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Clause 2 - Eligible people with diffuse mesothelioma

Mesothelioma Bill [Lords] – in a Public Bill Committee at 10:15 am on 10th December 2013.

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Photo of Nick Brown Nick Brown Labour, Newcastle upon Tyne East 10:15 am, 10th December 2013

I beg to move amendment 62, in clause 2, page 1, line 15, leave out ‘25 July 2012’ and insert ‘4 April 1979’.

Photo of Philip Davies Philip Davies Conservative, Shipley

With this it will be convenient to discuss the following:

Amendment 2, in clause 2, page 1, line 15, leave out ‘25 July 2012’ and insert ‘10 February 2010’.

Amendment 6, in clause 3, page 2, line 44, leave out ‘25 July 2012’ and insert ‘10 February 2010’.

Amendment 64, in clause 3, page 2, line 44, leave out ‘25 July 2012’ and insert ‘4 April 1979’.

Photo of Nick Brown Nick Brown Labour, Newcastle upon Tyne East

I want to speak first to the more modest of the two amendments in my name, but I will speak to the other one too.

Those who have followed this issue might ask how far back we would want to put the date. After all, the Bill deals with people who are in the direst circumstances, and their life expectancy is short, so the question might be, “Why does this matter?” Of course, the answer would be that it matters not just to the victims themselves, but to their close relatives and other beneficiaries.

The two dates in my amendments are 10 February 2010 and 4 April 1979. It would have been possible and rational to go back much further. The date when the damage caused by inhaling asbestos dust was first definitively known about can be traced back to before the second world war, and it would have been possible to table an amendment including a date that took us back that far. I suppose it is a sign of my moderation and willingness to find common ground that I have gone back only as far as 4 April 1979.

There is a widespread feeling that the start date the Government have chosen for the Bill is mean and as narrow as possible. There is at least a case for going back to the start of the consultation. I remind the Committee that the original consultation document was issued under the previous Labour Government, and it is a great credit to the current Government that they carried the consultation through. Somebody in the Government must have championed it.

Photo of Mike Penning Mike Penning The Minister of State, Department for Work and Pensions

The champion is Lord Freud; he is the one who pushed and who had the really difficult negotiations with the insurance companies—they did not just stroll in one afternoon and say, “We would like to do this.” He dragged them in and thrashed a deal out. He then had detailed debates during the Bill’s passage through the other House. He is the champion who took the consultation on from where it was.

Photo of Nick Brown Nick Brown Labour, Newcastle upon Tyne East

I am grateful to the Minister for his intervention. It is right to give credit to the ministerial champion of this proposal. I was not quite certain which group of Ministers was in favour of it and which had reservations, but it is now the policy of the Government, and none of them will be opposed to it.

A statutory scheme has been under consideration by Governments for some time. I say that with some authority, because when the Department for Work and Pensions was first formed, I was the first Minister with responsibility for work. I had responsibility for these issues and chaired departmental meetings on the possibility of getting such an agreement with the insurance industry. Indeed, for the purposes of transparency, I am quite willing for my papers from that era to be put into the public domain so that people can see what was under discussion and what the difficulties were. There was not unanimity in the Government then.

Photo of Nick Brown Nick Brown Labour, Newcastle upon Tyne East

My hon. Friend intervenes from a sedentary position to confirm what I said, which is helpful.

Photo of Chris Bryant Chris Bryant Shadow Minister (Work and Pensions)

I intervened not because I disagreed with my right hon. Friend, but because we disagreed with some other people, who shall remain nameless.

Photo of Nick Brown Nick Brown Labour, Newcastle upon Tyne East

Exactly so, but I ask myself, with the advantage of hindsight and the distance of time, why should Patricia Hewitt remain nameless?

Photo of Mike Penning Mike Penning The Minister of State, Department for Work and Pensions

I am very grateful for the tone and empathy that the right hon. Gentleman uses in his speech. I have been a Minister in three Departments in the last 14 months and I have never understood why certain papers that would really help the public understand what the Government’s thought processes were do not get published. A problem I have had is that all I am allowed to see is the consultation. If he was involved in any of those discussions, it would be really useful if those papers could be released, although I do not know the process for that. I was not involved in any of those understandably difficult discussions with the insurance companies to get us to this position. That is why I am so locked into the 3%, as I am sure the right hon. Gentleman will appreciate.

Photo of Nick Brown Nick Brown Labour, Newcastle upon Tyne East

I am grateful to the Minister for his intervention. We are not quarrelling among ourselves, so I think the Committee will make good progress. The Opposition’s amendments are designed to be constructive.

It would help wider public understanding if the papers from previous Governments—I am not the only Minister who tried to make progress on this issue—were put into the public domain. If the present Minister requires any  consent from me to see the ideas that we explored, what I tried to do, where that went right and the reasons why it did not come to fruition as quickly as I wanted, inasmuch as it is for me to say, I am more than happy for the papers to be put into the public domain. It is always difficult to speak for others, but I would not expect any resistance from the former Secretary of State for Work and Pensions, my right hon. Friend the Member for Oxford East (Mr Smith), who had oversight of what happened at that time. Those papers would help inform future debates.

