If we are to regulate the claims-handling world, we must do so properly. The definition of claims management services in the Bill has clearly been drawn intentionally wide to ensure that there are no loopholes that unscrupulous individuals or companies could use to evade regulation. The definition captures all those who provide claims management services, subject to the points that I made about the term “regulated”.
However, there is also a power to exempt. While I can see the logic in exempting bodies whose claims management services will be regulated under the new Legal Services Board umbrella, I cannot understand why the Government believe that trade unions should be exempt, because some have clearly behaved in the same way as disreputable claims handlers.
The Times has exposed the activities of the National Union of Mineworkers. It says:
“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.
The solicitors concerned, Yorkshire-based Raleys, have been paid £53 million of public money for their work on the cases settled so far.
The NUM has banked an estimated £10 million from the compensation scheme but has not paid legal costs in any of the 28,000 cases that Raleys has...handled.”
One of the claimants, Mr. Roberts from Worksop, Nottinghamshire, said that
“when he first contacted Raleys he was told he could only proceed if he signed a document agreeing to pay NUM contributions out of his compensation.”
“I was under the impression that the NUM was paying for the claim to go through and that they were supporting me.”
Recently, however, the Law Society’s adjudication panel has ruled against inadequate professional services in this connection.
According to The Times, the right hon. Member for Rother Valley (Mr. Barron), who was a senior NUM official, described the union’s arrangement with Raleys as
“a scam from day one”
“The NUM has not put a penny into fighting these cases and they have raked in millions of pounds for doing very, very little”.
On Second Reading, the hon. Member for Bassetlaw (John Mann) described the NUM’s activities and highlighted the case of his constituent Mrs. Beckett, who was not a union member, but who was invited to have the NUM fund the case. That shows that the NUM was acting as a pure claims handler.
Mrs. Beckett was never invited to do anything. She was presented with a fait accompli, having signed with a solicitor and had no dealings of any kind with the third party.
The hon. Gentleman makes the point even more forcefully than I did. What has happened is a scandal. The hon. Gentleman continued by calling on the NUM immediately to repay all the money that it had acquired through compensation cases, and I echo his comments. As far as we know, however, the NUM still chooses to keep the money.
The hon. Gentleman also pointed to the activities of the Union of Democratic Mineworkers, which shows that the NUM case is not unique. Indeed, there have been 750,000 registered claims so far, 390,000 of which have been settled. The damages total £2.8 billion, and the solicitors’ fees total £665 million.
The hon. Member for North Durham (Mr. Jones) cited the two unions for their behaviour and said that Thompsons solicitors had been garnering claims for the NUM and joining people up at £20 a time as so-called associate members. Those individuals then have 7.5 per cent. of their compensation deducted and given to the union for nothing. Unions should not be allowed to conduct themselves in that way; they ought to be regulated. There is no justification for their exemption. The Constitutional Affairs Committee, which after all has a Labour majority, reached the same conclusion in its report entitled “Compensation Culture”. It said that it did not see any benefit in exempting trade unions,
“since all claimants should have protection and the opportunity of redress, where malpractice has occurred.”
And it concluded:
“We would expect that trade union services would be able to comply with any regulatory regime without any difficulty”.
The Minister has said that she can exempt the unions and still apply conditions to them under clause 5(3). She talks of a code of conduct and the possibility of withdrawing exemption if it is breached. Other hon. Members have talked about the role of the trade union certification officer, but that is prescribed in statute and it does not include the area under discussion. We have heard nothing to suggest that his powers will be expanded. We have not seen the code of conduct, and we would question what teeth there are to enforce it. If it is going to be a forceful and satisfactory measure, I am surprised that we have not seen it.
When we talk about teeth to enforce a code of conduct, we should not forget the Bill’s powers that the regulator will use. They are wide-ranging and tough.
I can understand the hon. Gentleman wanting to defend the union he loves, but when it comes down to it, Raleys the solicitors has been done by the Law Society. That was the finding. But the trade union, the NUM, received £10 million, and it has not given a penny back. So who will regulate the union? That is the point. It is all very well to say, “It is only a few trade unions,” but it is only a few solicitors. We still regulate all them, because we cannot guess which one will misbehave.
Would that we did regulate solicitors. The hon. Gentleman and the Committee will be interested to know that Raleys has not paid back Mr. Roberts despite the fact that the Solicitors Disciplinary Tribunal upheld the Law Society’s decision, as did the adjudicator. He still awaits justice. The circulation within the Law Society, whereby solicitors practise avoidance even when their own regulator rules against them, must be considered in terms of the teeth of this Bill.
The hon. Gentleman’s view is that at least there is power over and regulation of solicitors, but is he really satisfied with a system that just lets the unions off? What is the position of the claims handler, Vendside, about which he speaks regularly, and which does not speak charitably of him? It is wholly owned by a trade union. Is he really satisfied that under the Bill, a body such as that can be let off because it comes under a trade union?
That is the point. Vendside acts as a claims handler, not as a trade union. It is distinct, and it will come under the legislation of claims handlers. Where trade unions act properly and legitimately as trade unions within the code of practice, they should be exempt. But if, like Vendside, they are claims handlers, they will be subject to the regulator.
I do not think that the hon. Gentleman has spotted the full subtlety of what the Government are suggesting. I agree with him—all claims handlers ought to be covered by this Bill. If they are already regulated by another body then they may be exempt. But the Bill says that only people whom the Government choose to regulate are actually regulated. It is quite easy to be a claims handler under this Bill and not be regulated at all. The Minister can then say that a union is exempt.
What is Vendside but a wholly-owned creature of the Union of Democractic Mineworkers? It is the UDM. I am concerned that the clause is not going to cover Vendside. It is not going to cover the unions. And I cannot imagine that the hon. Member for Sherwood (Paddy Tipping) would sanction the way the NUM and the UDM have been going on—it just is not good enough.
The hon. Gentleman should be more specific when he talks about the NUM. It is a number of affiliated bodies, many of which matter in very different ways, so he must be careful with his language. It is clear that he is trying to make an analogy between claims handlers and trade unions, but trade unions are regulated. They have an internal rule book, access to disciplinary procedures, employment tribunals, certification officers, and the ultimate one which we have to face, is that its officials are voted into office, which does not happen with claims handlers.
Well, of course the certification officer is not able to interfere in this area because, as the hon. Gentleman will know with his long record in the union movement, and his great support for his union which he loves, the certification officer’s remit does not cover the activities of a trade union acting as a claims handler. If he wants to tell me of some statutory provision that says that the certification officer does, then he is quite welcome to stand up and do so. I have read up on certification officers and I can tell him that they do not cover this area.
As regards the NUM, I hope that he was not trying to threaten me in some way. The fact of the matter is that it is not me but Labour Members of Parliament who have stood up and made serious allegations against the NUM. One of our best reputed national newspapers, The Times, has investigated this in the context of the solicitors’ disciplinary body, where all these facts have been revealed. So it is not me, as a Conservative, making up some story—these are the facts, and he ought to get to grips with them. It is not right for Parliament, just because the hon. Gentleman has a sentimental attachment to trade unions, and he and his brother Labour Members are not prepared to stand up and be counted, to allow vulnerable people to be treated this way.
I need no lectures from the hon. Gentleman and his party on how to stand up and be counted. There is a factual incorrectness there. It is not the NUM, but certain regions of the NUM, that have been taken to court. The National Union of Mineworkers is an organisation of federated unions. There is a difference.
I am shocked that the NUM has behaved this way. The hon. Gentleman might say, “Oh well, it wasn’t my particular little bit of the NUM”. But surely, he must have a sense of shame that the Durham NUM has behaved like this, given the history of the union movement. Surely he is prepared to say that that is shameful? Is he really saying here, in this Committee, in the Parliament of this land, that he is prepared to defend miners having money taken off them, out of their compensation, without their knowing the truth that the Government were paying the compensation? Is he saying that that is acceptable?
What I am saying is that the hon. Gentleman does not have all the facts and that those facts have not been established anywhere in relation to the Durham NUM. The Durham area is actually the Durham Miners Association, it is not the Durham NUM. The hon. Gentleman’s ignorance has let him down in this debate. The only people who have gone through court are the people who took the case against Raleys, which has nothing to do with the Durham area of the NUM.
All I say to the hon. Gentleman is that he should look at column 494 of Hansard on 8 June, and at what his Labour colleague the hon. Member for North Durham said—if anyone should know, he should.
To continue, if I may, it is a question of enforcement. If someone is regulated under the Bill, severe powers of enforcement are available to the regulator. I am looking at paragraph 10(2) of the draft regulations, which are called something long and complicated—the draft Compensation (Claims Management Services) Regulations 2006. That range of powers includes search warrants, and regulators are allowed to demand documents and information and to investigate complaints in all sorts of ways. The regulations provide ways in which breaches can be tackled and deal with the more complicated issues of warrants for entry to residences—the sort of powerful investigatory approach that we have seen with other important regulators such as the Financial Services Authority. Why should the unions be let off all that?
