.”

According to Jillings, the scale of what happened and how it was allowed

“are a disgrace, and stain on the history of child care in this country.”

Had the report been published at the time, it would have sounded alarm bells and things would have moved much faster.

The report was not published because of concerns over libel, and because of legal advice and concerns from the council’s insurers, Municipal Mutual Insurance, which warned that publication would encourage court cases and compensation claims. The report, which was limited to 12 copies only, was virtually unseen by committee or council members and was pulped. The insurers even suggested that the chair of the council’s social services committee, Malcolm King—a brave and determined whistleblower—should be sacked if he spoke out. They wrote to the council:

“Draconian as it may seem, you may have to consider with the elected members whether they wish to remove him from office if he insists on having the freedom to speak”.

In November 2012 Malcolm King said:

“Because it was suppressed, the lessons of the Jillings report were not learned. It was the exchange of financial safety for the safety of real people. It was one of the most shameful parts of recent history.”

In 1996, just before William Hague announced the Waterhouse inquiry, I tabled four early-day motions to put on the record what had allegedly happened in north Wales, because I had seen the Jillings report. To do that, I had to block parliamentary business for two nights running. As Members can imagine, I got into considerable trouble with my Chief Whip, as well as with Whips from other parties. I re-tabled one EDM in November 2012, which contained the gist of the complaint at the time. Back then, however, the subject disappeared from the Order Paper. The moment the Waterhouse inquiry was announced in Parliament, discussion of these matters in this place was shut down for four years. That is why I thought it so important at the time to table the EDMs, so that people would understand the seriousness of the allegations.

It was not until July 2013 that a redacted version of the Jillings report was finally published, after a request by the BBC under the Freedom of Information Act. Flintshire County Council had previously uncovered one copy of the report in its archive. The six north Wales councils took legal advice on whether it could be made available. That was after demands by myself and many others for the report to be published after the Jimmy Savile sexual abuse scandal came to light.

I want to finish by discussing the Waterhouse inquiry. At the time, it was

“the biggest investigation ever held in Britain into allegations of physical, sexual and emotional abuse of children who passed through the care system”.

The findings, which were published in February 2000, concluded:

“Widespread sexual abuse of boys occurred in children’s residential establishments in Clwyd between 1974 and 1990. There were some incidents of sexual abuse of girl residents in these establishments but they were comparatively rare.”

The Waterhouse inquiry stated that the insurers had

“acted throughout with the honourable intention” of preventing the council from acting in such a way that they would be forced to repudiate liability for claims. However, during the Waterhouse inquiry, the insurers’ representatives accepted that they went too far and

“that at times the tone of the correspondence on their behalf”— that is, the insurers’—

“was intemperate and went too far in the demands made of the Council.  They accepted also that their approach to the dilemma of striking a balance between the duty of a council to seek the truth and identify reforms on one hand and its duty to protect its financial interests on the other, may be open to criticism.”

The inquiry made 72 recommendations for changes, constituting a massive overhaul of the way in which children in care are dealt with by local councils, social services and the police. Recommendations 71 and 72 called for the Law Commission to investigate the legal issues arising from the clear conflict of interest between insurers and the insured. In July 2004, The Law Commission published a 220-page report, “In the Public Interest: Publication of Local Authority Inquiry Reports”—No. 289. That very thorough report makes two principal recommendations for reform: first, to amend the law of qualified privilege; and secondly, to create a new power of inquiry. The report found that

“insurers do in practice ‘lean’ in some way on authorities to prevent publication when reports may reveal admissions of liability”.

It said:

“The practical difficulty is that insurers and local authorities are in a market. If the risk for the insurers becomes too great, they might either raise premiums so that it is uneconomic for authorities to pay them or they might walk away from the business altogether.”

The report also points out that although it investigates local authorities and their insurance issues, in principle the same issues can arise in relation to any public body providing a public service, other than central Government. While the Law Commission report was presented to Parliament and accepted, it was not implemented.

It is a matter of concern that insurance companies can still exert adverse influence on any inquiry or report on complaints about children in the care of local authorities. As Tim Hulbert, former director of social services in Bedfordshire, explained in a report on the BBC’s “File on 4”,

“There is actually a conflict between the responsibilities of a local authority to safeguard its finances, which represents the interests of the insurers amongst other people, and the responsibility to protect children in whatever circumstances.”