Like the Minister, I do not understand why the papers on every single issue that previous Governments try to address have to be withheld from the incoming regime. As he will have discovered, 90% of public administration is prosaic and it is hard work. Differences of opinion can be within the governing party as well as between it and the Opposition. Often, there is no specific Conservative or Labour view on a topic, but different judgments and points of view from the individuals who hold ministerial office. Perhaps the best way forward—certainly on this issue—is evidence-based decision making and I think we could all stand up and say that that is what underpins this Bill.

On both my amendments, my plea is that the start date be pushed back a bit. How far is, of course, a matter of subjective judgment to some extent. One could make a case, as I have said, for going back some way. It is not so much for the victims themselves, although they are at the forefront of our mind, but for their dependants, their relatives and those who may, tragically, be the beneficiary of the award when it is made. I should have thought that a reasonable compromise would be to settle, as the Labour Front Bench has done, on the start date of the consultation. The expectations of those who follow these things would have been, once the consultation had started, that there would be a scheme.

It is to the credit of the Conservative party that no Conservative Member has suggested that there should not be a scheme. It was readily taken up and found ministerial champions in the new Government. I have tried to follow the debate as closely as anyone can. I am genuinely interested in it. But it has struck me that not a single person has said that there should not be a scheme. There are arguments against statutory arrangements. There are arguments against what could be regarded as an intervention in arrangements that should be left to the civil law and the private sector. But no one has made these arguments. Everybody accepts that there has been a failure, that the victims are left without anywhere to go and, indeed, that some employers who, as the law requires, had paid for their employers’ liability insurance had then been let down by the insurers for a whole range of reasons.

Historically there is also the case of people who cannot find the insurer or trace their former employers. That is particularly the case with contracting in heavy industry. Therefore, it is the events that gave rise to the legitimate expectations, that is the publication of the consultation document, which will have led people to believe that the Government were consulting on having a scheme and that there would be a scheme. Had there been widespread opposition to it, the argument would be undermined. But there has not been any opposition to it at all, as far as I know.

Photo of Paul Goggins Paul Goggins Labour, Wythenshawe and Sale East

I am looking at the various dates that my right hon. Friend has suggested. There will have been arguments down the years about whether the industry should or should not do something. But what is irrefutable is that in February 2010 a message went to the industry that something would happen and therefore from that point at least the industry should have been making preparations. Does he agree with me?

Photo of Nick Brown Nick Brown Labour, Newcastle upon Tyne East

Of course, I agree with that. It seems a reasonable point. If we were looking for a compromise, my opinion is that that is where the compromise should be, tempting as it is to make the case for the earlier date, or even earlier dates. It is always important in politics to try to find the middle ground. I would submit to the Committee that the middle ground is, as my right hon. Friend said in his intervention, at the start of the consultation rather than at a later date.

Photo of Stephen Phillips Stephen Phillips Conservative, Sleaford and North Hykeham 10:30 am, 10th December 2013

I do not want to detain the Committee long. It is a huge pleasure to follow the right hon. Member for Newcastle upon Tyne East, who advanced his amendments with considerable force. The question for the Committee, quite apart from those amendments, is this. The justification for the scheme is that it would give payments to those who cannot trace the employer who negligently exposed them to the fibres that caused the mesothelioma, or that employer’s insurers. In those circumstances there must be a question mark as to why there should be any start date at all. This scheme is being funded by the insurance industry on the basis that it received premiums in the past for risks that it agreed to bear, which have manifested themselves but for which they have not been obliged to pay.

If that is the justification for this scheme—and as I understand it, it is—there is no justification for any start date at all. Anybody who cannot trace an employer or an insurer should be entitled to compensation. That is consistent with the purpose of the scheme. The difficulty throughout, which the Minister already alluded to in his intervention on the right hon. Member for Wythenshawe and Sale East, is the same difficulty relating to the amendments not moved but spoken to a moment ago by the right hon. Gentleman. That difficulty is the figure of 3%.

The insurance industry has been clear that the cost of the scheme must be kept within 3% of the gross written premium. That is necessary in order for there to be no rise in the cost of premiums for this type of compulsory insurance, for those whom the legislation obliges to buy it. I understand that, and the Minister alluded to it just a moment ago. I say to the Minister that I can see no justification for any start date at all, other than the 3%, which I understand. I can see no justification, other than the 3%, for not accepting that there should be a research levy, whether hypothecated or not.

We will come on to this in due course, but I point out to the Minister that a huge pot of money is sitting there, completely untapped by the Bill. That pot of money lies in the hands of the reinsurers, who are not obliged to contribute to this scheme but who none the less received premiums in relation to the risks that have eventuated. The direct insurers have not paid for these risks, but will now be paying. The amendments that I subsequently  tabled, to which we will come in due course, relate to payments bringing reinsurers within the scope of this scheme and this levy. If the Minister is prepared to look at that, it opens up another pot of money. That would enable the funding of the research levy, on which the right hon. Gentleman spoke during the last group of amendments. Not only that, but it would also enable us either to move back the dates to the date that the right hon. Member for Newcastle upon Tyne East suggests in his amendment or to have no start date at all, as indeed must be the logical and proper conclusion to his argument.

Photo of Kate Green Kate Green Shadow Minister (Work and Pensions)

I am very much looking forward to the debate on the amendments that the hon. and learned Gentleman tabled in relation to the role of reinsurers. For the moment, if we accept that the figure of 3% is the constraint on amendments such as those in this group and the amendment tabled by my right hon. Friend the Member for Wythenshawe and Sale East in relation to research, perhaps the hon. and learned Gentleman would like to comment on my calculation that backdating the start date to February 2010 would raise the cost over 10 years to £451 million, which is 2.99% of the gross written premium.