At the moment, we are getting glimpses of what is really going on only thanks to The Times and some good-hearted Labour Members of Parliament. Should these people who are breaking all the rules—or so it seems—be able to hide and get on with such appalling practices without being subject to proper investigatory powers? Labour Members need to give that a bit of thought. Obviously they love the unions, but some of the most vulnerable people in our society need protection and a Conservative should surely not be lecturing Labour Members about such matters. Their history as a party and a union movement is that they were the people who stood up for those who were vulnerable and in need of help. It is not good enough. Will hon. Members please support us?
There should be proper protections. I am not asking for the unions to be treated in a discriminatory manner, merely that they should be treated the same as everybody else.
I should declare first of all that I am a member of the NUM, and that I still pay my dues to the NUM Scotland area. The point that my hon. Friend the Member for Blaydon (Mr. Anderson) was trying to make was that the NUM has many parts. Those parts have their own rule books and officials are elected to represent the people who pay their dues to the union. At the end of the day, the hon. Gentleman has not mentioned that the claims handlers are distinct from the unions. I do not count the Union of Democratic Miners in that, as it is not recognised as a union by the TUC and it runs a legal service, not an arm’s-length one.
There is another point. Unions are there to spend millions of pounds on defending their members and taking cases to court. The chronic bronchitis and emphysema case would never have been taken to court if it had not been for the unions spending millions of pounds. Claims handlers and lawyers do not do that; trade unions do. It is very distinct.
Does the hon. Gentleman think that there is a difference between a union that has a legal branch, as companies sometimes have a legal branch—with lawyers who do the work in-house—and companies that are entirely separate law firms? Would there be a difference, in his view, if there was not a payment back to the union by the solicitor’s firm even when there is an arm’s-length relationship? Could he unpack what he wants to do? I understand where he is coming from, but I would be grateful if he could explain whether he thinks that a difference in approach is needed for the two different ways of dealing with a trade union claim?
The two key issues that have emerged are the referral fee—or, in the example given by the hon. Member for North Durham, the associate member fee, which must amount to the same thing—and taking a slice of the damages. My view is that if one criticises those outside the union movement for making charges when all the legal costs are paid by the Government, it is very hard not to make the same point about trade unions. I do not want to get into the issue of structures. I do not know whether the hon. Member for North Southwark and Bermondsey (Simon Hughes) agrees, but I fear that if a gap—a loophole—is left, that is where the unscrupulous will go. I am just trying to say, “Look, let’s cover everybody. If you are a person who is regulated by some other body, fine. Let’s exempt you from this because you are covered there.” However, I do not believe that that would apply if a trade union were continuing the sort of activities that Vendside have been pursuing, or some of the other examples that Labour Members have given.
The hon. Gentleman is an expert, and hon. Members on the other side of the Committee know much more about Vendside than me. My understanding of Vendside is that, in law, it is a separate company set up by the UDM to do claims handling. There is a difference between in-house processing of somebody’s claim, and giving it out to somebody else, which could either be a recognised law firm, regulated by the Law Society, for good or for ill, or a claims company, such as Vendside.
I thought that myself, but I eventually received the letter, which described the hon. Member for Bassetlaw in critical terms, and all the references in it are to UDM Nottingham section/Vendside Ltd. It seems to be treated as one operation. In fact, the president of the union signs the letter on Vendside paper, so I do not know the extent to which there is genuinely a Chinese wall. The people who are suffering with these dreadful illnesses, and making claims under a scheme that the Government have set up to deliver compensation for them, should not be subject to that sort of abuse. I do not see why everybody should not be covered by some proper regulation. That is the whole point of the amendment. I said at the start that we wanted regulation to be effective, and that is all that I am trying to achieve.
I am pleased to follow the hon. Member for North-East Hertfordshire (Mr. Heald). Let me to say to him that I have thought long and hard about the matter, and have no hesitation in joining my colleagues, and latterly him, in criticising the activities of some sections of the NUM and the UDM/Vendside. I accept that it is not easy to sort out the legal structure of Vendside. It is a company that is 100 per cent. owned by the UDM; it is a separate company but has close links and the same directors and executives. In reality, it is UDM Vendside. As I say, I have no hesitation complaining about those abuses, which are irresponsible and immoral. It has yet to be seen whether they are illegal. The hon. Gentleman rests his case on an argument from the coal health claims sector, where the Government are rightly funding the fees. There is abuse, which needs to be controlled.
However, what has made me come to the conclusion that trade unions with legitimate activities should be exempted—I shall come to that shortly—is that I followed the history of trade unions taking claims against employers. Trade unions are a force for good when it comes to industrial injury. At present, only trade unions have the resources to be able to take on bad practices against employers. As my hon. Friend the Member for Midlothian (Mr. Hamilton) has already told the Committee, under the COPD legislation, claims would have gone nowhere without initial funding from the trade union movement. I see nothing wrong in principle with trade unions handling and pursuing claims—nor, provided agreements are open and transparent with members, with trade unions taking some money to put into the pot to fund future actions. That is collectivism and a community response to a real problem.
There is no doubt that trade unions are taking forward activities that are within the scope of a claims farmer or handler. I want a clear definition of when the code of practice will be used. It would be helpful if we had seen it and perhaps the Minister will tell us what discussions there have been with the TUC about the code of practice. I want an absolute assurance from the Minister today that trade unions that act improperly—I have no hesitation about saying this—will not be exempt from the Bill.
As my hon. Friends have said, there is a difference when it comes to trade union activity. At the end of the day, trade union members belong to an organisation that has a rule book and fought for democracy. Trade union members can make changes to its union’s policies and leadership.
I bow to the hon. Gentleman’s wider knowledge of the history of the NUM and UDM in Nottinghamshire. Can he tell us—this is a straightforward inquiry—whether there have ever or often been debates at Nottinghamshire area NUM or UDM conferences when a motion has dealt with the issue and the members have had the choice of deciding whether they want a deduction of money paid to be put in the pot or not? Has that been a regular issue? Have members had an honest, straightforward choice with no bullying or intimidation on the floor of the conference?
Many of my colleagues, for historic reasons, will have nothing to do with the UDM and I accept and understand that, but it is a major trade union in my area. I have been to the UDM conference and have criticised its activities of doubling-charging for co-handling claims. I have been booed and heckled for that, but within the union movement there has been a lively debate about that point. I do not think the debate has been detailed enough or in sufficient depth and it seems to me that some members of the UDM executive do not understand the activities of Vendside, but there has been a debate and we must encourage it. I hope that the Minister hears the hon. Gentleman’s comments because if it is argued that trade unions should be exempt, the opportunity of changing the rule book and making debate and democracy better must be a core function of the argument.
So I say to my hon. Friend the Minister that I have changed my mind about the matter. She knows that in the early days of preparation for the Bill I took the hon. Gentleman’s view that trade unions should not be exempt and should be treated as claims handlers, but I am satisfied and will listen again to the Minister’s assurances that if trade unions act as claims handlers they will not be exempt and that the code of practice will be tough, strong and transparent. What guides me is looking back at the history of the trade union movement, the struggle of collectivism and of men working together in difficult situations, the need to collect resources and to take forward powerful influences against employers who act improperly and badly. That is what the trade union movement has always been about. We must not deny unions the opportunity to take a small proportion of any successful claim provided that the money is used for the future and the collective, continuing struggle for justice in work-related matters. I appreciate that those are old-fashioned arguments.
If some person with a dreadful illness is entitled to a service paid for by the Government so that they can get the full benefit of the compensation, how can the hon. Gentleman then justify taking part of that compensation and giving it to the trade unions? That goes totally against the spirit of the compensation schemes set up—I guess—with his support.
The hon. Gentleman is honest enough to recognise that at the beginning I said that that was irregular, immoral and might prove to be illegal. 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. However, we are talking about a small sector of the activities of trade unions.
That issue was brought to the fore by the two coal health claims involving those suffering from chronic obstructive pulmonary disease and vibration white finger. The Government are paying those bills, but in lots of cases, the trade union movement has collectively found the massive resources needed in order for a claim to be made. If a trade union member is aware that a deduction is being made for the collective good, and in their interest, they will not object. I am not including coal health claims—I write that off.
I suppose that it is possible that somebody might want to make a donation. However, the hon. Gentleman says, “Oh, the vast bulk are good, and therefore it is wrong to have the same regulation for trade unions”. I put this to him; the other night I went to the legal aid lawyer of the year awards for solicitors in this country fighting hard for and campaigning on behalf of people in need. They are fantastic people doing a great job and putting in unpaid hours.
We have heard about a few firms such as Raleys and Thompsons which are misbehaving in relation to those coal claims. I would not dream of arguing that every solicitor should not be covered by those rules, but how can he justify saying, “Well, if they are trade unions, it is different”?
I hold no brief for Thompsons, but many people come through my surgery who have problems at work, who have been denied justice and who have nowhere to go other than their trade union. It is interesting that the vast majority, or a large proportion, of the trade union movement uses Thompsons as their solicitors. I accept that it has failings and does not win all its cases, but it has a good relationship with the trade union movement.
