Report (5th Day)

Part of Legal Aid, Sentencing and Punishment of Offenders Bill – in the House of Lords at 3:45 pm on 20th March 2012.

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Photo of Lord Beecham Lord Beecham Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Health) 3:45 pm, 20th March 2012

My Lords, let me make it clear that I do not for a moment charge the Minister-or indeed the Government-with conceiving of this as in any sense aimed at trade unions. It is a by-product of policy. Let me also remind your Lordships that referral fees are only banned-certainly at the moment, under the terms of this Bill-in respect of personal injury claims. For any other kind of arrangement, referral fees are apparently acceptable-not, however, in the context of personal injury claims.

That really illustrates whence this proposal comes from. It comes from the unacceptable activities of those who have perhaps been promoting spurious claims-and we will come at the next amendment to the kind of techniques that some of these firms and outfits adopt to encourage claims in a way that fosters this myth of the compensation culture. That is the genuine motivation of the Government; what they are doing to deal with it goes too far.

I do not recall having jousted in legal terms with the noble Baroness, Lady Deech, 50 years or so ago when we shared adjoining desks at the Honour School of Jurisprudence, but I will joust a little with her, if I may, this afternoon. She first of all asserts that it would be an incentive for firms not to do the job properly. I do not know what possible basis she can have for saying that. A solicitor's job is to do his best for his client. In a sense, there are two clients when one is acting for somebody referred by an organisation. Far from it being the case that there is no incentive to do the job properly, there is a greater incentive to do the job properly when one has a connection with a potential source of work-whether there is a referral fee or not -because, of course, one does not just lose and upset one client: one potentially loses a whole stream of work. In fact, therefore, the converse of her proposition is actually true.

The second of the noble Baroness's points which I seek to rebut is that this deprives people of choice. A union member or a member of a charitable or other organisation does not have to use the organisation that is recommended or go to one that pays a referral fee. They have the same choice as anyone else. But they may choose to rely on their own organisation, trade union or otherwise, having established from its experience that a particular firm or firms are capable of carrying out the work. The choice, however, remains with them. The noble Baroness has been on the website and discovered the Labour Party's scheme. Let me tell her and the House how much that scheme has raised: nil, nothing, not a penny. It is about as vibrant as Monty Python's parrot. It is redundant. It is a dead scheme. It has never been activated, so that issue need not distract your Lordships' House.

Before I conclude, I should make one other point in relation to charitable organisations. The ones I have mentioned operate on a referral-fee basis. There are three of them and I think there may be others, although perhaps that is a little beside the point. I liken the process to another aspect which is certainly something that political parties and many charities operate, and that is an affinity card with a bank, where a percentage of one's expenditure when using the card goes to the organisation. In precisely the same way that it could be alleged-I think wrongly-that as referral fees increase costs in the legal system, so by definition an affinity card must push up the costs in relation to financial services. It is an analogous situation.

I feel strongly about this-