Photo of Stephen Phillips Stephen Phillips Conservative, Sleaford and North Hykeham

If the hon. Lady is right, and the Minister is suggesting that the hon. Lady’s amendment cannot be made because of the figure of 3%, then obviously that would be a bad argument. However, if the hon. Lady is asking me to comment on her maths, I am afraid that I have not done the calculation myself. It is always a mistake to ask me to comment on anything mathematical. She may or may not be right; I do not know. If she is right, then she has a good point and no doubt the Minister will have to deal with it, and if he does not accept the amendment then he will have to explain his other reasons for that. If it is not a good point, and in fact her amendment tips us over the 3%, then the Minister will no doubt deploy that argument. I cannot say one way or the other which is right, although I am sure that others in the Committee can. That is really all I wanted to say on this group of amendments.

Photo of Ian Lavery Ian Lavery Labour, Wansbeck

It is a pleasure to serve under your chairmanship, Mr Davies. This is an extremely important issue, and I want to come to the point in a slightly different way. I want to focus on the pain and suffering this has caused, not to the insurance companies by the cost it will have for them, but to the people who will miss out—and who have missed out—because of the cut-off date, for which 25 July 2012 has been suggested. The Minister will recall that we discussed it very carefully on Second Reading, and during the course of the debate it went from February 2010 to—I think—1969. Then somebody corrected the guilty date of knowledge of mesothelioma to, I think it was said, 1965. So we had a wide and varied debate on what the date should actually be.

My hon. Friends on either side of me have suggested that there should be some middle ground here. Perhaps there should be, but between February 2010 and 25 July 2012—is that the middle ground? In reality, we have had people dying from mesothelioma for over half a century, and probably before that as well. We keep talking about  the 3% levy and the cost to the insurance companies. What about the cost of life for these individuals, who only went to work and suffered as a consequence of negligence, not only by the insurance company but greatly as a result of the employer? It was mentioned that it could be heavy industry. Most of the Labour team have constituencies where that has occurred.

Photo of Mike Penning Mike Penning The Minister of State, Department for Work and Pensions

I represent a very working-class area, although there was not the sort of heavy industry that there was in the north-east in particular. Many MPs across the House have cases in their constituency. The key is that, as the right hon. Member for Wythenshawe and Sale East said, it is not just about heavy industry. The hon. Member for Poplar and Limehouse (Jim Fitzpatrick) served in the fire service with me—not in the same brigade, but at roughly the same time or perhaps a little earlier. There were issues about the fire service. As I alluded to during the debate following that terrible crash in Glasgow the other day, there will have been no thought processes about what they were rushing into or about the age of the building. So this is not just about heavy industry. As the research goes forward we are starting to realise that, even though I know it is a really difficult situation. My point is that Members across the House are affected.

Photo of Ian Lavery Ian Lavery Labour, Wansbeck

I thank the hon. Gentleman. I was coming to that, because again, we have had this discussion at great length. Of course, this does not involve just heavy industry. One could argue that, in the main, the people who suffered from mesothelioma were not in heavy industry. The Minister mentions the fire service. I had a meeting with the fire service only two weeks ago and one of the main items on the agenda was asbestos. It was not just the fact that the fire brigade run into fires when everybody else runs out, which I am sure everybody would agree is unbelievably bad. Funnily enough, they also mentioned the fact that they fit fire alarms in people’s properties and were drilling into asbestos roofs. Mesothelioma just needs one little bit to lodge in the lungs and it could lie latent for 30, 40 or 50 years. If that happens and you are diagnosed as having it, you have a life expectancy of nine months to two years. So I totally accept that it is not just heavy industry; it is across the board.

Another issue, which is not in the Bill, is asbestos in school properties. That causes me great concern. We often talk about the teachers who have died. Lots of them—up to 10,000 teachers—have died in a very short space of time because of mesothelioma and asbestos-related disease. What concerns me is the kids. There is no record at all of children who are exposed to asbestos in these schools. If teachers are dying with asbestos-related diseases in schools, the children are exposed to the same levels of asbestos. I think it is fair to say that. One could not argue against it, but as far as I am aware, there is no record anywhere of the potential for children in schools to die as a result of asbestos-related diseases, including mesothelioma.

Let me return to the issue of the cut-off dates. In my previous occupation I was heavily involved with the mineworker schemes for vibration white finger, chronic obstructive pulmonary disease—chest disease—and the pneumoconiosis scheme which, I think, was concluded in 1979. I was still at school then, by the way, but we  sought to better the situation. In court cases and litigation, the most important point was always the guilty date of knowledge. As far as the Bill is concerned, the guilty date of knowledge is 25 July 2012. That is the date from which people will be paid. I think that that is terribly unfair, and it has been chosen only because that is the date on which Ministers—I am not criticising Ministers from any particular party—got around to doing something about the matter.

A letter from the Minister to everyone who spoke on Second Reading, which is dated 6 December, states:

“Several colleagues proposed alternative start dates for the scheme eligibility. The fundamental issues here are around legal expectations and affordability. The expectation for eligibility was deliberately set as early as we could arrange it, once the scheme had been agreed. Whilst I understand the desire to include as many people as possible, February 2010 is not a legitimate date to use as the consultation did not indicate the intention to create a scheme and indeed one of the options proposed was ‘do nothing’. At that point in time, there was no certainty what, if any, scheme would be pursued by government. Only from 25th July 2012, could people have an expectation that they would receive payment.”