I have experience in that matter; I think that I deal with more people using trade union legal services, such as Thompsons, than does the hon. Gentleman, and most are satisfied with those services. At the end of the day, if they are a trade union member, they have the right to argue and debate for change within that organisation. It must be right that trade unions have the opportunity and resources to take unscrupulous employers to court, which is why I have come reluctantly to the position that the Government are advocating.
I want to make a few remarks—the first in the context of the amendment.
Does the Minister intend to exempt before-the-event insurers, which constitute the largest group of potential exemptees? Without question, BTE insurance operates in Britain as a claims handler. For example, if one crashes a car, one goes to a claims handler. I am seeking her assurance that BTE insurers, in their role as claims handlers, will not be exempted from the legislation. It would be wholly improper for some of the current situations in claims handling, for example in car insurance claims, to be exempted. To illustrate that, I have received information that demonstrates that just two companies have the lion’s share of the car insurance market. That is only one part of BTE insurance, but it is the biggest part. If one crashes one’s car, one could therefore be in negotiation with one’s own insurer through the same insurer and never know it. That is clearly entirely unsatisfactory in terms of consumer rights. Will the Minister assure the Committee that she does not intend to exempt BTE insurers under the clause?
My second comment is that it is regrettable that during the Bill’s progress letters have been sent to certain members of the Committee and other Members of the House specifically attacking a number of MPs, including myself by name and other members of the Committee by implication. For those members not to have at least been copied into the letter shows that further investigation might be needed. Such inaccurate and misleading allegations could influence Members’ thinking on the Bill, and it is inappropriate for them to be given to anybody or to hold any sway. I am sure that they will hold no sway with members of the Committee, but the principle of the effective running of Parliament is at stake. The matter should be referred higher within the House, because such actions as those taken by Vendside Ltd should not be tolerated in a fair and democratic debate.
The hon. Member for North-East Hertfordshire said—I paraphrase, but I think accurately—that a special case should not be made for trade unions, but by specifically naming only trade unions in the amendment he does precisely that. Others could equally be exempted, so although I understand the principle behind what he is trying to do, there is a lack of logic. The terms of the debate have been whether unions should be covered by the rules. My understanding of what the Minister and her officials seek to do—she will correct me if I am off beam—is that they wish to ensure that unions are covered by the rules, but not by the regulator through self-regulation. I am interested only in how good the regulation is, and there is no good case for exempting unions, thereby saying, “Out with the rules”.
I shall come on to the definition of unions, which is critical in this context, but there is a good case for saying that unions as they have generally been defined in the debate are already covered by a range of legislation and statute. That means that their individual members have a range of remedies available. The Minister might insist that an effective code of practice be applied by the unions. However, not only is existing statute sufficient, there is possibly more power to regulate unions than any other body. There is already a common law remedy, because union decision-making and the use of union finances are covered by the Trade Union and Labour Relations (Consolidation) Act 1992 and others. The individual has remedy under those Acts. There is also a certification officer, who ruled that he was not prepared to look at the miners’ cases because they were not members. If they had been members, he would have been prepared to look at the consumer issues involved.
We must also consider the democratic structure of the unions, which are not sufficient but create a good argument because there is a danger of a loophole whereby precedent could allow other quasi-democratic organisations to avoid regulation.
I will give one example that I would want to avoid; the British National party. Four years ago in Stoke-on-Trent, the British National party attempted to become a claims handler, working with a firm of solicitors called Beresfords. They were going door-to-door, as part of their political campaigning, trying to recruit people.
Having received information and documentation from the Ceramic Union in Stoke, I challenged Beresfords solicitors and gave them an offer that they chose not to refuse. They decided not to work with that organisation. However, that is a membership-based organisation, in theory anyway, a registered political party.
It is essential that the detail is right. We are not talking about exemption. We are talking about whether self-regulation will be satisfactory in the context of unions. If it is, all sides of the House should—if they agree in the concept of this Bill and the principles—regard that as rather sensible because effective self-regulation is cheaper from the state’s point of view. Other precedents have been set. The Law Society is one that is similarly going to be exempt.
I do not see a principled problem. However, that relates to union members and it is union members who have the rights. The problem with the miners’ cases was not union members. That is the great irony. In every single area of the NUM, and in the UDM, union members were not charged.
Therefore, it was a myth that that was a contribution to help the fighting fund. It was not and was never explained as that. However, if it had been, union members would have been paying in. Union members were explicitly exempt from paying; they did not pay penny.
Is my hon. Friend aware that in Durham, the words “associate members” were used for people with no connection with the mining industry, in terms of their rights under the trade union legislation, there were none. In that case, would he agree with me that rather than being a membership fee, it was an access fee to get to the benefits, just as the claims handlers used?
If it had been a membership fee, the certification officer would, having looked at the matter, been able to intervene on their consumer rights. It was not a membership fee. If it was a membership fee, there would be a range of benefits that go with membership. That is what one pays membership for. Some of those are covered by statute, others are covered by the union rulebook and can therefore vary from union to union. However, some of the core ones are covered by statute.
That was never re-joining the union. People did not get ballots in union elections. They did not get access to other union services. My constituents and the hon. Member for North-East Hertfordshire praised The Times and a few members for raising the matter. However, the true credit goes to people in constituencies such as mine and others, who saw that something was going wrong. They were raising the issue in their own union, seeing something wrong and then raising it outside.
In my constituency, Mrs. Moorhouse is a classic case. Her husband was a lifelong branch official of the NUM. She took an advert out in the newspaper and found that she was paying a fee to the UDM. Mrs Moorhouse said it was straightforward,
“My husband would roll in his grave if he knew I had done this. I will do whatever is required.”
I have scores of people like that, individuals such as Mr. Albert Priest, on strike for a year, with whom I went to Raleys solicitors. He wanted to know why they had taken his money off him, together with three of his colleagues, also on strike for a year. Raleys came out with all types of nonsense trying to suggest that he did not understand what he was talking about and that he had been conned or kidded by me.
He understands what he is talking about. He understands that the Government have paid a shedload of money—£55 million in respect of Raleys—and he wants to know, as I do, that if the company wants to pay some of that money to the NUM, why not do so out of the £55 million? If Thompsons wants to pay some to the NUM, why does it not do so out of its £90 million or £100 million? Although the matter is subject to other investigation, I can put the reason why the solicitors can afford to pay that money on the record.
The UDM set up an agreement with an organisation called Indiclaim, and, before that, Walker and Co. There are some questions about those organisations, but the solicitor paid £500 as the highest rate in respect of Indiclaim claims to a third party and collected the Vendside-UDM fee from constituents. Out of the money received from the Government, the firms could still presumably make a profit taking the cases and be paid £500. If the solicitors—Thompsons with its £100 million, Raleys with its £55 million, Beresfords, Moss and the rest of them—want to pay the unions, allowing them to fight such cases not only can they, but they have ample resources to do so. Ironically, within the UDM, although it has nowhere near the number of union members of the NUM, precisely that has happened through Indiclaim and Walker and Co.
So the question is straightforward. The issue is non-members of the union, and the dividing line is straightforward. The moment that we had rights covered by statute, I would relax. I would use the law to ensure that justice was seen to be done. My constituents would then receive justice. Even now, without the regulation, it certainly would be much easier. There is no reason why people should have to go to court. Good regulation is important to avoid the process of going to court. That is what I want to achieve from the Bill, as do my constituents.
What does the hon. Gentleman make of the argument made by the hon. Member for Sherwood that there are people who want to support the UDM or the NUM and expect to pay a little bit out of their compensation to the union for future cases in respect of other conditions, and that I am wrong to think that the money should not just be taken out of the compensation?
Well, I set up one of largest strike funds in British industrial history in the Amalgamated Union of Engineering Workers 35-hour week campaign. People made a contribution, but it was voluntary. If the contribution is explained to people and it is voluntary, there is no problem. The problem comes when the contribution is compulsory and it is not explained to them. What would be the rationale for not explaining that the contribution was compulsory? It needs, first, to be proportionate to the amount of compensation and, secondly, to be explained.
I have put it on the record before in the House that no complaints have been made in Scotland, where the NUM levied a theoretically voluntary £50 per claim. Everyone paid it and I cannot see the rationale for anyone not paying it. I accept that, in theory, it is voluntary, but why would people not pay it? It is proportionate. It puts money into a pot that allows the union to take forward cases. The money is up front at the beginning. That is all highly rational, and I have no objection to it.
I am a member of the NUM in Scotland, where I pay my dues, and £50 is taken at the source. I have been a Member of Parliament since 2001 and, before that, I was a councillor. During that time, neither I nor any colleagues have received a complaint from anyone in Scotland about that contribution. Under Scots law, families also receive compensation. Members of the union, their widows and their families recognise that the union provides convalescent homes and many other types of support for miners’ families and villages. It is a continuous process and I hope that my hon. Friend will expand on it to make sure that we do not receive a false figure for what is being proposed.
