Compensation Bill [Lords]

Public Bill Committee, 22 June 2006.

Standing Committee E

Clause 1

Oliver Heald (Conservative, North East Hertfordshire)

I beg to move amendment No. 10, in page 1, line 11, at end add—

‘(2) In determining negligence the court will have regard to—

(a) the extent that the person undertaking the activity obeyed the instructions given by the person providing the activities, and

(b) the influence of drugs or alcohol.'.

Peter Atkinson (Conservative, Hexham)

With this it will be convenient to discuss the following amendments:

No. 13, in page 1, line 11, at end add—

‘(2) In considering whether an activity is a desirable activity for the purposes of this Part, the court shall have particular regard to whether the claimant—

(a) willingly accepted a risk as his, or

(b) entered onto land or into premises with the intention of committing an offence.

(3) In determining whether a risk was accepted for the purposes of paragraph 2(a) the court shall decide using the same principles as in other cases in which one person owes a duty of care to another.'.

No. 14, in page 1, line 11, at end add—

‘(2) In considering whether an activity is a desirable activity for the purposes of this Part, the court shall have regard to the age of the claimant and in particular whether the claimant is—

(a) under 10 years of age, or

(b) under 14 years of age but can prove that he did not have the capacity to understand the nature of his actions.'.

Oliver Heald (Conservative, North East Hertfordshire)

Mr. Atkinson, I reiterate my welcome to the Chair that I gave to you and your brother Chairman, Mr. Caton. It is good to be under your firm but wise leadership.

All three amendments deal with the question of whether the law should encourage the public to behave in a responsible and safe manner when enjoying leisure pursuits. Their purpose is to look at whether there should be a legal duty to comply with safety instructions and similar such points, because it is important that somebody who is under the influence of drugs or alcohol, or behaving in an obviously reckless way, should shoulder the burden rather than others. The British Association of Leisure Parks, Piers and Attractions, the Field Studies Council and others make the point that in other jurisdictions it has been possible to make that more clear than in English law.

New South Wales, for example, has a clear formal position for dealing with claimants who are drunk or under the influence of drugs when they behave in a particular way and damage themselves. In the case of Radcliffe v McConnell Jones and the Governors of Harper Adams Agricultural College, his honour Judge Brunning found the college 60 per cent. liable for the claimant’s tetraplegia. In that case, a student who had been drinking dived into the shallow end of a college swimming pool. The Court of Appeal, in overruling the decision, made the point that the risk—that in diving the claimant might hit his head on the bottom of the pool—was common and obvious to most adults, and that it was important to bear that in mind. One of the judges said:

“It is unfortunate that a number of high spirited young men will take serious risks with their own safety and do things that they know are forbidden. Often they are disinhibited by drink and the encouragement of their friends. It is the danger and the fact that it is forbidden that provides the thrill. But if the risk materialises, they cannot blame others for their rashness”.

Another similar case was Donoghue v Folkestone Properties Ltd. in 2003. Is there scope for clarifying the law and making it clear, as clause 1 does in other contexts, that it would be a defence if people undertaking activities completely ignored the instructions that they were given by, say, the leisure park or organiser of the activity, or were drunk or high on drugs?

Michael Clapham (Labour, Barnsley West and Penistone)

Is there not a danger of putting people who are doing a job of work into a difficult position from which it would be difficult to draw back? Let me give the hon. Gentleman the example of a fireman who willingly enters a building as part of his job and is injured. Linking the case to the concept of desirability, if we accept the hon. Gentleman’s proposals, could we not be creating a situation whereby such a person would find that he had accepted the risk?

Oliver Heald (Conservative, North East Hertfordshire)

I fully appreciate that it would be a bad thing if that were what I am proposing, but it is not. Amendment No. 10, to which I spoke first, would require the court to have regard to

“the extent to which the person undertaking the activity obeyed the instructions given by the person providing the activities”

and whether the person was under the influence of drugs or alcohol. Neither of those would apply in the case that the hon. Gentleman mentioned. Amendment No. 13 relates to a person who willingly accepts a risk with the intention of committing an offence. Of course the fireman would not intend to commit an offence. Proposed subsection (3) begins:

“In determining whether a risk was accepted for the purposes of paragraph 2(a)”,

which refers back to entering a premises willingly but with the intention to commit an offence. I am alive to the concern raised by the hon. Gentleman, but it need not exist.

One could call amendment No. 13 the Tony Martin defence. It covers a situation in which somebody enters premises willing to commit an offence and thereby exposes himself to risk.

Lembit Öpik (Liberal Democrat, Montgomeryshire)

My reading of amendment No. 13 suggests that proposed subsections (2)(a) and (2)(b) actually work slightly separately. They state that they relate to someone who has

“willingly accepted a risk as his, or ... entered onto land or into premises with the intention of committing an offence.”

Would that not mean that a fireman who enters premises and gets injured in the course of trying to put out a fire would not necessarily find it so easy to sue the owner of the premises? There may be problems in considering compensation for people wounded in the conduct of their work, but it would seem unreasonable for the owner of a house that must necessarily be a danger as it is burning to end up being sued by somebody who is pursuing his work. There are two issues to consider and I suggest that the hon. Gentleman is right to say that the amendment would afford some protection against vexatious claims.

Oliver Heald (Conservative, North East Hertfordshire)

I am certainly always willing to be corrected on my interpretation of my amendments, and if the Minister says that I have got it wrong and wants to come up with an even better version on Report, nobody will be happier than I.

Angela Watkinson (Conservative, Upminster)

As the debate has turned to firefighters and my youngest daughter is a firefighter, I feel compelled to contribute.