Although I welcome the Bill, just because we as politicians got around to saying on a certain date that there might be a case for it, which gave sufferers an expectation that they would receive compensation—remember, those with mesothelioma suffer only for a short while because they die, which is not the case with diseases such as vibration white finger or pneumoconiosis—that is no justification whatsoever for setting that date as the cut-off point. There is no good reason behind that. We should be looking at the middle ground, somewhere between 1965 and 2013. Doing so may present great difficulties, but we must have some justification for the cut-off date, because it means a great deal to a whole lot of people.

I will not go into too much detail, but there is a chap in my constituency who was diagnosed before the proposed cut-off date, so he cannot apply. He received some £23,000 in compensation, but if he had been able to apply he might have received as much as £350,000. That is the sort of difference in compensation that many people will suffer because of the cut-off date.

We are compensating people here. What sort of message does it send out if people cannot apply because they were diagnosed before the cut-off date? How many people are we talking about? These are people who suffer from a disease that was likened on Second Reading to having a tree growing inside them, which spreads its branches until the sufferer simply dies. It is like drowning, because their lungs fill up. It is the most excruciating and horrendous disease. It is unimaginable. Only those who suffer from it, and their families, can truly explain it. I pay tribute to everyone who has insisted on bringing the Bill this far, because it has been needed for many years. For the sake of its being a really good Bill, rather than an okay Bill, we should consider the cut-off date. We should ensure that people who have suffered as a consequence of mesothelioma—only for going to work, as has been said—get rightful compensation. The cut-off date should be as far back as we can possibly make it. The Bill is to compensate people who have suffered, and their families, so we should not preclude hundreds, thousands and possibly tens of thousands from getting rightful compensation.

Photo of Kate Green Kate Green Shadow Minister (Work and Pensions) 10:45 am, 10th December 2013

I want to speak to amendments 2 and 6, tabled in my name and that of my hon. Friend the Member for Rhondda, and to support the ambition in the amendments tabled by my right hon. Friend the Member for Newcastle upon Tyne East.

Amendment 2 would set a start date for the scheme of 10 February 2010 and amendment 6 repeats that start date in relation to later references in the Bill. We have already heard compelling arguments for as early a start date as we can possibly manage, recognising that we have not recently come to knowledge of this illness. The knowledge of its existence and effects, and the industry’s role in collecting premiums and therefore, presumably, reserving for possible future risk, has not arisen only since 25 July 2012.

As my right hon. Friend said, we have selected the date of 10 February 2010 in our amendments, and this is a moderate suggestion to an industry that has been collecting premiums in respect of this industrial illness over many years. That is the date at which, under the noble Lord McKenzie, the then Labour Government launched a consultation, at which point it is arguable that the insurance industry was crystal clear about the intentions of the Government and what would follow.

It is important that we remember that, in that short period between 10 February 2010 and the proposed start date of the scheme of 25 July 2012, an additional 700 people will have died of this disease without any recourse to compensation. If we were to go back before 25 July, in total more than 6,000 victims have died without any payment recognising their right to justice.

I recognise that, between the launch of the Labour consultation in February 2010, the change of Government and the response to the consultation, and the legislation being developed in 2012, there was a requirement on current Ministers, particularly the noble Lord Freud, as the Minister mentioned, to engage in complex, detailed discussions with the industry. I do not suggest that nothing was being done between the close of the consultation period and 25 July 2012, and I do not underestimate, either, the scale of the task faced by Lord Freud in negotiating with the industry. The Minister said on Second Reading that the Government had been

“in deep negotiations—there is no argument about that; it will all come out—but the insurance companies did not just stroll up to Lord Freud’s office and say, ‘By the way, can we do a deal?’ They were dragged there”.—[Official Report, 2 December 2013; Vol. 571, c. 724.]

The Minister has repeated the words, “dragged there”, today.

We understand that there has been a protracted period of discussion with the industry, but it is clear that, going right back to February 2010, the industry could be in no doubt at all that some scheme would be put in place because the consultation document issued by the Labour Government made it pretty clear what kind of scheme was likely to evolve.

The original DWP consultation published in February 2010 stated clearly:

“We want to see more done to ensure that individuals who are unable to trace insurers are given better support…Arguments have been made suggesting that as drivers are compensated by the Motor Insurance Bureau (MIB) where they are involved in an  accident with an uninsured driver, so injured workers who had no control over the recording of EL”— that is, employer liability—

“policies should have, at the very least, protection when they are injured or made ill at work.

Having considered this carefully, the Government are persuaded that an ELIB should form part of the package of measures to improve the lives of those who, for whatever reason and through no fault of their own, have been injured or made ill as a result of their previous employment and who are unable to trace an old employer or their insurer. The ELIB would be the compensator of last resort if all other efforts to trace an employer or insurer have failed. An ELIB could be loosely based on the MIB whose obligations are linked to the compulsory insurance requirement of the Road Traffic Act”.