It is absolutely right that people should be able to make a voluntary contribution of whatever they want. In the engineering unions, it was common that if someone won an industrial accident case, they would send a letter to the union journal saying that they had sent a cheque to the union fund because they were delighted with the service that they had received.
But the key is that the case was not conditional on a contribution being made. People were not told, “You have to do it in this way, and this much will be deducted.” The Scottish situation demonstrates the lie about the fact that the money was required to take other court cases. More common law cases than any other kind have been taken in Scotland. The Scottish system is totally defensible. In south Wales, the unions chose not to take anything.
There is an important issue of proportionality, but also an issue of principle. Mrs. Beckett, a widow, went to Raleys solicitors, having got their number out of the phone book. They deducted money for the NUM and told Mrs. Beckett, who did not necessarily read every last dot and comma of her solicitors’ letters, that the NUM was funding the claim. In fact, it was not. I do not believe that the NUM had ever heard of Mrs. Beckett. Then we found that both NUM Yorkshire and Raleys were defending her.
There is no defence for that. It is immoral, and I suggest that it is illegal. The Law Society was eventually clear about it. That kind of thing should not be happening. It is claims handling, straightforwardly and absolutely. Thousands of my constituents are in the same position. What really gets them going is when it is explained how much the solicitors get out of it. They think, “Hang on a minute. Why have I paid this money, to whom and why?” If I recall correctly, Mrs. Beckett, a widow, paid £598 to Raleys. That is one of the lower sums that I have dealt with. Many are much higher. With the UDM, it tends to be less, but it is usually two or four claims per family, and £352.50 seems to be the standard charge. Sometimes it is lower. People want to know why they are paying that and what they are paying for, and then they see. The UDM it has been straightforward. They can see the salaries, the pensions, the cars and the houses. That is where a significant amount of the money is going.
Will the Minister give us not just assurances—she is a genuine and honest Minister for whom I have the highest regard, as I said at the beginning of these proceedings—but the detail? It is essential that we do not get this wrong. If she wishes to hold some Members on her side in the approach that she is taking, the principle is not that the unions should be exempted. It is that self-regulation must be as effective as regulation.
If that is the case, I will be delighted. It would be better. It would make a clear divide between union members and non-members and make it much easier to define what constitutes claims handling and what constitutes a union representing its members. Even to have proper consumer rights regulated by the unions in relation to their members would be a major step forward. I therefore hope that the hon. Member for North-East Hertfordshire will consider not pushing his amendment, depending on what the Minister says. The amendment would not be too helpful to our deliberations.
I believe that trade unions should be exempted. I would have liked to see exemption in the Bill, but that is not to be the case. Trade unions should be exempted because of some of the points made by my hon. Friend the Member for Sherwood. Over the years, they have been able to collect together and to afford the legal services that have pushed the boundaries of the law. In a prior life, I was the deputy head of the NUM compensation department in Yorkshire. At that time, we had in-house solicitors and claims officers. Following an accident at a colliery, a claims officer would receive what was then called the AR1 or accident report form. He would decide whether he thought there had been a breach of common law or of statute and proceed from there.
As I said, the cases would be dealt with in-house, between the solicitors, the claims officers and the Coal Board social insurance department. Many cases were settled in-house. The few cases that could not be resolved within the framework of the figures that our side had put forward went to court. Generally, cases went to court on quantum issues.
However, that changed following the collapse of the coal mining industry. Many of the NUM areas could no longer afford to keep in-house solicitors or in-house law firms so they engaged the services of trade union solicitors such as Raleys and Thompsons. I can tell the hon. Gentleman that I telephoned Raleys to ask what some of the reserves that had been passed to the NUM could be used for. I was told that there are 200 surface claims that may be run. The Committee will be aware that the current chronic obstructive pulmonary disease scheme does not cover surface workers. That issue may well still be challenged. We will see.
My hon. Friend the Member for Sherwood referred to the COPD claim. I can tell the Committee that the COPD claim would have been unlikely to be resolved had we not had a change of Government. On 17 January 1996 I introduced the last debate on the COPD claim and requested that the Government consider introducing a scheme. If I recall correctly, the then Minister replied that one could not distinguish between the damage done to a person’s lungs by smoking and that done by dust. The trade unions were in the Gallery and decided, following that debate, that they would take the case to court. The case went to court and the High Court came down on the side of the trade unions. That was challenged. In between times there had been a change of Government, but the Appeal Court heard the case in February 1998 and decided that the decision of the High Court was correct.
At that point, the Government decided that they would put a scheme into being. Because the case was owned by the courts and not by the Government, they left the solicitors from both sides to negotiate a scheme and a fee structure. That is where the large sums of money referred to came from. Solicitors from both sides sat down and negotiated the fee structure, which the court accepted. The court endorsed the fee structure, as indeed it did the COPD scheme.
So the COPD scheme came into being as the result of the collective action of the trade unions. They were able to afford to take that case to court and through the appeals procedure and eventually to win through with a scheme. Trade unions have done that over the past century. In doing so they have pushed at the boundaries of the law. They are a force for betterment.
During the debate on Second Reading I made the distinction between trade unions and claims handlers. I used two cases to show that distinction. There is clearly a distinction. Claims handlers exist to make a profit, whereas trade unions and their legal services exist to represent their members and to ensure that the working environment is made better by collective action. So there is a huge difference, and I hope that the Minister will ensure that trade unions are exempted.
I do not come to the debate with any particular prejudice, although I was instructed and briefed by Thompsons in my previous job and held a brief from them. Given that the issue before us has been raised again, I thought that it would be courteous to ask Thompsons what the current practice is and I shall share with hon. Members the key points from their reply because they are relevant. They also pick up a point that the hon. Member for Midlothian (Mr. Hamilton) made the other day and confirm that there are differential practices north and south of the border because of differences in the law, and those are highly relevant to this debate.
I asked the hon. Member for North-East Hertfordshire whether he would take a different view depending on whether legal advice was in-house or contracted out, simply because I wanted to know whether he had addressed the question. Thompsons tell me—I have not done a survey myself, although other colleagues might know more about this—that unions “invariably” use law firms rather than deal with cases in-house, so I am working on the assumption that that is generally the case. In theory, unions could have their own lawyers, and we certainly had an in-house lawyer in the old days when I was a students union officer, but things have moved on, and I am assuming that pretty well everybody in England and Wales contracts out their legal advice.
Of course, such firms are regulated by the Law Society and come within its system. As people know, I am pretty critical of how that system has worked in the past, but I hope that it is being dealt with. I have tabled a later amendment to ensure that we link this debate and this Bill with the legislation that is coming down the track on the regulation of legal services, because, logically, we need to put them under the same umbrella.
The answer is that a trade union receives a request for help from a member, but then passes on any legal aspects to a company, which will act for it.
Perhaps I can pause there and add that the point that the hon. Member for Bassetlaw made a minute ago is important. There should be a clear distinction between union members, who are entitled to the services that a union can properly give them, and people who sign up for the day without having a proper link to the union through their employment. That makes all the difference. It is entirely proper that a union member and their immediate family should have the protection of the services that are offered to them as a result of their contributions, but somebody else should not be able to walk in off the street, become an associate member and get the benefit. That is important.
I will just give a summary of the points that Thompsons made. If the Minister believes, on advice, that they are untrue, I hope that she will tell us, because we all need to work on the basis of the facts. One key point picks up the contributions made by the hon. Members for Sherwood and for Bassetlaw and others. Thompsons say that unions have conducted all or much of the legal work for their members and their families for a long time, and that was certainly my experience when I did such work. They either did that work in-house or they passed it out; indeed, they mainly passed it out to firms such as Thompsons, and that was certainly true 20 years ago, when such firms did much union work.
Thompsons go on to say that, for many years, trade unions—particularly those in the coal industry, where there is a heavy incidence of disease—operated a scheme of funding
“that was based on contributions from successful cases cross-subsidising” other claims, and particularly test case claims. In the past, deductions were made sometimes by the union and sometimes by the law firm. However, they would, in theory at least, be put into a pot, although I understand the point about the profits going to the solicitors. As a result, there was money in the pot so that the firm could take a test case on a new form of industrial industry or disease.
Thompsons tell me—I have no reason to disbelieve this—that they have never benefited from such deductions and that they have passed them on to the unions to benefit the members who use their legal schemes. I have not been able to check that, but that is what I am told. I hope that it is true, otherwise Thompsons will doubtless be challenged.
I am listening carefully to the hon. Gentleman, but he is a little behind the times. He is suggesting that we still have the system that used to exist, whereby somebody joining a union was covered if they lost a risky case. That is not the case since conditional fees came into operation.
Thompsons have been a bit disingenuous in what they have said to the hon. Gentleman. There is a big difference between the cases to which he refers and a scheme case, in which there is no chance of anybody losing anything at all.