There is always a leading hand or senior officer in charge of proceedings in a dangerous situation. There may be a case in which firefighters who have entered a building and are in communication with the organisers of the operation outside encounter unforeseen circumstances. They then have to make a quick decision on their own back. I am not sure how legislation can account for such a situation or who could be held responsible should those firefighters sustain injury having acted in accordance with their training and made a sudden decision that takes account of circumstances unknown to the leading hand outside. Such a case might come under the Health and Safety at Work, etc. Act 1974. How can such circumstances be accounted for?

Oliver Heald (Conservative, North East Hertfordshire)

That makes me think a little more about the point that the hon. Member for Montgomeryshire (Lembit Öpik) made. I believe that under the law of negligence it has always been the case that if somebody is working in their normal job, going about lawful activities and is injured, and there is fault, the employer can be found liable for damages. However, it has always been said that if the worker acts wholly outside the normal ambit of his work and does something reckless or completely out of line with his duties—I think it was called a “frolic of his own” in a case called Hilton v. Thomas Burton (Rhodes) Ltd.—the workman cannot say to the employer, “Look, it’s your system of work or the way you’ve employed me that is the root of the problem”. It was always open to the employer to use the defence, “You acted outside your instructions in a way that wasn’t envisaged.” It is important that that protection should remain, provided that it is properly decided on. The hon. Gentleman’s point is a good one. If the amendment is not drafted as well as it should be, I know that the Minister will tell me. However, the point about accepting risk—or acting in a criminal way—is that there should be a defence available for the occupier or employer.

The final amendment in the group deals with the situation of children. It is an attempt to consider the duty that applies, even to trespassers, under the Occupiers Liability Act 1984 and to reflect a view of the current situation and the intention of that Act. The case of British Railways Board v. Herrington led to that law. A child of six trespassed over a broken fence and was injured. It was found that the British Railways Board was liable because it was an obvious risk that a child would go over the fence to roam and explore. The intention of the amendment is to restrict the application of that measure to children. We can all understand that a child is likely to climb over a fence if it is not high enough. The amendment aims to say that while, yes, if a child is involved, there should be liability, if someone older—perhaps someone in their late teens or older—acts recklessly and goes on to land, the situation is different. I am interested to hear the Minister’s views on that.

The basic point that I am trying to make in the group of amendments is that individuals should have some responsibility to behave responsibly. There have been dreadful examples of people behaving recklessly in leisure parks. As a society, we believe that individuals should take responsibility for their actions. The question is whether the law can be improved in these three areas.

Julian Brazier (Conservative, Canterbury)

I welcome you to the Chair, Mr. Atkinson. The issues that we are dealing with are fundamental to the workings of the first part of the Bill.

I start by making a quick point that reinforces that made by my hon. Friend the Member for North-East Hertfordshire (Mr. Heald) about firefighters. I have great respect for firefighters. My constituency headquarters burned down just before a general election. A young man was a tenant in the floor upstairs. The firemen arrived and had a terrible battle with the blaze—although none of them was injured—and the building was completely gutted. The student’s car was outside and we thought that we had a tragedy on our hands, but mercifully it transpired that he was sleeping elsewhere that night.

There is a parallel with the armed forces. I ask my hon. Friend and the hon. Member for Barnsley, West and Penistone (Mr. Clapham) to bear in mind that we are dealing with claims of negligence and of breach of statutory duty. The normal route for a fireman injured on duty would not, of course, be a negligence claim against his employer any more than would the normal route for a soldier injured in action be a negligence claim against the Army. The point is well made, but it is not that a fireman, through using his initiative and seeing that he had to do something outside his instructions, would lose the framework of protection for people injured on duty. Far from it. We are dealing with negligence claims that are issued against people who break the law, behave grossly irresponsibly in disobeying instructions, or are drunk or drugged.

As I did on a number of occasions in our previous sitting, I quote Andrew Caplan, the legal adviser to the Scouts. He says:

“I am aware that the matters listed below may be taken into consideration currently by the court when considering the question of contributory negligence but the law on contribution often allows the courts to make an award to the claimant whilst recognising he was in part to blame for his own misfortunes. The problem for the defendant is that they have to proceed through the whole litigation process incurring significant costs and the discount for contribution is usually very small. In addition the defendant has to pay all the claimant’s and his own costs which together far outweigh the cost of the damages in the majority of cases.”

My hon. Friend cited BALPPA, which says:

“the law should encourage the public to behave in a responsible and safe manner when enjoying leisure pursuits. This would place participants under a legal duty to comply with the safety instructions they receive both visually and verbally when enjoying leisure pursuits. Whilst the current law provides a system of contributory negligence, the Courts seldom make a finding especially where the claimant is a child under the control of the parent at the material time. Even where a finding is made, it is almost unheard of for the amount to exceed 50 per cent. and more often the figure is around 20 per cent. and fails to reflect an individual's responsibility.”

Let me relate that to a particular example. I have twice taken my children to a commercial leisure activity centre with the rather colourful name “Going Ape”. Visitors have two safety ropes attached to them and run around through a series of obstacles up in the trees. First, a simple model is used to show the children how to operate the equipment, after which their parents supervise them as they go round. As somebody with quite a lot of experience of such activity from the airborne forces, I must say that the safety standards in both the parks that I visited were extremely high.

I have a horrible suspicion, however, that the time will come when a parent manifestly fails to do the simple check that they should do before their child attempts each obstacle, and the child will be injured. Given the heights involved, the accident could be very serious, and the operation would probably close if a successful case were brought against it. Such operations offer teenagers the opportunity, under strictly controlled safety conditions, to have a hell of a lot of fun, but the court will not take into account the fact that teenagers who are not offered such opportunities—I will not go over the same ground as last time—will often find other, far more dangerous ways to amuse themselves.