He went on to say:

“For that reason, it needs to be dealt with as part of the whole examination of what influences have allowed the cover-ups of child abuse for so long.”

While we wait to see what comes out of the Macur review, I fear that the Goddard inquiry will not have access to that uncompleted review and may not have access to all previous unredacted local authority inquiry reports.

It is now high time—I hope the Minister agrees—that the Government implemented the Law Commission’s recommendations and brought forward a Bill to reform insurance company influence. I hope that in future any council that wants to publish a report, on whatever subject, will be protected from its own insurers. This matter has not yet been resolved and needs to be put right.

Finally, I pay tribute to Alison Taylor, a residential care worker who was one of the first whistleblowers in Gwynedd, and to Councillor Malcolm King, who was the chair of social services at Clwyd County Council. They were both outstandingly brave, and Alison Taylor was sacked because nobody believed her at the time.

Photo of Caroline Dinenage Caroline Dinenage Minister for Equalities (Department for Education), The Parliamentary Under-Secretary of State for Justice 5:19 pm, 16th July 2015

I congratulate Ann Clwyd on securing this important debate. She has been absolutely tireless in her efforts to expose the barriers to justice for children who were abused while in the care of the state. She speaks today with as much passion as ever about this tragic issue, and I commend her for bringing it to our attention once again.

Child sexual abuse is of course a despicable crime that this Government are absolutely determined to eradicate. It is a fundamental right of children and young people that they should be protected from such abuse.

The right hon. Lady spoke very eloquently about her concerns that local authority inquiries into abuse in care homes in the former county of Clwyd and other areas of the country have been barred from publication so as not to jeopardise councils’ insurance cover. She is absolutely right that that is completely unacceptable. I wholeheartedly agree with her that it is terrible if inquiries do not see the light of day. That is true whether these are cases into child abuse or into failings in any other institution. Not only is it a completely unacceptable waste of money and resources for an inquiry to be carried out and not published, but, much more importantly, it is unforgivable if the failure to publish an inquiry means that we do not learn the lessons from the atrocities of the past and that more children suffer in the future. In my response, I hope to be able to demonstrate that the Government have addressed her concerns, and that we are learning from the past to make sure that children are protected both now and in the future.

I fully understand the right hon. Lady’s disappointment that the then Government failed to take forward recommendations in the Law Commission’s 2004 report. That report followed recommendations from the Waterhouse inquiry into child abuse in north Wales children’s homes. She outlined a lot of what the Law Commission said. As she pointed out, although its recommendation was accepted when it was presented to Parliament, it was never implemented. However, there have since been a number of changes, in both the insurance industry and the statutory framework for inquiries, which I will outline.

I fully appreciate the right hon. Lady’s view that it is not appropriate for insurers to influence the terms of reference, the processes or the outcomes of inquiries that local authorities commission; nor is it appropriate for them to influence the content or publication of the final reports. As I understand it, that is also the view of the Association of British Insurers.

I understand that many standard insurance contracts across a range of product lines contain a clause requiring the insured not to admit liability or to settle a claim until the insurer has provided written permission. One of the reasons for that is to ensure sufficient time to establish the facts in an individual claim properly.

I have checked the position with my counterparts at the Treasury. Their view is that, at present, there is no indication that any insurer has broken any regulatory rules. That said, the Government are determined that financial services firms be subject to appropriate regulation. The Financial Conduct Authority regulates the insurance industry in the UK and sets the standards required of insurance firms in relation to their business. It also supervises the conduct of insurers and will take action against insurers that are found to be in breach of the FCA rules.

Furthermore, the Association of British Insurers has informed me that it is working with its members to create clear guidance and to make sure that an insurer’s role in these sensitive processes is very clearly understood. The insurance industry recognises the sensitivities of such child abuse inquiries for the survivors of abuse, as well as their importance in investigating what went wrong and what lessons can be learned.

As well as better regulation of the insurance industry since the right hon. Lady first became involved with these issues, the whole statutory framework for inquiries has changed beyond recognition both in local government and in central Government inquiries. She asked for clarification about whether previous redacted reports would be available to the new inquiries. As they were statutory inquiries, the reports will indeed be available.