Thirdly, Thompsons make the good point that the unions are not alone in making deductions and that the state also does so. If claimants receive state-funded civil legal aid and succeed in their case, they pay back into the legal aid fund. That continues to be controversial, but remains the case.
I am sorry to intervene again on the hon. Gentleman, but in the case of the COPD scheme and the people with whom I and my hon. Friends the Member for Bassetlaw and for Sherwood have dealt, the solicitors were paid and the fees were guaranteed by the Government. The idea that those cases were somehow risky is wrong—they were underwritten by the Government. To say that they were on a par with other trade union cases with which I used to deal on a professional basis is just not true.
I understand that and accept that there is a difference between a test case on new ground, which is a risk and could last a long time and affect a lot of people, and a case in which there is clear underwriting of costs. I do not dispute that.
I could not quite follow the point that the hon. Gentleman was making about those who win their cases having to give money to the legal aid fund. There was a scheme years ago whereby a counsel had to put 10 per cent. back in the pot, but that went out years ago.
I am talking about the pre-2000 position. When I used to appear in the courts, if the claimant won a civil legal aid case the costs were taken out of the damages awarded. That is why, as I am sure you will know from your own experience, Mr. Atkinson, there could be a big damages claim but after a two-year case the claimant would be left with a very small amount of money. That is why the best advice was, “Never go to a lawyer if you can possibly avoid it.” I am not being flippant about that.
I also wish to put on record the fact that most of the big test cases, not only those taken by Thompsons but others in the name of trade unions, have been won. I am talking not about cases that have already been argued, after which everybody seeks to gain the benefit of them, but about new ground cases. The big test cases run for many years, as did the one that we have debated, and the unions are best placed for such cases because they have the widest experience and the most people able to give appropriate evidence and help them to build up a case with examples. Chronic bronchitis and emphysema are obvious examples of such cases. It is also true that there is benefit in being a union member because otherwise an individual would have to use a little local solicitor who has not dealt with such cases and does not have the experience to pick them up. Going to a firm that knows what it is talking about and has been through the courts before is clearly a potential benefit to a union member.
In those days—before 2000—there was cross-funding whereby a normal contribution went in and test cases were paid for from that source. The hon. Member for North Durham made the point that in 2000, when the Access to Justice Act 1999 came into force, insurance and conditional fees started to be part of the way in which the system works. I understand that because of the ability to insure personal injury cases, contributions from compensation are now very rarely needed. I therefore assume that the hon. Member for Sherwood was talking about the pre-Access to Justice Act cases before 2000, when money was still taken out of the kitty. People should not have to be asked for money now. It should not come out to be paid either to the union, in most cases, or to the law firm because there is an insurance policy that they take out as soon as someone comes up with the claim.
That is not precisely the case, but my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) talked about the case that has been prepared for surface workers. There is also a long-standing matter about cases on beat knee or miner’s knee, which will not be insured. It will be necessary for the trade union to provide the initial funding to take the cases forward.
I accept that. The qualifying point that I was going to make is that there are both old and more recent cases in which a conditional fee or insurance does not work. Those are usually test cases in areas that have not been tried before in which insurance companies will not pick up or be able to quantify what can be big libels.
I accept that there are cases that trade unions need to fund. However, they do not need to get that money from individual members. The other way is to claim a success fee from the other side, which creates a pool of money that can be used for cases that are lost or for tests. I know that because one of my last acts before leaving chambers was to set up such a thing in the north-east of England.
I understand that too. May I say, Mr. Atkinson, in deference to your intervention, and to place it on the record, that my view is—on the basis of the information that I am sharing with the Committee—that they should not be exempted? If they are to be exempted at all, it should be on the basis of a rational assessment of the law position in England and Wales. For the reasons that the hon. Member for Midlothian gave, it may be entirely different in Scotland, which will mean that there are no conditional fees and all the other things.
Is not the hon. Gentleman missing the point, as the Thompsons briefing also does? The matter is not about different kinds of funding, although there is an issue about that. Both this Bill and the amendment are about whether there are individual consumer rights.
For example, in 1989, the NUM’s president wrote to Mrs. Meacham, my constituent, saying that she would have to decline the offer that she had been made or the NUM would take action against her as a member. Subsequently, she did not have her case put in the batches that went to court, which resulted in her receiving no compensation.
Consumer rights is the issue. Should we not be wary of falling into the trap of discussing different types of union funding? Should there or should there not be consumer rights? Does the amendment improve on the Minister’s suggestions in ensuring that there are consumer rights.
I accept that that is the right place to make the judgment. I accept that no one—even if they have been a union member all their life or are the wife or the widow or other family member of a union member—should suddenly find that, without their express authority and having had the position explained to them, they agree to what happens, particularly if it means they make a financial contribution. I accept that. I agree with that completely. It is quite wrong, it was wrong, it is wrong now.
The point that I am trying to make is that it is my understanding that since 2000, that situation should be less frequent in England and Wales. The system of insurance and conditional fee means that no one needs to take any money from one when they start the case because they do not need to put money up front into the kitty.
I finish with the point that the hon. Gentleman prompted me to make. The question is will everyone be covered? At the end of the day, is the Law Society going properly to cover law firms, so that they do not take money from people that they do not know has been taken and not put it to a proper use? Is anyone else going to take money? The Bill is about ensuring that other organisations that are not regulated, as we hope law firms are, do not take money from people in a way that the customer cannot understand and that is not under control. Whether they are unions or other organisation, they need to be under the regulatory umbrella so that the individuals to whom the hon. Member for Bassetlaw and others have referred never again find themselves losing not only their rights but their money in such a way that they cannot control what goes on.
This debate was effectively about legislating against the myth of the compensation culture. We said clearly on the first day in Committee that that is what it is: a myth. I hope that we can dispel some more myths later in the debate. The hon. Member for Canterbury (Mr. Brazier), who is not in the Room, spoke a lot about have-a-go claimants—people who try it on. My experience is from the other side of the fence, of people who never admit that they are wrong, particularly employers who have done wrong and abused people at work, and of trying to ensure the rights of the employees who have been exposed to them.
Unlike my hon. Friend the Member for Midlothian, I cannot say that I am a member of the National Union of Mineworkers. The section of that union of which I was a member became defunct in 1995 thanks to the efforts of the Conservative party in destroying the coal industry in the north-east of Durham. I am proud of the fact that I was the president and am a life honorary member of Unison, a union with 1.5 million members, a turnover of £150 million a year and legal bills of probably more than £10 million a year. The same thing that Unison has tried to do, which is to look after people who have been abused at work, is what the trade unions, or what is left of them, in the coal mining areas have tried to do. They have tried to look after people who have been left high and dry by employers.
The reality in the north-east is that from 1993 there were no paying-in members, no subscriptions coming in and the union had no access to information to try to run cases and expose the fact that people had been treated badly at work. As everybody has agreed both here and in the Chamber, people were exposed to bad treatment at work and their cases were legitimate. They had to find the money to start the cases, and there were only two ways in which they could do that. One was to sell property and the other was to get together and say to the people who had represented them for more than 200 years in the north-east, “We will try to carry on supporting you if give us funds to do so.”
Certainly, Mr. Atkinson. I am more than happy to do that on your behalf.
It is clear that we are considering whether trade unions are claim handlers. There is a long history of the difference between trade unions and claim handlers being that when a case is handed over by a trade union it does not end there. The union must continue to carry out work and a lot of work goes on to try to find witnesses. There have been successful cases in which people have been dead for more than 30 years, and the unions have gone out and spoken to former members and colleagues, asking, “Can you remember what was happening and what this man was using, and where he was exposed to this thing?” No claim handler in the world would do that; they want to be in and out, get the money and leave.
The other difference, which is key, is that there is massive trust of trade unions in the community. People might say that what has gone on has breached that trust, which is a sad shame and I hope that it is put right. However, people have faith in trade unions to do work for them because of the long history of that having happened. When intervening on the hon. Member for North-East Hertfordshire I said that there are restraints on trade unions that there are not on claims handlers, including the fact that financial records have to go in front of the certification officer, who can be challenged by ordinary members and who can go through books in a way that could never be done in the case of an insurance company. Again, the reality is different in trade unions.
The ongoing work is not just about individual cases; there are knock-on effects. In cases in which compensation has been won, many people have accessed payments through what was the Department of Social Security and is now the Department for Work and Pensions. The unions on the ground have supported those people to go to appeal and to take out cases on reduced earnings allowances and other such matters. The unions have helped them to continue to get the support to which they are entitled. To return to my original point, without the deductions that would not have happened. It is clear that they also intend to carry on doing work. The NUM is a federated structure, and certain federations are now agreeing to take on more cases for people who have had their knees damaged at work. That can be done only if people work together. The union will provide the money up front—money that they do not have through subscriptions—and take a risk on behalf of their members. If the risk comes off, those people will be well looked after.
Several parts of that federation are considering the weak knee issue, which will cost millions of pounds to take forward. It will not affect existing miners; however, it will affect hundreds of thousands of former miners who have not paid any union dues.