BALPPA goes on to say that the Colorado ski industry in the USA was saved from closure by a change in the law. A series of claims was successfully brought against the industry, but it is now written into the law in Colorado that those who disobey the clear notices telling them to ski on piste and so on cannot bring a negligence case against the ski slope operators. In Australia, as my hon. Friend mentioned, many states have rewritten their laws on negligence. The wording in Western Australia reminds the court that personal negligence can be responsible for 100 per cent. of the case.

Let me end by giving an example of a case that did not go to court. It involves the British Canoe Union, which settled the case on legal advice. The BCU sent details of the case to me because it was concerned about that legal advice. It was told that it had to settle the case; otherwise it would face a long and costly court case, which it was likely to lose. The BCU says that, in its marathon two years ago,

“crews were competing over a 30 mile course in racing kayaks. Part of the course passed through a narrow, half-mile long cutting. A volunteer marshal was positioned at each end of the cutting to warn crews entering it about any powered craft which could present a danger to it.

A power boat entered the cutting and four minutes later a kayak arrived at the cutting travelling in the same direction. The marshal”,

who was standing on the bank,

“allowed it to enter on the strict understanding that there was a powered craft in the cutting and that they should not try to overtake it.”

There was no question but that they had heard the instruction, but they ignored it and overtook the boat. Fortunately, no one was injured, but there was a collision and the power boat was severely damaged. The BCU said:

“A claim was made against the volunteer marshal alleging he should have assumed the crew would have ignored his instruction and he was therefore negligent.”

Bearing in mind the background—which is that although one can bring contributory negligence in court, it almost never exceeds 50 per cent, and rarely exceeds 20 per cent—it was good legal advice that the marshal would be better off settling than fighting back. The BCU’s insurers paid up, but the result has been a substantial increase in insurance costs for all subsequent races, and the volunteer in question will never offer his services again.

My hon. Friend made it clear to the Committee that he is not particularly wedded to his wording; if the Government want to improve on it, that is fine. If we want a country in which young people have the opportunity to take risks, we must make sure that the courts do not penalise those who, whether as volunteers—that is my main concern—or in a commercial context, provide the opportunity for young people to take risks in a properly structured way. On the very rare occasions when some of them behave grossly irresponsibly—when they are drunk, manifestly disobeying instructions or whatever—the courts should not penalise the organisers, because if they do, we will go down the route of losing even more of the remaining adventure training opportunities. The result will not be fewer tragedies, as even the Royal Society for the Prevention of Accidents has pointed out; youngsters will go off and find alternatives, in canals and pools and on railway lines, and in other unsupervised activities, and so there will be far more tragedies, not fewer.

Lembit Öpik (Liberal Democrat, Montgomeryshire)

My hon. Friend the Member for North Southwark and Bermondsey (Simon Hughes) has asked me to apologise on his behalf for his absence for part of this morning; he has to attend the funeral of his former colleague, Mick Heaney, and I hope that the Committee will be understanding about that.

My hon. Friend and I very much support amendment No. 10, which seems to introduce a degree of common sense. It would allow the courts to take into consideration the influence of drugs and alcohol. To be more precise, the amendment would require judges and courts to take account of an individual’s decision to compromise their capabilities by taking drugs or alcohol before undertaking a given activity. It would be an eminently sensible addition to the Bill. Although individuals may lose the capacity to act responsibly after taking drugs or alcohol, they are nevertheless responsible for putting themselves in a position in which their reduced capacity leads to an accident. For that reason, it seems eminently reasonable to include some provision directing courts to take seriously the contributory negligence of an individual who has necessarily compromised their abilities prior to embarking on an activity that may lead to them being injured or, in some cases, killed.

I ask the Minister to provide her perspective on this very important matter. The hon. Member for Canterbury (Mr. Brazier)—he is my hon. Friend for these purposes—has given a couple of examples, and I know of a couple more specifically involving people who are incapacitated in some way or another. I hope that the Minister can provide us with a helpful perspective on amendment No. 10.

I have two things to say about amendment No. 13. I actually think that it is well drafted. Separating proposed paragraphs (a) and (b) with the conjunction “or” is quite sensible. As has already been made clear in this debate, nothing in amendment No. 13 would compromise a firefighter’s ability to seek compensation when they have been injured as a result of carrying out their duties, but it makes it more difficult for individuals to launch vexatious and unreasonable compensation claims against the owner of premises that have caught fire. Obviously, if premises have caught fire, something has gone wrong and there has been a breakdown of some sort.

If firefighters could sue owners of property for negligence, almost every fire could be blamed on the proprietor or at least there could be a “have a go” compensation claimant in each case. Thankfully, in this country we have a noble body of firefighters who, on the whole, would not dream of attempting to sue individuals who own premises that have subsequently caught fire. There is nothing to be concerned about in the amendment because it does not prevent legitimate compensation from being paid out to firefighters who have been injured as a result of carrying out their duties.

With regard to subsection (2)(b), the Martin case has been mentioned. One of the news stories that greatly vexes the public is when an individual commits an offence and then succeeds in suing the victim of their offence. I do not want to get too far into the philosophical debate, but I should be interested to hear the Government’s view of what, on the face of it, seems to be a reasonable modification to the Bill. It makes it more difficult for someone who is breaking the law and, by inference, depriving an individual of their rights, to then sue that individual. I recognise that the Minister may wish to stay silent on this because it opens large gates to even bigger debates that impinge on some of her colleagues’ areas of work, but if she does say something the Committee would be most grateful.