The Secretary of State for Communities and Local Government has the power to direct a local inquiry to be held into the way that a local authority has carried out its functions if he is satisfied that an authority has failed to comply with its duties. In such local inquiries, witnesses can be compelled to attend and give evidence on oath. In central Government, we now have the Inquiries Act 2005, which repealed the Tribunals of Inquiry (Evidence) Act 1921, under which the Waterhouse inquiry was originally set up. The 2005 Act provides a much more solid statutory framework for inquiries, to make them swifter, more transparent, less costly, and more effective at finding facts and making practical recommendations. It also aims to restore public confidence in inquiries, particularly given the concerns following previous inquiries such as that into Bloody Sunday. It clearly sets out the respective roles of inquiry chairs and Ministers, and it stipulates that proceedings should be in public unless there are good reasons to restrict public access.

Nowadays, public inquiries rightly expect to receive full and frank co-operation from all parties. They regularly take steps to ensure that the evidence gathering process, and subsequent recommendations, are free from undue influence and retain public confidence. Public inquiries are a vital means of holding public bodies to account and providing answers to some of the most troubling events, and nowhere is that more necessary than in relation to child sexual abuse.

The Home Secretary’s independent inquiry into historical child sexual abuse will investigate whether, and to what extent, public bodies and non-state institutions have taken seriously their duty to protect children in England and Wales. The inquiry will challenge institutions and individuals, without fear or favour, to get to the truth. It has been established under the Inquiries Act 2005 and so can compel witnesses and call for evidence. There are no time limits on what the inquiry can consider—it is free to consider evidence from any point in the past without restrictions.

The Government very much welcome the fact that Justice Lowell Goddard—a highly experienced and respected High Court judge from New Zealand—is leading this inquiry. Victims and survivors were instrumental in setting that up, and they will be at the centre of the inquiry’s work as it moves forward. We want nothing to stand in the way of the inquiry. This is a once-in-a-generation opportunity to get to the truth, expose what has gone wrong in the past and learn lessons for the future. In addition to the Goddard inquiry, in March 2015 the Prime Minister launched the “Tackling Child Sexual Exploitation” report. We are getting on with delivering the actions in that report.

As the right hon. Lady knows, Lady Justice Macur is carrying out a review into the scope of the Waterhouse inquiry and whether any specific allegations of child abuse falling within the terms of reference were not investigated. I know that the right hon. Lady has been interested in that review from the outset. Like the Goddard inquiry, that review is entirely independent of Government, and Lady Justice Macur made it clear from the outset that her review would be thorough and that she would draw no conclusions until she had considered all the evidence. We look forward to receiving that report in due course.

There have also been major changes in the way that children’s homes are run since the right hon. Lady first became involved in these issues. Children’s homes provide care for some of the most vulnerable, traumatised and challenging children and young people in the country. Many homes provide excellent care, but we want to make sure that all homes provide high-quality care that meets each child’s individual needs and enables them to live their life to the full and reach their full potential.

The legislative and regulatory framework around the regulation of children’s homes is very different today from how it was in the past. Changes over the past 12 years include a comprehensive programme of legislation that aims effectively to safeguard all children living away from home in residential and foster care. For example, all children’s homes and fostering services must now be regulated and inspected by Ofsted, and all people working in them must undergo enhanced disclosure checks. Last year, the Government reformed care planning and children’s homes regulations to improve the safety of children in residential care. That included strengthening safeguards when children are placed out of area, and when children go missing from care.

Earlier this year, the Government introduced new children’s homes regulations, which include quality standards that all children’s homes must meet for their children. One of those is the protection of children standard, which clearly sets out what staff must do to ensure that children are protected from harm and enabled to keep themselves safe—a lot of change, and all for the better.

The right hon. Lady highlighted a sensitive issue that goes to the heart of society, and society must surely be judged by the way that it looks after its children. The historical sexual abuse of those trusted to the care of children’s homes in north Wales and in foster care was truly shocking. More recently, we have seen the systemic and appalling abuse of children in Rotherham, Rochdale, Oxford and elsewhere, and we know that this crime affects communities up and down the country.

Sir Ronald Waterhouse’s report in 2000 led to the Law Commission report and recommendations, but nothing was really done about the issue. Today, there is a real will to tackle this stain on our society. Many of the issues that the right hon. Lady has highlighted are now being addressed by initiatives across Whitehall.

The right hon. Lady has worked utterly tirelessly on this issue and I give her every credit for doing so. I have every confidence that Justice Lowell Goddard’s inquiry into historic child sexual abuse will both allay her concerns about transparency and finally fully expose the truth behind the troubling events that she has been fighting to uncover for so many years.

Question put and agreed to.

House adjourned.