That is not the Government saying, “We’re thinking that it might be an idea if…”. It is pretty clear that we intended that from February 2010, that that would be the model established, and the insurance industry was on notice at that time. Although I was obviously not privy to the discussions taken forward then by Lord Freud when the present Government came into office, I have no reason to believe that that was not also the starting point for the discussions with the industry, and that that model is exactly the one that has ended up in the Bill. What is more, the idea that there might have been other possibilities—

Photo of Stephen Phillips Stephen Phillips Conservative, Sleaford and North Hykeham

The hon. Lady is making a powerful case in relation to the consultation, but what is the relevance of the consultation or what it said? The fact is that the industry accepted premiums for risks that have eventuated, presumably reserved for that event and therefore has a pot of money that would have been used if the employer could have been traced, because the employer would then have pursued the insurance. Why have any date at all, whether by reference to the consultation or otherwise?

Photo of Kate Green Kate Green Shadow Minister (Work and Pensions)

I agree with the intellectual thrust of that intervention, but I also accept the constraint that we discussed earlier during his speech. If Ministers feel that nothing can be done beyond the context of the 3% levy—we will be debating that proposition later—the start date of 10 February 2010, by my calculations, sits within the limit of the 3% levy over a 10-year period. The Minister may question my arithmetic, and I am sure that the whole Committee would benefit from seeing the sums properly worked through, but that is the basis on which I have been prepared to accept that most limited of start dates.

Arguably, at that point, the precise nature of the scheme began to crystallise, so the industry began to understand exactly what it would have to prepare for. However, the thrust of the remarks of the hon. and learned Member for Sleaford and North Hykeham is absolutely right. The industry has been collecting premiums for decades. It must therefore have anticipated that there was some risk associated with the collection of premiums and the carrying out of that business for decades. Why should that money not now be deployed to the benefit of sufferers?

It is also worth noting that the Motor Insurers Bureau model was the only model referred to in the consultation. The scheme’s funding is derived from any company  offering motor insurance in the UK; members contribute to the MIB levy and supply data to the motor insurance database. That is exactly the model being introduced in relation to employer liability insurers.

Photo of Mike Penning Mike Penning The Minister of State, Department for Work and Pensions

In a previous incarnation, I was a Transport Minister with responsibility for the insurance industry. The hon. Lady is absolutely right that that is the only other compulsory insurance that we have. The interesting thing, though, is that the insurers pass on that cost directly to the policyholder through the premium. This fund of last resort is not intended to be passed on by the insurers. Specifically, we are not trying to penalise businesses today for mistakes made in the past, whereas the MIAB does pass on costs to policyholders. I do not think that the comparison which I saw within the consultation fits perfectly with what we are discussing today.

Photo of Kate Green Kate Green Shadow Minister (Work and Pensions)

I accept that the costs will be held within the industry in the scheme now before us, but we are talking about a multi-billion pound industry that can easily afford to bear that cost. We are also talking about a rather more constrained and very specific illness in relation to mesothelioma, whereas obviously the ambit of motor insurance is much broader, but I take the Minister’s point.

However, the industry must have been aware, since 2010, that something new would be happening that would finally begin to crystallise the financial obligation that they have had to victims over many years. We simply cannot accept that an industry whose very raison d’être, whose very lifeblood is the assessment and management of risk would not at least have made some sort of prudent provision from February 2010 to meet the potential new responsibility that would arise if the consultation did indeed move to the kind of scheme that was proposed therein.

My right hon. Friend the Member for Newcastle upon Tyne East and the hon. and learned Member for Sleaford and North Hykeham have suggested that 2010 would be a very modest start date, particularly when we know that the cause and long-latency characteristics of mesothelioma have been known since early reports in the 1930s. The insurance industry should have therefore been reserving against asbestos claims 50 years or more ago. Certainly—as my right hon. Friend has mentioned—when the Newhouse and Thompson report was published in 1965, the Sunday Times reported on how epidemiological investigation by Newhouse and Thompson for the London School of Hygiene and Tropical Medicine had shed light on the origins and nature of mesothelioma. However, it was the 1930 Merewether and Price report that had warned of a latency of some 25 years in terms of asbestos-related illness. There have been many decades of knowledge in relation to this matter and the industry should have been prepared.

Photo of Paul Goggins Paul Goggins Labour, Wythenshawe and Sale East

I am sure that my hon. Friend is aware that the estimated value of the potential claims by people who had mesothelioma and subsequently died is estimated at around £800 million.

Photo of Kate Green Kate Green Shadow Minister (Work and Pensions)

I am grateful to my right hon. Friend for sharing that figure with the Committee. I think that may be of interest when we discuss amendments in terms of the amount of payments that victims are to  receive and the extent of generosity which could be expected from an industry that has been doing very well over many decades from the premiums that it has collected.

My argument is that at the very minimum, a pretty specific model has been on the table since February 2010. Even if the industry believed that it was only a consultation and that it would never come to fruition, given its existence as an industry is about the management of and the preparation for dealing with risk, it would have begun business planning to meet that possibility. It has, after all, been collecting the premiums to support it in meeting that contingency over many more decades and therefore, it is right that it should now be correcting the injustice that many victims have suffered over many years.

My contention is that a start date of 10 February 2010 is entirely affordable. It is an extremely modest extension of the scheme in comparison to the many years of what my hon. Friend for Wansbeck has called “guilty knowledge” and in relation to the many years over which insurance companies have been collecting premiums. It is certainly an amendment that would be widely welcomed by victims and their families. I hope that the Minister will at least be able to comment on the possibility of other opportunities to make the scheme more generous in other ways, although I know that we will debate that later in our proceedings.