Finally I turn to amendment No. 14. I recall the tribulations of Pete Jones, one of my constituents, who runs the Red Ridge outdoor pursuits centre. It is because of him that I initially got involved in this field of policy. He has suffered frivolous and vexatious claims on a number of occasions. They often come from parents, who, having allowed their offspring to enjoy the benefits of going to the Red Ridge centre, try to sue Pete Jones and his organisation for things such as banging heads on the bottom of a bunk bed when sitting up too quickly in the middle of the night.

Julian Brazier (Conservative, Canterbury)

Lest anyone in the Committee believes that the points about banging heads on bunk beds are lightly made, I understand from the Girl Guides that they have had a number of claims for exactly that. This is what we have come to in this country.

Lembit Öpik (Liberal Democrat, Montgomeryshire)

I am grateful to the hon. Member for Canterbury (Mr. Brazier) for making that point. There is a breakdown of common sense when people make such claims. The injury is negligible, but the cost is enormous.

Kevan Jones (Labour, North Durham)

I am considering their comments carefully, but are not both the hon. Gentleman and the hon. Member for Canterbury indulging in what was described at Second Reading as the myth of the compensation culture? Could the hon. Gentleman give some specific examples of where someone has sued for banging a head on a bunk bed?

Lembit Öpik (Liberal Democrat, Montgomeryshire)

This is an actual example. Pete Jones at the Red Ridge centre had to defend himself against a compensation claim made by parents on the basis that their offspring had banged their head on the bunk bed above the one in which they had been sleeping. In order to furnish the hon. Gentleman with further information, should it not be ruled out of order, I shall share the names with him between now and the afternoon sitting in order to assure him that this is not a myth—I do not wish to enter the names on the record because I do not want to exacerbate the situation. The example that I gave is real.

I know that the hon. Member for Canterbury can provide examples from the Girl Guides, where real compensation claims have been made against real people who have acted in good faith in attempting to supply services for the Girl Guides and for other organisations.

Julian Brazier (Conservative, Canterbury)

I have cited several direct examples from the Scouts, who have a policy of fighting such cases and have provided chapter and verse. The Girl Guides organisation has a policy of never releasing the names involved in cases. However, I can tell the hon. Member for North Durham (Mr. Jones) that a member of the Guides council who comes regularly to our meetings told us that an action had been brought by a girl who banged her head; not only that, but a payout was made in a case of a girl getting burnt by fat spurting on to her hand from cooking sausages over a fire—she was not camping but was in the garden of the Guide hut. These are not middle-class myths; they are actual cases.

Lembit Öpik (Liberal Democrat, Montgomeryshire)

This highlights the disappearance of common sense and reasonableness from the compensation environment. I say to the hon. Member for North Durham that none of us is trying to prevent legitimate compensation claims from being pursued through the courts. The hon. Member for Canterbury and all the rest of us involved in the all-party group on adventure and recreation in society are not trying to prevent negligent activity and irresponsible behaviour by those providing the services from experiencing the full force of the law. We are trying to prevent individuals who act in good faith and provide a net social benefit from being the victim of the “have a go” compensation culture, where individuals, far from seeking compensation to get redress for real suffering that has been caused, instead come to the view that they might be able to make a few bob on the side by taking something like this through court.

I stress to the hon. Member for North Durham, and to the Committee as a whole, that the difficulty is that being found innocent is still extremely expensive, because one still has to pay one’s costs. I shall give way to the hon. Gentleman, but I am a bit cautious about doing so because we might be straying a bit far from amendment No. 14 and the points that I was making.

Kevan Jones (Labour, North Durham)

The hon. Gentleman shows a great degree of ignorance of compensation and legal cases, because the case involving a young girl being burnt by fat would not succeed unless there was negligence and unless an horrific burn was involved. We are not talking about a splashing of fat out of a fire. I am sorry that he is again using inflammatory language about the idea that there is a compensation culture. We heard on Second Reading and in Committee that there is no evidence for it. I am sure that he and his fellow Liberal Democrats would be the first to cry wolf if, for example, someone was injured on a school trip.

Lembit Öpik (Liberal Democrat, Montgomeryshire)

I have a great personal affection for the hon. Gentleman for reasons that stretch right back to our Newcastle city council days. I could have sued him for flicking my ears on at least one occasion during a council meeting. It was an unprovoked attack and I could have accused him of assault. Despite that affection, I must say that it is he, rather than ourselves, who is making unsubstantiated criticisms. I can and will furnish him with the details of the example that I have cited from Pete Jones’s Red Ridge centre. I challenge him to illustrate why he thinks there is not a perception of a compensation culture and why he thinks that all the examples we have given were legitimate claims. If he really feels that way, what is he doing on this Committee? Why is he supporting the Government’s Bill, which seeks to redress a balance that the Minister validly thinks is an issue?

Julian Brazier (Conservative, Canterbury)

Does the hon. Member for North Durham not appreciate that we are desperately short of Scout masters and Guide leaders because of those cases? He was in his place when I described the Manchester case, which took place six days after the first debate in the House of Lords—it was in the middle of the process there. In that case, an award was made against the Scouts of £15,000. A Brownie attending a pantomime put on by the Scouts as a kindness to younger children allegedly cut herself when she put her hand under her chair in an auditorium that had been separately inspected twice—once by the Scout master and once by the licensing officer from the council. I read out the details, and the hon. Gentleman was there—

Peter Atkinson (Conservative, Hexham)

Order. That intervention is rather long.

Lembit Öpik (Liberal Democrat, Montgomeryshire)

I am tempted to suggest that we are straying into the realms of a Second Reading or Third Reading debate rather than talking about the amendments. However, Mr. Atkinson, the hon. Member for North Durham provoked us. He sought to distract the Committee from its legitimate activity; in the normal world, he could be open to charges of libel for the upset and emotional distress that he has caused.