That is exactly my point. The union is doing what it did years ago and taking a risk. It is saying to the members, “If we can deal with it for you, we need to do it up front.” The point was made that people are getting nothing back, but one section still involved in compensation in the north-east pays funeral grants, education grants and subsistence grants for people moving into convalescence homes. There is support.
May I apologise for not being present at the beginning of the debate? I was in the Administration Committee.
As I said on Second Reading, the starting point for the debate is the consumer. That is fair, and that is where the Government are coming from. We must have something to protect the consumer. I also made it clear on Second Reading that trade unions should be exempt in certain circumstances. If they act as claims handlers, however, they should be covered by this legislation.
I forgot to say that I and my hon. Friends the Members for Bassetlaw and for Sherwood have been castigated by certain people in the trade union movement. It is strange that they do not come out the woodwork, into the light and say to our faces that we are somehow hampering the movement by insisting that regulation is introduced for those few trade unions that act as claims handlers. I am sorry, but we are doing not only the movement but the consumer a favour.
I have great respect for the work that my hon. Friend the Member for Barnsley, West and Penistone has done on chronic obstructive pulmonary disease and asbestos issues, but he says that there should be an exemption in the Bill. I heard it put forward in a recent briefing by Thompsons, which seems to have much to say to try to skew the debate. If the Bill exempted trade unions, the exemption would have to include all trade unions. I am sorry but I shall neither sanction nor support such claims-handling unions as the Union of Democratic Mineworkers and the Durham Miners Association in the north-east of England by providing them with blanket exemption. That is why I support the proposal for a code of conduct that regulates the way in which they operate. It will not provide them with a blanket amnesty.
I, like my hon. Friend the Member for Bassetlaw, wait with interest to see what the code says, but if unions break it, they should be regulated. From the examples that my hon. Friend has given, it is clear that the UDM is not only acting as a claims handler, but setting up around it a string of other operations.
I shall resist the amendment. If one acts within the law and one is a trade union member, like my hon. Friend, one will be covered by other regulations. That is fine. I must disagree with earlier comments, because the Durham Miners Association acts as a claims handler. It charges people—some of whom have no connection with the union movement at all—£20 a year associate membership, which is not membership at all. It does not confer on them any trade union rights or voting rights in the association. Likewise, it is not covered by the certification officer. I have checked whether such people come under the certification officer’s remit, and they clearly do not.
What is the £20 a year fee? It is an access fee, paid as a fee would be paid to a claims handler, to get access to what was described in a letter from Thompsons solicitors in my constituency recently as the “Durham miners’ legal aid scheme,” giving the impression that it is a great scheme. It is not; there was clearly no risk involved in the cases. The fee is an access fee, and if somebody does not pay it they get a threatening letter saying that if they continue not to pay it their case will be withdrawn. The most interesting point is that the person in question must pay on top of that fee 7.5 per cent. of their final compensation. No early explanation is given to clients—remember that they are not trade union members—that they could go to another firm of solicitors or the secretary of the NUM north of the Tyne and get it done for absolutely nothing.
Like others, I have no problem with what people do with their compensation. If they wish to make a voluntary donation to a trade union or any other body, that is fine and quite legitimate. What is wrong is for people to be misled into thinking that a trade union is the only way to access justice. That is why a case such as the one that I have with Thompsons, or going to the Law Society, is the only redress that people have. The legislation will cover such people and give them consumer rights.
Can my hon. Friend come up with any rationale why solicitors such as Thompsons in his area, or Raleys or others in mine, cannot pay the unions a marketing fee of £300 or £500 a claimant, as Wake Smith and BRM solicitors do to Indiclaim, to fund the unions in doing the worthy things that they do? Is there any reason why Thompsons, Raleys and other solicitors cannot pay such a legal marketing fee?
I hear what my hon. Friend says, and I can see no reason whatever. I have no problem with trade unions receiving money from such claims, whether it be from conditional fee arrangements or in the way that he describes. I find it a little rich that people are saying that my arguing on behalf of my constituents who have been misled is somehow an attack on the trade union movement and that such cases are the only source of finance that trade unions have to continue their work. I do not think that they are, but my hon. Friend raises an interesting point.
We must remember that Thompsons has got something like £100 million in fees from the Government alone, and that figure is growing by the day as it settles cases. I cannot see why the person to have their money deducted should be the claimant and why in the Durham cases Thompsons could not have paid the NUM to continue their work, if Thompsons is the great trade union labour firm that it purports to be.
Will my hon. Friend comment on the fact that Wake Smith is paying as its marketing fee to Indiclaim approximately 20 to 25 per cent. of the total costs that it gets? If a similar system applied to firms such as Thompsons and Raleys, but they were to pay, for instance, just 5 per cent., significantly lower than Wake Smith is paying to Indiclaim, that would bring many tens of million of pounds from different companies into the unions instantly.
I agree, that would be a fairer way to do it as the claimants would not have their money deducted. Many people might say that the £20 a year associate membership fee is somehow not much money, but it is if it goes on for five years—it is £100. The amount of money that has been deducted from the compensation of the people with whom I am dealing is such that they can little afford it.
I am grateful to the hon. Gentleman for giving way. He will appreciate that one of the problems with claims handlers is getting hold of a proper file to check through and find out what they have been up to. What worries me about the code of conduct approach—the informal approach being suggested by the Minister—is that it will not have all the powers, which the regulator will have, to investigate what has gone on.
I do not know whether the hon. Gentleman has seen a document called “The Compensation Claims Management Services Regulations”, which is a Government draft listing excellent powers such as getting hold of documents by using the procedures herein, including search warrants, or being able to seize documents. They are all firm powers available to the regulator. That is what we are going to miss out on if we go down the route of the code of conduct. That is my concern.
I do not think that we are. First, I want to see the code of conduct as tough as possible. What the hon. Gentleman misses—I might be getting this wrong—is that if people do not sign up to or meet the code of conduct they will be drawn into regulation and will come under the powers that the hon. Gentleman has just explained. I agree that the important point is how tough the code of conduct will be—I hold my breath. The code must be tough to ensure that trade unions or anyone else acting in the field has due regard to issues around, for example, explaining to people their rights if there is a complaint. I do not think that there is a loophole because if trade unions start acting as claims handlers and not abiding by the code they will be drawn into regulation by the Secretary of State.
Say there were legitimate suspicions that the code of conduct was being broken by, say, Vendside or one of the other organisations. If they were regulated one could go in and get the documents. That is easy. What would happen under the informal scheme, with the code of conduct? There are no powers. That is my concern.
I hope Vendside would be covered by the claims handling regulation and not get exemption.
I find it strange that the tables are turned here. The Government are arguing for less regulation and the hon. Gentleman is asking for more regulation in certain areas. That is a strange thing from the hon. Gentleman.
The point is clear. If people do not abide by or fail the code, the Secretary of State will have the powers to pull them into regulation. Therefore, the powers outlined would be covered.
The Government are putting forward a sensible approach. Trade unions undertake fantastic work in representing their members. However, and for the first time in my life, I have to agree with the hon. Member for North Southwark and Bermondsey; there is a big difference between members—people who have taken a conscious decision to join a trade union and gain the benefits, as well as the protection in law with certification or other things—and people with no such connection, who are just being farmed into the organisation for claims or legal services. That is a big difference that we need to recognise.
I come back to the point with which I started; the consumer has to be the key issue. It is clear from the Durham NUM cases that I have in my constituency that there are no consumer rights apart from the complaints made to the Law Society about the solicitors who should have given clearer advice. I hope that we will give those people rights when dealing with their claim through the claims handling arrangement.
There is a big difference between scheme cases where there is no risk in a lot or none of the cases, and those bits of legislation involving injuries where people—if, for example, they are injured at work—are taking individual cases. Although there is no risk here, clearly there is there. Certain people have seen this as a honey pot to be dipped into, which frankly has not done credit to solicitors or, I hasten to add, some who claim to be staunch trade unionists, but at the end of the day are making a great deal of money out of people. Many of my constituents can ill afford to lose any of the compensation that they have been rightly awarded by a Labour Government.
We have had a good and thorough debate. I emphasise the point made by my hon. Friend the Member for North Durham that the second part of the Bill is about ensuring that the consumer receives the best possible protection when dealing with claims farmers or anyone else. I share the worries that have been expressed about the activities of one union and individual NUM unions. I accept what my hon. Friends the Members for Midlothian and for Blaydon said about the fact that the NUM is a federated structure, so we cannot talk about the whole of the NUM as if it were one entity in such matters. I take those worries seriously, which is why I have been working closely with my hon. Friends and the Law Society to resolve such issues.
As the hon. Member for North-East Hertfordshire, who tabled the amendment, recognised on Second Reading, we accept that trade unions generally provide an excellent service for their members, particularly in personal injury and employment cases. Therefore, bad practice by two trade unions should not justify imposing unnecessary burdens on the rest. My hon. Friend the Member for Blaydon advanced a powerful argument about the vital role that trade unions play in our society, championing the rights of ordinary hard-working people.