Photo of Mike Penning Mike Penning The Minister of State, Department for Work and Pensions

I thank right hon. and hon. Members for their contributions on these amendments. I agree with my hon. and learned Friend the Member for Sleaford and North Hykeham that it is an arbitrary matter. If the insurers are not taking the insurance, how far does it go back? A line has to be drawn in the sand somewhere. In principle and from an intellectual point of view, I completely agree with him. However, we are where we are today, and this is a fund of last resort for those who cannot trace their employer and thus their employer’s liability insurance. We could have decided on myriad different dates, and in our negotiations we decided on 25 July 2012.

Photo of Stephen Phillips Stephen Phillips Conservative, Sleaford and North Hykeham

I know that we will come to my amendments on reinsurers in due course, but does it follow from what the Minister has just said—I am sure it does—that if more could be found, he would agree that there should be no arbitrary cut-off date because we would remain within the 3%?

Photo of Mike Penning Mike Penning The Minister of State, Department for Work and Pensions 11:00 am, 10th December 2013

My hon. and learned Friend touched on the 3% a moment ago, and I am afraid that it will come up time and again. Negotiations took place, and it is of course possible theoretically to bring in others, and thus more money, within the 3%. We will debate other insurers later.

The shadow Minister quoted extensively from the consultation. I tried to be open and honest in the letter I sent to everyone who contributed to the debate, and the one thing that was sitting on the back of that was the set of options, one of which was to do what has been done under previous Administrations of both colours: nothing. I accept that the insurers should have realised in 2010 or earlier that at some time some Government would do  something about the matter, but they did nothing for years, which was one option. We were not bound by consultation by a previous Administration because of the closeness to the last election, and I am sure that the Opposition would not want to be bound by consultation that we held just before an election, even if they thought it was a good idea to introduce legislation.

I understand how difficult it will be for anyone who had a loved one who sadly died from this horrible disease on the wrong side of the cut-off date. There will be losers and gainers, but I want the Committee to concentrate on the fact that some people will benefit, and we must ensure that they get that benefit as soon as possible. I want to be open and honest. We estimate that setting the date in 2012 instead of 2010 will affect around 700 people and the cost would have been £80 million, as the shadow Minister said.

Going back to what the right hon. Member for Wythenshawe and Sale East said, although it is difficult to estimate, the assumption is that around 6,000 extra successful applications would cost in excess of £800 million. I want to be open and honest about the figures, which are out there in the ether. The key is that we have an agreement within the 3%. If I break that agreement, we will have to renegotiate.

We will discuss at length later the mathematics and the shadow Minister’s qualifications and calculations, but many people are doing the maths for me. We may not agree, but we are trying our best. I hope that the Committee will not accept the amendment and that we stick with the Government’s proposal.

Photo of Paul Goggins Paul Goggins Labour, Wythenshawe and Sale East

On more than one occasion this morning, the Minister has reminded the Committee that 3% is the golden rule, but my hon. Friend the Member for Stretford and Urmston made the point that according to her calculations—we look forward to hearing more about this later—it would be possible to go back to February 2010 and remain within the 3% limit, which is the golden rule according to the Minister. If my hon. Friend’s maths are proved to be correct—she is very accurate in mathematical calculations—will the Minister be prepared to look again at the start date in the light of new evidence?

Photo of Mike Penning Mike Penning The Minister of State, Department for Work and Pensions

I have to look at the evidence that has been produced for me and is being used extensively. The scheme will run for 10 years and there will be understandable movement in the calculations, so nothing is fixed. I do not think anyone will be absolutely spot-on. The shadow Minister thinks that he is absolutely spot-on. My officials think that they are absolutely spot-on. The estimated cost on top would be £80 million, which would take us over the threshold, so I am not willing to accept that we should do what is proposed. I think that it would break the agreement.

Photo of Kate Green Kate Green Shadow Minister (Work and Pensions)

Can the Minister confirm whether that £80 million is over the four years or over 10 years?

Photo of Mike Penning Mike Penning The Minister of State, Department for Work and Pensions

I believe that it is over the four—no, it is over the 10-year period. That has just been indicated to me in case I made a mistake on that point.

Photo of Stephen Phillips Stephen Phillips Conservative, Sleaford and North Hykeham

I am a little confused, as I am sure many members of the Committee are, about the numbers. It would be helpful—if not today, then before the Bill is reported back to the House—if the Minister undertook to write to the Committee, setting out why the figures given by the hon. Member for Stretford and Urmston would push the costs over the 3% of gross written premium, so that we can all be satisfied, at least for the purposes of Report, that that is the case. I know the Minister very well and know him to be a deeply honourable and straightforward person. I take the Minister at his word, because I am sure that if it were under 3%, he would be accepting the amendment.

Photo of Mike Penning Mike Penning The Minister of State, Department for Work and Pensions

Once we have seen the hon. Lady’s calculations, I will be more than happy to do that, so that the whole House will have an opportunity to look at this when we come to Report. What I am saying is that I am not willing to accept the amendment. I will write to the Committee, but I will also ensure that the document is available to the whole House by placing it in the Library, which I think is what the hon. Member for Rhondda is indicating from a sedentary position that he wants. I will do that. With that in mind, I hope that the Committee will not accept the amendments as tabled.