In fairness to the hon. Member for North Durham—I always try to seek the positive in his contributions—what he said relates directly to proposed subsection (2)(b) in amendment No. 14. It states:

“In considering whether an activity is a desirable activity for the purposes of this Part, the court shall have regard to the age of the claimant and in particular whether the claimant is...under 14 years of age but can prove that he did not have the capacity to understand the nature of his actions.”

The hon. Gentleman and the Committee would obviously be highly sympathetic to that sentiment.

If someone under the age of 14 did not understand the consequences of what was going on, one would infer that he had acted in good faith. If he came to grief, the court would want to consider that fact when judging whether sufficient care and attention had been taken by the provider of the service, and it would draw the appropriate conclusion. However, it also works the other way round. If it can be shown that someone under the age of 14 who had the capacity to understand the nature of his actions had acted in what could be regarded as an irresponsible fashion, that would afford some protection to providers of services who in good faith genuinely believed that they had sufficiently warned their relatively young clients of the dangers of straying from the recommended path.

Oliver Heald (Conservative, North East Hertfordshire)

In clause 1, we are consider whether an activity is “desirable” when deciding a negligence claim. However, in the amendments we are considering whether cases that have already been decided at the highest level should go further. For instance, we ask whether an occupier should be liable in circumstances in which harm had arisen because of an individual’s choice to engage in a dangerous activity. By and large, those cases seem to suggest that the occupier should not be liable.

Lembit Öpik (Liberal Democrat, Montgomeryshire)

The hon. Gentleman’s observation is valid. I hope that the Minister can provide some perspective, for the benefit of the record, on how the courts should interpret negligence in such circumstances—we have given many examples this morning—when the providers of services have done everything that they reasonably can to ensure that their clients understand the dangers, but the latter nevertheless act in what used to be called, in non-legal terms, an irresponsible way.

I accept that one of my questions may be beyond the remit that the Minister chooses to take on today, but I hope that she will be able to give quite a complete reply on amendments Nos. 10 and 14.

Philip Hollobone (Conservative, Kettering)

It may be worth dealing, during discussion about what is or is not a desirable activity, with the terrible dilemma faced by many police officers in responding to emergency calls. I recently spent 22 days with the Northamptonshire police force as part of the police parliamentary scheme and I learned that there are three grades of police driver—advanced, standard and basic. In a nutshell, only someone with an advanced or standard driving qualification with the Northamptonshire police is allowed to exceed the speed limit in responding to emergency calls.

Each police officer has on their person an alarm button that they are encouraged to press if they are under threat of personal attack. If they press it, every police officer in the county knows that that police officer is under threat, and is advised to get to the scene of the incident as quickly as possible. That presents a huge dilemma for the Northamptonshire police officer who has only a police basic qualification. Should he or she proceed to rescue his or her colleague within the speed limit, or exceed the speed limit to get there as quickly as possible?

I should have thought that most of us would consider it a desirable activity for that police officer to respond to the call as quickly as he or she could, but the advice that they are given is that if they exceed the speed limit and something goes wrong they will be personally liable and will be likely to lose their job. In response to the amendments I should welcome the Minister’s advice and guidance on whether that dilemma could be solved by Government action.

John Mann (Labour, Bassetlaw)

I wanted to make a few remarks on the amendments, whose underlying tone suggests an intoxicating cocktail of Conservatives and Liberals working together. To illustrate my remarks I want to use an example that may be from your area, Mr. Atkinson; as I recall, Otterburn is in or near your constituency. I used to run outward bound courses at Otterburn so I have some first-hand experience of the issues.

The Bill grapples with two major dilemmas, which the amendments handle rather badly. The first concerns drugs and alcohol. I cannot recall whether Otterburn was one of the locations where the dilemma arose, but it did arise at others that I have used. One of the key dilemmas for an organiser—and I was organising both for youths and for adults—was whether to have a bar open, and how often.

If someone is organising what I might call adventure pursuits and chooses to have a bar open in the middle of the day there is clearly direct and contributory negligence. It may be, however, that the operation being operated or hired is a commercial one. One of the big battles that I used to have either in those situations or in general education was about persuading the venue to close the bar that it wanted to profit from, particularly at midday but also, potentially, into the early hours of the morning.

Some of my hon. Friends may recall my horrific success in closing the TUC bar at its national education centre, at midday, precisely because there was no reason why anyone doing trade union studies would need the benefit of alcohol. If the context is one of more dangerous pursuits than the genteel learning of employment or industrial tribunal law, there is a dilemma. One of the issues emanating from the amendments that the Minister needs to contemplate is that there is a clear difference between a commercial organisation that operates for profit, where the pressure to maximise income generation, including from alcohol, is part of the consideration, and a purely voluntary organisation. Some thought needs to be given to the difference between voluntary and commercial activities.

The second issue relates to the question of children. The amendment is particularly bad in that context, although well meaning.

Lembit Öpik (Liberal Democrat, Montgomeryshire)

Will the hon. Gentleman give way?

John Mann (Labour, Bassetlaw)

If I may follow through the logic, I am sure that the hon. Gentleman will want to intervene then.

A culture is growing in this country of what one might call the adrenalin junkie, whereby outdoor pursuits are taken to the limit. I chair the parliamentary mountaineering club. In some sports, the concept of “limit” is clearly defined, but outdoor pursuits are generally different. I recall a particularly horrific case involving schoolchildren from, I believe, Leeds—certainly from west Yorkshire. They were river running under adult supervision. I do not know the precise details, but I do know from my experience that what tends to happen is that the adult organiser, who may be an adrenalin junkie themselves, pushes the boundaries of outdoor activities, and moves beyond some genteel walking, caving, climbing, abseiling and canoeing.