When I explain the thinking behind the exemption, the hon. Gentleman might consider that we have done a deal and be sufficiently reassured to withdraw the amendment.
We want to focus the regulation on the areas where there is the greatest potential for consumer detriment. The risk of harm is posed by commercial claims farmers, not the overwhelming majority of trade unions. The Better Regulation Task Force recommended in its 2004 Report “Better Routes to Redress” that we regulate claims management companies, but it did not suggest regulating trade unions. We need to put in place a proportionate regulatory mechanism that is effective in clamping down on the cowboys, but which does not shackle trade unions or others in the not-for-profit sector. I must say that, during the whole debate, there has not been much mention of the other organisations in that sector that we are prepared to exempt and that also do an excellent job on behalf of vulnerable people.
My hon. Friend the Member for Barnsley, West and Penistone made a powerful speech at the beginning of the debate about the unique position in which trade union find themselves. They have a long history of ensuring that workers’ rights are protected and have campaigned long and hard, as he has done, for health and safety protection. That motivation therefore is qualitatively different from that of a commercial claims farmer. The intention of the Bill is to tackle abuses by commercial claims farmers and that is where we should be focusing our attention.
As I made clear on Second Reading, we intend to exempt by order trade unions certified as independent by the certification officer, when they provide regulated claims management services to their members and their members’ families. Many trade unions offer services to a member’s husband or wife, partner or other close relative. Of course, we need to avoid loopholes and we will be looking carefully with the TUC at the definition of “member” to ensure that it is properly defined so that we avoid exempting the provision of services to associate members. I hope that that reassures the hon. Member for North Southwark and Bermondsey and my hon. Friend the Member for North Durham, who made an important point about associate members.
On that point, we should separate associate membership from retired membership. In Scotland, we have a substantial number of retired membership branches—indeed, I opened one in Midlothian just three weeks ago, which is the third one there. We do not have a membership in Scotland—there is a core of 20 or 30 members. Retired members still look to local, ex-union officials to try to support them, and the retired branches should be included in the same way.
I accept what my hon. Friend is saying. He has made the point that I think a number of Members made earlier, that there has to be the link with the trade union and the services that the union provides. If the union provides the services to retired members in the way that he describes, I am sure that we can find a way of describing membership to take that into account.
On retired members, is it not critical for the Minister to ensure that rights of membership are the issue, rather than category of membership? Otherwise a union such as the UDM could change its rule book and say, “Everyone is a retired member. If you were ever once a member you are classified as a retired member and therefore will be able to bypass the legislation.” The critical issue is the consumer and other rights that can be exercised by what is generally recognised as a union member—a paying one—and the rights that ensue from that membership.
My hon. Friend makes the point well. That will be at the forefront of our thinking when we come to define what is meant by a member. We consider full regulation of trade unions to be excessive and an unnecessary burden, but we think that proper standards are needed to ensure that consumers are protected, and the trade unions agree with us. We shall therefore make it a condition of the exemption that trade unions demonstrate readiness and commitment to comply with the code of practice that we shall devise in consultation with the TUC.
From the political perspective of the hon. Member for North-East Hertfordshire he is probably not aware—understandably—that the TUC works closely with other organisations such as the Royal College of Nursing and the Police Federation, which will all agree to sign up to the code of practice, because they too represent their members in the way that TUC affiliated unions do.
Actually, I have been meeting its representatives since 1992. May I ask the Minister about the code of practice? I imagine that there is a draft. Can we see it?
I am just coming to the code of practice and what we expect it to contain.
Any disregard by a union for the principles outlined by the code of practice can lead to the Secretary of State withdrawing the exemption. That is a pretty powerful rule, and it will be enforced. There is no way that any trade union will get off the hook. If it does not meet the standards in the code, the Secretary of State can withdraw the exemption.
Would my hon. Friend agree that the proposal is a better method of dealing with rogue elements than a blanket ban, and will she comment on the suggestion by the hon. Member for North-East Hertfordshire that certain individuals be excluded? Is it not the case that the law does not allow exemption only of TUC affiliated organisations and not others? The proposal rewards all those trade unions—TUC affiliated or not—that are good, that will sign up to the code of conduct, and will come down hard on those that do not.
My hon. Friend is absolutely right. The proposal allows unions that are not TUC affiliated to be part of the exemption. That is an important point to make.
I listened carefully to my hon. Friend’s point about fees. Transparency and clarity will be key requirements of the code, which will make it plain that the information given to clients must be clear and must give all the details about the fees that are charged. The code will set out the acceptable standards, especially in respect of transparency about fees. There must also be transparency in respect of any fees that are paid to the union by another party, such as a solicitor, in respect of a claim. There will be a very clear procedure for dealing with consumer complaints and effective redress.
The hon. Member for North-East Hertfordshire asked me whether he could see a copy of the code of practice. It is still under discussion but I expect it to be published by Report when I will ensure that it is made available to every member of the Committee and of the House.
My hon. Friend the Member for Bassetlaw asked for two assurances. He asked first about before-the-event insurers. We have already said that we would exempt insurers—insurance companies, insurance brokers and their agents—in respect of claims by their policyholders and anyone with whom they have arranged insurance. That would cover the normal business of insurance companies and their claims-handling agents because such activity is already regulated by the Financial Services Authority. When a claims handling activity is carried out by a BTE insurer that is not within the regulation, that insurer would have to seek authorisation under the scheme.
The hon. Gentleman also asked about non-members. Trade unions that provide services to non-members will require authorisation in exactly the same way as commercial claims farmers would. Where that is granted they will need to comply with the full range of articles, regulations and rules of conduct. Several of my hon. Friends have pointed out that when trade unions act as claims farmers they should be treated as such; that is the thinking behind the Bill. On the other hand, when trade unions provide services to both members and non-members they will have to seek authorisation in respect of the non-members, although they will still be exempt as far as their members are concerned.
So the exemption will be for all trade unions, but what would happen if, for example, the Union of Democratic Mineworkers or the National Union of Mineworkers in Durham misbehave? Will the Minister change the exemption so that it reads, “All trade unions except the north Durham miners, the NUM or Vendside.”? How will it work?
It will work quite simply. If the TUC tells the Secretary of State that a union has not risen to the standard it expects and it is not following the code of practice, the Secretary of State can remove the exemption. The union will then have to apply for authorisation under the regulations. If it does not apply, it will not be able to practise in that fashion. That is how the proposal will work.
I take my hon. Friend’s point. I will ensure that the STUC is also involved in the discussions.
We should remember that all trade unions have to comply with general consumer protection law as well as with the specific legislation relating to trade unions and their conduct. As some of my hon. Friends have argued, it could be said that trade unions are already extremely well regulated by a raft of the laws that relate directly and solely to them. If Members think that trade unions will be let off the hook, I can assure them categorically that that will not be the case.
The hon. Gentleman is missing the point. The point regarding the exemption for trade unions is that there will be a code of practice. If an individual trade union does not behave in line with that code, the TUC can report it to the Secretary of State—the regulator—who can then withdraw the exemption.
Is it not the case that if a trade union refused to agree to the code of conduct, it would be regulated automatically? However, may I urge that matter not be left solely to the TUC? The Secretary of State should be able to decide whether to withdraw the exemption based on complaints from consumers or Members of Parliament.
I can answer yes to both those points. I think that I said on Second Reading, in relation to those who would be regulated, that the Secretary of State does not have to wait for a national audit decision, but can, through Members of Parliament or other individuals, look into a case if there is a suggestion that someone is not behaving reputably.
The UDM is in a unique position, because there are no consumer rights for those who did not go through solicitors. Such consumers cannot even see their client file, unlike those who go through a solicitor. Will the Minister ensure that when the Bill is enacted, those consumer rights will come into place for those who currently have none?
That will happen. The UDM-Vendside—whichever is the company—would have to be regulated. As a company acting in that fashion, it would have to apply for authorisation.
I am saying that the organisation—UDM-Vendside, as a number of Members have called it—is clearly a commercial claims farming company and therefore would be subject to regulation as laid out in the Bill.
My hon. Friend makes a good point. The organisation would have to comply with the code of practice and, like trade unions, as I have described, show that it is prepared to abide by that code. The TUC will have a role in monitoring the activities of its affiliates and in informing the Secretary of State about any behaviour that it believes falls below the required standard.
The code of practice will provide an objective public benchmark against which trade unions will be judged. If there is sufficient evidence that the standards of service offered by certain unions has fallen below the requirements in the code, the Secretary of State will withdraw the exemption.
Let me answer the point about putting an exemption in the Bill raised by my hon. Friend the Member for Barnsley, West and Penistone. I do not want an exemption to be put in the Bill because that would not give the Secretary of State the flexibility to deal with rogue behaviour in the way that I have described. If the provision were in the Bill and rogue behaviour occurred, we would have to have to act through primary legislation and the consumer could continue to suffer.