Photo of Nick Brown Nick Brown Labour, Newcastle upon Tyne East

I have listened carefully to what the Minister has said and I have to say that I do not find it persuasive. My own instinct would be to push my own amendment to a vote, but that is not the united view of the Opposition. Bearing in mind the views of my colleagues rather than my own, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Photo of Kate Green Kate Green Shadow Minister (Work and Pensions)

I beg to move amendment 3, in clause 2, page 2, line 4, leave out

‘and is not eligible to receive a specified payment’.

Photo of Philip Davies Philip Davies Conservative, Shipley

With this it will be convenient to discuss the following:

Amendment 4, in clause 2, page 2, line 4, after subsection (e) insert—

‘(f) save as provided in (g) below, the application is made within three years of being first diagnosed, and

(g) for those persons first diagnosed on or after 25 July 2012, but before this Act comes into force, the three year time limit in section 2(1)(f) shall commence on the date this Act is brought into force.’.

Amendment 5, in clause 3, page 2, line 35, after subsection (d) insert—

‘(e) save as provided in (f) below, the application is made within three years of the death of the person with the disease, and

(f) for those persons who died on or after 25 July 2012, but before this Act comes into force, the three year time limit in section 3(1)(e) shall commence on the date this Act is brought into force.’.

Amendment 11, in clause 18, page 10, line 45, leave out subsection (3) and insert—

‘(3) In specifying circumstances in which a person is, or is not to be treated as, eligible to bring an action for the purposes of section 2(1)(d), or section 3(1)(c), the scheme shall ensure consistency with the definition of eligibility in section 2 and section 3.’.

Photo of Kate Green Kate Green Shadow Minister (Work and Pensions)

The amendments deal with a number of different issues, so I will speak to each of them in turn. Amendment 3 is intended to remove a loophole that would allow the scheme potentially to direct nearly all prospective claimants to much lower levels of product liability compensation. The amendment has been tabled to deal with the likely exclusion of former workers from the scheme proposed in the Bill, leaving them dependent on other insurance products, which would mean that they were likely to receive less than they would if they were enabled to access this scheme.

There was discussion in the House of Lords about what the specified payments were to be, and on 7 June, Lord Freud wrote to peers to confirm which payments were to be specified under clause 2. The specified payments that he has listed in that letter are those under the Naval, Military and Air Forces Etc. (Disablement and Death) Service Pensions Order 2006, the Armed Forces and Reserve Forces (Compensation Scheme) Order 2005, the UK asbestos trust established on 10 October 2006 for the benefit of certain persons suffering from asbestos-related diseases and the employers’ liability scheme trust established on 23 November 2006 for the benefit of certain persons suffering from asbestos-related diseases, and a payment from any Government Department, authority, body corporate or employer exempted from insurance under section 3 of the Employers’ Liability (Compulsory Insurance) Act 1969.

There was extensive discussion in the House of Lords about the situation where the Government were the employer and that included the situation in relation to the armed forces. It was recognised that the Government effectively self-insure and that they will not therefore access the employers’ liability market, hence the logic for excluding Government departments and armed services from the ambit of this scheme.

That is not the case for former employees of Turner and Newall. Lord Freud’s letter is quite clear that the two trusts that I listed are the more commonly known Turner and Newall trusts. Turner and Newall was historically the UK’s largest asbestos company and is currently one of the largest, by volume, asbestos defendants in this country. In October 2001, Turner and Newall entered into administration in the UK in the context of very considerable pressures on the company’s global and, particularly, US business. In the UK, a number of funds were established to pay creditors, but the vast majority had insufficient assets to pay creditors in full and accordingly most are receiving only a partial dividend.

Our concerns are that the product liability insurance offered by the Turner and Newall trust for compensation at a much lower rate than offered through this scheme will mean that former employees of Turner and Newall will have to be at least eligible to access the product liability cover that would have been on offer and the funds that are available to meet those claims. That would mean that, as currently worded, they would be precluded by this section from applying to the diffuse mesothelioma payment scheme, even if they made no claim and received no payment from any of the Turner and Newall schemes. The purpose of the amendment is to remove what could be a very useful loophole to the insurance industry.

Amendments 4 and 5, which cover the same issue in clauses 2 and 3, are on a different issue of particular importance. They relate to the date of diagnosis of a mesothelioma sufferer. The current provision is that the  sufferer will have three years from a diagnosis in which to make a claim to the scheme. As we have heard, the prognosis following diagnosis is well short of three years, so it is obviously envisaged that either the sufferer or his dependants may be the beneficiaries of any payment under the scheme. But it is also important to recognise that that is quite a short timescale in terms of the complexity of assembling the necessary information and evidence to enable a claimant to access the scheme. There is the need to check whether a previous employer or employers can be traced and the need to establish whether those employers’ insurers can be traced or are still in existence. I will speak on subsequent amendments about the need to provide medical evidence and the delays that can arise.

It would be useful if the Minister could give a specific assurance in relation to a matter that was raised by Lord Browne in the House of Lords. In the course of that debate, on 22 July, he stated that he had received informal assurances from officials:

“Finally, the most important point that has arisen from my engagement beyond Parliament with the Bill team is that during my conversations and in correspondence with those advising the Minister it was explained to me that it was the Government’s intention that, when a person was diagnosed with diffuse mesothelioma on or after 25 July 2012 but before the Bill comes into force as an Act, application to the scheme would have to be made and received by the scheme administrator not later than three years after the date on which it comes into force, not three years from 25 July 2012. That would be a very welcome relaxation of the limitation rules, given the nature of this dreadful disease and how quickly it can become fatal.