Such a culture has begun to build up. It has been reined in a little, but one could find oneself on a course in the Lake district going down rivers, going down some fairly high mountains and walking down reasonably tricky footpaths. On Helvellyn, people were attempting to parachute down becks.

I hope that the Minister will give some thought to this critical point, particularly in respect of young people: these were adult-initiated pursuits. The child was going on an adventure holiday and in reality had no say over which combination of pursuits they participated in, and the parent at home would probably have had no idea whatever about the activities. They may have had a general picture, but they may not have even heard of some of the more adrenalin-fixated pursuits that have started to creep in. That kind of differentiation is important in this context, as the adult is making the decisions, in some cases irrationally.

Oliver Heald (Conservative, North East Hertfordshire)

Does the hon. Gentleman acknowledge that Arthur Wainwright states in “The Eastern Fells” that the safest way off a hill if the mist comes in is down a beck? There is a question about introducing nanny state concepts. The fact is that most hill walkers would go down the beck in such circumstances.

John Mann (Labour, Bassetlaw)

That is not Wainwright’s advice. [Hon. Members: “Yes it is.”] No, it is not.

Oliver Heald (Conservative, North East Hertfordshire)

I will bring the book in tomorrow.

John Mann (Labour, Bassetlaw)

The hon. Gentleman is misunderstanding Wainwright and also my remarks. How one escapes from a mountain following the course of a beck or a river—going down and wading through—is fundamentally different, particularly in bad weather. No mountain guide would advise people to go through water to try to descend a mountain, as body temperature would be reduced. Indeed, avoiding the water is fundamental. [Interruption.] The hon. Gentleman has reinterpreted Wainwright.

Oliver Heald (Conservative, North East Hertfordshire)

I accept the hon. Gentleman’s point, but I would not expect to walk down the middle of the river.

John Mann (Labour, Bassetlaw)

That is my precise point. Some of the adrenalin-junkie outdoor pursuits do precisely that. In other words, one walks part way up Helvellyn and goes down the beck. That may or may not be a legitimate pursuit, but a balance needs to be drawn, for young people in particular, and included in legislation, so that the extension of the adrenalin-based society with, from my experience, the outdoor pursuits organiser at the forefront, is brought into the context of what is and is not legitimate. In particular, there is a need to clarify what is free choice.

As the course leader of a group of young people, if they liked my leadership style I could persuade them to do the most absurd things if I chose to do so. Indeed, in a non-dangerous context, not in adventure pursuits but through the power of the paper-based exercises that formed part of the development and learning, we put groups into absurd positions. I could have devised—I am aware of others who have done so—dangerous pursuits in the same context. Such projects are to do with team-building, group interactions and communication skills, but the difference between building danger and non-danger into that is often divided by a fairly thin line. My only point is to point out that the adrenalin-based nature of many new pursuits is itself a potential danger that clouds part of the debate.

Julian Brazier (Conservative, Canterbury)

I am listening carefully to the hon. Gentleman. I have two quick points. First, I understand that the number of children killed in adventure training pursuits across sport, adventure training, school trips and the rest is an average of about three per year. Large numbers of young people are dying of drug addiction, some are dying of alcoholism and large numbers are killed in accidents pursuing things. My second point is that for those people whose parents cannot afford expensive adventure training holidays of the sort described by the hon. Gentleman, the opportunities are getting thinner and thinner and so they are going out and finding their own ways of amusing themselves.

John Mann (Labour, Bassetlaw)

The hon. Gentleman does not, in my view, make a legitimate point. I also happen to be the chair of the all-party group on youth hostelling and we provide 25,000 places for young, disadvantaged people. I provided some myself this week for free for young people with poor backgrounds in my constituency so that they can do well-organised activities outdoors. We must not confuse the rightful fear produced by such adventure and risk-taking—which is felt by definition during pursuits such as mountaineering—with the adrenalin-junkie nature of some of the new pursuits. People rightly want to be able to pursue legal cases should such pursuits go wrong. That is part of the balance of reining them in.

Julian Brazier (Conservative, Canterbury)

Will the hon. Gentleman give way?

John Mann (Labour, Bassetlaw)

I will give way to the hon. Member for Montgomeryshire.

Lembit Öpik (Liberal Democrat, Montgomeryshire)

The amendments have prompted a useful debate. What we are discussing is in line with amendment No. 14, in particular. In that context I have two observations. Is the hon. Gentleman aware of the theory that we are each attracted to varying levels of risk and that that is built into us as individuals? As I have said before, Professor Heinz Wolff calls it vitamin R, where R stands for risk. Would the hon. Gentleman accept that through history each of us has had a different threshold of risk but that we will fulfil the need for our relative levels of risk? If he accepts that, I would challenge his assumption that we are becoming adrenalin junkies. There has not been a change in the relative need for risk, but a suppression of the opportunity to fulfil that need in a legitimate way.

My second point was a statistic that I sought to research. Is the hon. Gentleman aware that we were looking into trying to compare how many deaths per thousand or per million occur during organised and supervised adventure activities against a control sample of individuals of the same age group and social background who are not in supervised adventure activities? It seems that the death rate and injury rate are lower in the supervised activities than in the control sample. In other words it is safer, even with the deaths and injuries that he has described, to have people on those adventure activities than not.