Will the code make it clear to any union member that they can at any time see any file of theirs held by any law firm without any cost?
I have been asked questions like that in the past and have had to be careful when speaking about the role of solicitors and their files and what they consider to be confidential documentation and what is not. I would like to return to the hon. Gentleman on that specific issue, because it might relate to solicitors’ rules and I do not want to make a statement that might not be accurate.
I hope that I have clarified the Government’s position. My hon. Friends have made a very powerful case for exempting trade unions and other not-for-profit organisations. I hope that, as a result of this comprehensive debate, the hon. Member for North-East Hertfordshire, who admires the work that trade unions do, will feel sufficiently reassured to be able to withdraw the amendment.
Equality is equity, as they say. There should be a level playing field. The last thing I want to do is to embarrass the hon. Members for North Durham and for Bassetlaw, who have taken a brave stand; equally, however, I do not want to give the Minister a signal that we are happy with what is going on, because we are not. The idea is that the code, which we have not seen, allied to the TUC will be an adequate remedy, but I just do not see it.
If a body regulated by the regulator—the Secretary of State—does anything in breach of the codes of conduct issued by the regulator, a massive raft of powers become available to the regulator to investigate abuses. We know from what has been going on that it is quite hard to investigate abuses. It has been hard to get hold of the files, people have been obstructive, and obstructive actions probably continue. I am sure that that is why the Minister has the draft Compensation (Claims Management Services) Regulations 2006 and has put into them all the powers for the regulator to act if information is not being provided and there is, on the face of it, a credible allegation of contravention of the codes of conduct.
I do not see that that is in any way equal to what is proposed for trade unions. If there is no investigator and no powers of investigation, how will Brendan Barber of the TUC get to the truth? That just does not stack up. If the UDM is to be exempted, who will get in there and investigate Vendside? The hon. Member for Bassetlaw has had a heck of a job to get the least information out of Vendside—at least, that is my understanding of what he has been saying—so where are the powers? As far as I can see, there is no question but that Vendside-UDM—I think the provisional wing is called Vendside—will be exempt. What a ludicrous notion.
The hon. Gentleman does not quite understand what is proposed, because it will not be exempt. Let us say that a trade union signs up to the code and then acts in the way Vendside-UDM have acted. The hon. Gentleman asks what the powers will be. The Secretary of State will withdraw the exemption and then the regulator will be able to kick the doors in, as the hon. Gentleman says, to find out what has been going on.
No. Let us compare the two situations. Let us say that the organisation is regulated—not exempt—and that an apparently credible allegation is made of a contravention of the code of conduct that the regulator issues, there are powers to obtain documents, powers to search and a whole raft of other powers. That is the first position.
The second position is that the organisation are exempt. Let us say that the hon. Member for Bassetlaw hears an allegation and wants to investigate it. Will he be given the file? Well he has not been so far. He has had to struggle to get the files. Will anybody be able to come in and help him to investigate—Brendan Barber, for example? Why would the UDM let him have anything? Equally, if it were the NUM, how satisfied is the hon. Gentleman after what went on in north Durham that he would get all the co-operation he required? There need to be some teeth. If Ministers are saying that we need all these powers of investigation, why should these cases not be covered in the same way?
In the case of the Durham NUM, I accept, like my hon. Friend the Member for Bassetlaw, that the present position is very difficult because there is no method of getting redress for these individuals apart from through the Law Society. If in future the union were signed up to a scheme, it would have to abide by that code of conduct. I agree with the hon. Gentleman. I want to be clear what is in the code of conduct. To protect the consumer it needs to have both a complaints procedure and a system to remedy complaints. That would solve the problems of those individual cases. If it got to the stage that we have reached in Durham and Nottinghamshire with Vendside and that number of complaints, surely the Secretary of State would have to act to withdraw the exemption. That would lead to the draconian powers of kicking doors in that he described being able to be used against those unions.
I do not know exactly how long it has taken to investigate the Vendside claims and to get hold of the files, but I know that it is years. Is the hon. Gentleman satisfied that we have an agreement for the trade unions, including the two that have misbehaved, which means that if they want to they can sign up to the code saying, “Oh yes, of course we will behave,” and when allegations are made can be difficult about it saying, “We have done nothing wrong, why should we produce our files?” Who will make them do so? Nobody.
One would not have a panoply of regulations like the Compensation (Claims Management Services) Regulations 2006 if they were not needed—well, I do not think that the Government would do that in this instance, or at least I hope not. If this is necessary to tackle these sorts of people why should it not apply to the sort of people in north Durham and Vendside-UDM who we know have been misbehaving. It seems daft to let them off.
I do not want to pursue Vendside endlessly—I leave that to my hon. Friend the Member for Bassetlaw—but it is clear that as things stand, Vendside could not be exempted. First, it is a claims handler, secondly it is a limited company, not a trade union and, thirdly, the bulk of its work is not for members, but for a wider audience. I would be pursuing the Minister hard if there were any chance of Vendside being exempted in its present form. It will have to change its behaviour fundamentally.
Forgive me for being a suspicious old lawyer, but when Claims Direct was sued as a claims handler, it started arguing that it provided insurance services. It is not beyond the bounds of possibility that if the powers do not apply to trade unions, Vendside, which, let us face it, is a union—it is the UDM and a creature of the union—will maintain that it is a union. I am sure that it will. In fact, I think that it is doing so. Those people are prepared to be inventive. We know that claims handlers are already setting up in Fuengirola so that they do not have to comply with the regulations. We should not simply accept that these sorts of people who have a lot of money at stake will behave in a decent way.
We are talking about 6 million trade unionists. For the past half hour, the hon. Gentleman has been referring to an industry with less than 5,000 people. Why does he not say what he really means? He is attacking the trade unions, as he always does.
Let me put it the other way. I am a lawyer; there are about 100,000 lawyers, and I do not suppose that more than a handful could be criticised in the area under discussion. Raley’s, Thompsons and perhaps two or three other firms have been mentioned, but I accept that the entire legal profession should be properly regulated. The question for the hon. Gentleman is, what is he afraid of? Why does he want an easy deal—easy street—for the trade unions? The people who are affected have been described as consumers, but they are the victims of poor health and safety provision in the workplace. He said that he has been a trade unionist his whole life, so I would have thought he would have cared about that.
Why does the hon. Gentleman want a regulator, in addition to the certification officer, union democracy and common law rights, spending his or her time on any issue, however frivolous or unrelated to his or her work, raised by anyone from the series—the 99.9 per cent.—of trade unions where nobody has demonstrated any problems, or if they have, from a union that the Minister can un-exempt, instead of spending his or her time concentrating on the problem and scandal, which means focusing precisely on organisations such as the UDM and Vendside which will not be able to opt in to the code of conduct? Any Minister with a blossoming career who allowed them to do so would pay a terrible price. The possibility of its happening defies common sense. I am sure that the hon. Gentleman accepts that.
I should be careful talking about blossoming in the Minister’s presence, and I do not intend to do so.
I looked into the point that the hon. Gentleman made the other day about the certification officer being the regulator, and I had the Library look into it, too. The certification officer has distinct and restricted statutory powers that do not cover somebody who acts as a claims handler, or ensure that that person acts in accordance with the code of conduct. It might be useful if the certification officer were the investigator, but the law does not currently allow for it. I do not want to accept a convenient solution or a fudge; I want something that works for all claims handlers. There is a danger that, with so much money at stake and so much poor behaviour behind us, people will take advantage.
I do not want to reveal the hand that may be used in court for consumer rights against the UDM and Vendside, but I assure the hon. Gentleman that had a member complained, the routes to the certification officer would have been used some two-and-a-half years ago, with great success, I am certain. When there is a major problem rather than an individual, one-off complaint, the certification officer has the power of redress; however, that does not exist with the UDM, precisely because the complainants are not members. None of the members was charged, and on that basis, the certification officer will not even consider the case.
It is true that an allegation of financial irregularity can be made to the certification officer and that he can investigate it. If a member has some money taken off them by deception, which is one allegation, it can be investigated. However, the investigation would not fully cover the misbehaviour in the cases that we are discussing. As both hon. Members said, the unions acted as claims handlers, not only for members but for non-members. I want to ensure that they cannot do so.
I understand where the hon. Gentleman is coming from, but, to be immodest, would it not be better to use the solution that I offer him now? Rather than the blanket ban on trade unions being exempted imposed by his amendment, we could change clause 14, which allows any order laid by the Minister to be subject to the negative procedure, so that it required the affirmative procedure. Then, if the Minister were to come to us with a proposal to exempt unions in general, types of union, or one union in particular, we would have to debate it and vote on it.
I will support the hon. Gentleman on that. It is a good idea, but I am still not satisfied. If the Minister said, “Look, here’s my draft code of conduct; here are the investigator and the powers. It will be the same as now, only with a different slightly self-regulatory route, and as effective,” that would be fair enough. However, she has not gone that far. Perhaps she will at a later date. I look forward to seeing the code of conduct, but I should like to press the amendment to a vote.