Unfortunately, the draft rules make no mention of that relaxation and there is no such relaxation anywhere in the Bill. However, there is a very specific relaxation in draft rule 7, where a person has died on or after 25 July 2012 and the claim is made by an eligible dependant. That very significant concession is known to me and is now known to all Members of your Lordships’ House. It requires some parliamentary acknowledgement or commitment, at the very least. More than that, it requires some commitment that the regulations will deal with this in an explicit way”.—[Official Report, House of Lords, 22 July 2013; Vol. 747, c. 1052.]

The draft rules make no mention of the relaxation and we therefore look to the Minister for that specific commitment today.

Finally, amendment 11 is about specifying circumstances in which a person may or may not be eligible to bring a case to the scheme. It would require that those circumstances be consistent with the definition of eligibility in sections 2 and 3. I am not sure what clause 18(3) is intended to achieve and whether it is to limit access to the scheme in some way in relation to what is provided elsewhere in the Bill. This, too, was raised by Lord Browne on Third Reading in the House of Lords. He pointed out that clause 18 introduces circumstances where someone could or could not access the scheme and said that he assumed that the details of that would follow in regulations. Again, I have not yet seen anything to explain in detail what those eligibility criteria will be and, indeed, I have no idea why there might be any additional eligibility criteria that are not already covered by earlier provisions in the Bill.

My concern is that, if there are to be further eligibility criteria laid down, these should be subject to parliamentary scrutiny. If the Minister can assure me that that will be the case when the regulations come forward, that would  certainly be welcome. There was no clarity from the Minister in the House of Lords, Lord Freud, about the Government’s intention in relation to this clause and I therefore hope that the Minister will give us some clarity this morning.

Photo of Mike Penning Mike Penning The Minister of State, Department for Work and Pensions 11:15 am, 10th December 2013

I fully understand where the Opposition amendments are coming from and I will try to address each issue as we go through. Let me first address Turner and Newall, as it is commonly known. This is supposed to be a fund of last resort when dependants who have suffered from this disease cannot get the financial help that they deserve from other sources. If they have received money from the Turner and Newall scheme, they would be excluded from this scheme, although, on the face of it, some of them may get less than they would do from this scheme. However, because of exemptions in the legislation that created the Turner and Newall scheme, there will be no clawback of benefits or anything else, which, in most cases, would have taken them over the limit.

Photo of Kate Green Kate Green Shadow Minister (Work and Pensions)

Will the Minister comment on two points? First, I accept what he said about there being no clawback of benefits, but the level of compensation that people receive under the Turner and Newall scheme is typically substantially less than the amount that they will receive under this scheme. Secondly, people could be prevented from claiming not because they have made a claim or received money from the Turner and Newall scheme, but because they can potentially make a claim, not in relation to employers’ liability, but to product liability. Is it the Government’s intention that people should use the scheme when they have no access to redress under other employers’ liability insurance, or when they have no access under any insurance policy at all?

Photo of Mike Penning Mike Penning The Minister of State, Department for Work and Pensions

As I understand it, it is under any insurance policy at all. If I am wrong about that, I will write to the hon. Lady. As I said, the Turner and Newall compensation will allow for benefits and other lump sums to be held; they will not be clawed back. Under the scheme of last resort, the benefits that claimants have received will be clawed back. I will deal with that later in the debate. There are a range of payments, and people should try to receive moneys from whatever sources they can, for the simple reason that this is a fund of last resort.

On the three-year rule, to which the noble Lord Browne referred in the other place, the compensation will come into force on the day that the regulations come into force, not on the day that the Bill is enacted or from 2012. That is important. I hope that addresses the issues that the hon. Lady raised.

Amendment 11 seeks consistency when a person

“is not to be treated as…eligible to bring an action for the purposes of section 2(1)(d), or section 3(1)(c)”.

It would apply when, for example, a company is in liquidation or administration. It would ensure that the insolvent employer would not be able to pay such damages. It is important that claimants’ civil cases are not affected by the amendment. I am not a lawyer, but I have been told by my officials that this is an important part of the Bill. When a company becomes insolvent, we must ensure that the administrators do not interfere  with the compensation that should be paid. I hope that I have addressed the issues that the hon. Lady raised, and that she will withdraw the amendments.

Photo of Kate Green Kate Green Shadow Minister (Work and Pensions)

I am grateful for the Minister’s assurances on amendments 4 and 5, and I will withdraw them both. He gave a more generous response than I asked for, which was very welcome. I am not a lawyer either, so I would like to consider further what he said on amendment 11. It would be helpful if he would write to me—he indicated that he will—so we can return to this matter on Report if necessary.

I am disappointed about the Minister’s response on amendment 3. It seems that we are not at one on the spirit of the Bill and on the scheme being a last resort. Victims see it as a scheme of last resort to be used if an employer or insurer cannot be traced, specifically in relation to the employer’s liability insurance. It would be unfortunate if claimants were precluded from accessing the scheme.

The Chair adjourned the Committee without Question put (Standing Order No. 88).

Adjourned till this day at Two o’clock.