John Mann (Labour, Bassetlaw)

I agree. That is why we need a balance in the law. The point of what I intended to be a short contribution but which has been widely intervened on was to ensure a balance in the debate, too. I disagree on the issue of adrenalin junkie growth, because that is what I observe. Admittedly, it is a small part of the activities that take place but, with regard to the river running exercise that led to the tragedies in the Yorkshire dales, I can see, having organised such pursuits for many years, no logic whatever that suggests that there is any added value in organising that kind of activity for young people. It seems to me that the move into new ways of finding adventure and excitement is potentially beyond the bounds of what is legitimate if they are for young people.

If the hon. Member for Montgomeryshire—at his more venerable age—wishes to climb mountains and try to shimmy down rivers, he is welcome to do so, but he should not be allowed to do so with a group of young people whose parents have perhaps paid him to do so without realising precisely what is going on and knowing the risks. It is not rational to say, as the amendment does, that a young person is capable of making a personal decision in relation to a group activity. That is not coherent.

Michael Clapham (Labour, Barnsley West and Penistone)

My hon. Friend has extensive experience of working with younger people. In his experience, would a judge deciding on a case of negligence consider the nature of the instruction given, whether the person bringing the claim had failed to take into consideration the instruction given, and whether the person had indulged in alcohol or drugs?

John Mann (Labour, Bassetlaw)

Although I am not the greatest lover of judges, my experience is that those factors are likely to be taken into account. I would not want to give the impression that I believe that the danger of the compensation culture does not exist, because there are examples of that, and I will give one relating to mountaineering in order to balance things out.

There was the absurd case of a young person, educated not within—it is not within yet—but on the borders of my constituency, who employed a professional mountain guide to climb Mount Everest and died in the process and whose father is suing the mountain guide. That is where the illegitimacy comes. Decisions taken in such a context can be wrong and of course there can be negligence, but if one has determined to climb Mount Everest and does any research, one knows that the likelihood of death can be, depending on the time of year, anything from one in 10 to one in 20 and therefore it is a highly dangerous activity. One knows that, at those heights, even the most experienced mountain guide is not necessarily going to be working at 100 per cent., because of lack of oxygen. To sue on that basis is illegitimate.

The hon. Member for Canterbury rightly made the point that if one sues, there is the dilemma of whether to settle because the legal costs are so great. That is exactly what the Bill needs to address. We need to bring into this context—this includes organisations such as the Scouts—the way in which adults can make determinations for children. Some years ago, when I first went on a Scout camp—no, this was pre-Scouts; it was a Cub camp—the instruction was, “You will do this; you will do this; you will do this.” As I catapulted down from the first tree, luckily the level of mud was such that I did not break a leg. However, it was not my choice to do that aged eight or nine; in reality, it was the leader’s choice. The peer group pressure meant, in essence, that the activity was compulsory—“You will do that.”

That is where we need to get the balance right. Adults make those decisions for children. It is right and proper that, in ensuring that we rein in the compensation culture, we do not reduce in any way the improvements in risk assessment or health and safety in such activities. That is the dilemma that the Minister and the Department have been handling and I hope that she will bear in mind the points that I have made.

Julian Brazier (Conservative, Canterbury)

The mountaineering case to which I referred in the last sitting but could not name was Hedley v. Cuthbertson in 1997, a summary of which is in the Library brief. I hope that the Committee will forgive me for making that point after the thoughtful contribution that we have just heard, and that it is in order for me to do so. It was an equally shocking case and one in which the instructor lost.

The hon. Member for Bassetlaw (John Mann) has a tremendous reputation for his knowledge about alcohol—a sentence that I phrase quite carefully. I remember that when we received our Home Office brief, his was one of the most respected voices in the House on the matter. I am sure that he would accept that his point about alcohol could be easily coped with by modifying the amendment of my hon. Friend the Member for North-East Hertfordshire. The provisions should not be nullified, but tightened up where there is an incentive to provide alcohol or where people have chosen to provide it.

I shall make two points about the wider issues that the hon. Gentleman raised. First, the Youth Hostels Association, to which he referred, is a splendid body. I cannot claim as close an involvement with it as he can, but I can tell him that it was one of a number of youth groups that wrote in support of my Promotion of Volunteering Bill, which sought to set a much higher standard for negligence cases. The YHA not only wrote to support the Bill, but was a co-signatory, along with the Scouts, Guides and other youth organisations, to a letter written in support of the Bill that appeared in The Times.

Secondly, I felt towards the end of the hon. Gentleman’s contribution that, unusually for him, what he was saying did not bear directly on the other amendments. My hon. Friend the Member for North-East Hertfordshire said that the gist of the other two amendments was that the law should be different where people have deliberately disobeyed instructions or where someone has criminal intent. The hon. Gentleman, however, seemed to be saying that where an adult had given someone an illegitimate instruction to do something dangerous, they would get caught by that. Reading my hon. Friend’s amendments, I cannot see that, but even if it were the case, a drafting improvement would be needed, rather than an attempt to strike against the main import of what my hon. Friend is trying to achieve. I think that the hon. Gentleman is actually with us on this issue.

Lembit Öpik (Liberal Democrat, Montgomeryshire)

Before the hon. Gentleman finishes, and to prevent me from making a second speech of my own, will he tell us whether he agrees on another interesting observation made by the hon. Member for Bassetlaw? I have not considered before—but it must be correct—that one of the most unpleasant experiences that children have at school is of being forced to do things that are outside their risk envelope; in other words, being forced to operate in an environment that exceeds their need for risk.

One of the observations that arises from the thoughtful contribution that the hon. Member for Bassetlaw made, and on which we should all reflect, is that we need to protect young people from being forced to operate in a risk environment that far exceeds their own desires. Such activity not only provides very little educational benefit, but can lead to unnecessary psychological pressure and risk for the individuals participating in it.

Julian Brazier (Conservative, Canterbury)

The hon. Gentleman makes a good point, but the case for the amendments seems to me overwhelming, although my hon. Friend made it clear that he is not particularly wedded to the wording of any of them. Indeed, on the narrow point of where someone supplies alcohol, the hon. Member for Bassetlaw was quite right: the wording could do with some tweaking. However, I urge the Minister and the Committee to support the amendments.

Bridget Prentice (Labour, Lewisham East)

This has been a wide-ranging and useful debate, from which I have certainly learned a great deal. I did not realise how many experts the Committee has on all sorts of adventurous activities. I feel very unadventurous in comparison with some hon. Members present, although I have managed to abseil down Citibank in Lewisham. That is about as much as I can manage.

Oliver Heald (Conservative, North East Hertfordshire)

Wow!

Bridget Prentice (Labour, Lewisham East)

I am glad that the hon. Gentleman is suitably impressed.

I very much welcome the thinking behind the amendments and agree that we need to strike a balance, with people behaving responsibly and an element of common sense brought back into the situation. That is why I hope that we can reach some agreement—we began to see agreement between the hon. Member for Montgomeryshire and my hon. Friend the Member for Bassetlaw towards the end of the debate—about the way in which we treat young people. Making them go beyond their adventurous abilities is something that must be considered.

Nevertheless, I ask the hon. Member for North-East Hertfordshire not to press the amendments. I shall try not to take up too much of the Committee’s time, because we have had a thorough debate, but I can say that my main reasons for arguing against the amendments are that there is already sufficient legislation to cover what he is trying to achieve, and that there are some drafting errors, which as he recognises, is often inevitable when one puts together amendments in this way.

I reiterate that it is important to ensure that people take responsibility for their actions, and that a proper balance is struck between the individual’s rights and responsibilities. The Law Reform (Contributory Negligence) Act 1945 already allows the court to take into account all aspects of a claimant’s behaviour and the extent to which his or her negligence might have contributed to the injury suffered. The hon. Member for North-East Hertfordshire said that his amendment could be called the Tony Martin amendment, but it would not have protected Tony Martin, because he was sued for the deliberate tort of battery, not for negligence. Also, section 329 of the Criminal Justice Act 2003 already makes it much more difficult for any criminal to sue for battery; I hope that the hon. Gentleman will take that into account.

On drunkenness, the court will reduce damages on account of the carelessness of a drunken claimant not because he was drunk, but because he was careless. It might interest hon. Members to know that a drunk cannot use drunkenness as an excuse for not taking care of himself, or as much care of himself as if he had been sober, but of course, the court will always decide on the evidence before it.

The hon. Member for Canterbury talked about his canoe case, which was obviously a difficult one, but as it did not go to court, we cannot speculate on what the court might have decided.

Julian Brazier (Conservative, Canterbury)

I am grateful to the Minister for coming to that point. Of the cases about which I have given the Committee specific details, that is the only one that was settled out of court. Does she accept the testimony from the legal sources that I quoted that contributory negligence in this country is never above 50 per cent. and rarely above 20 per cent.? On that basis, the legal advice was pretty understandable.

Bridget Prentice (Labour, Lewisham East)

First, I do not accept that contributory negligence is never more than 50 per cent. While the hon. Gentleman was speaking, I was looking at a list of cases in which contributory negligence was up to 90 per cent. I shall come back to that point in a minute when I find the example. Just because someone disobeys instructions, it does not mean that the defendant was not negligent also; one or two of my hon. Friends made that point.

I return to contributory negligence. A workman climbed up and interfered with unfenced transmission machinery and was injured as a result, with 90 per cent. contributory negligence. A machinery attendant climbed on unfenced transmission machinery to catch a pigeon roosting behind it, with 80 per cent. A metal moulder who failed to wear protective legwear suffered burns to his ankles from molten metal splashes, with 75 per cent. contributory negligence. I have a number of other examples.

Oliver Heald (Conservative, North East Hertfordshire)

The concern is that when such an instance is overwhelmingly the individual’s fault, it should not come to the point where the court says, “It’s your fault.” If somebody is so reckless as to be 90 per cent. responsible, surely the court should just say, “No, you haven’t got a claim, because it’s your fault.”

Bridget Prentice (Labour, Lewisham East)

In many cases, the court does say that. Often, where damages are given, they are derisory damages to send a message that the court does not see such claims as sensible. That should give lawyers the message—I think that this is the point to which the hon. Member for Canterbury was alluding—that they should not encourage their clients to pursue such cases.

I turn now to the amendments. There are drafting difficulties with amendment No. 10. It is not clear what is meant by a court determining negligence. It could mean that the court is to have regard to such factors at any stage of its determination of a claim, including any assessment of damage, or it might be construed to mean that the court could regard them when considering liability. Nor is it clear whether the court would be required to have regard to each factor as a separate matter wherever it arises, or to have regard to the extent to which the instructions were followed and the effect of drugs or alcohol.

On drugs and alcohol, although I realise the difficulty, the amendment does not include a definition of the term “drugs”. It could be interpreted rather widely, and might even include situations where someone was taking a prescription medicine. I do not think that that is what the hon. Member for North-East Hertfordshire was trying to achieve.

Lembit Öpik (Liberal Democrat, Montgomeryshire)

The Minister seeks to take an extremely pedantic view of the amendment—a remark that sounded worse than I intended. Surely she accepts that no measure would be that precise. I understand from her previous comments, and especially from the examples that she has given, that she agrees with the amendment’s intent. She hopes that courts would take account of individual decisions to act irresponsibly, such as by getting drunk or taking drugs, prior to going on an adventure activity. Will she confirm that even if she does not like the amendment’s wording, she respects its intent?

Bridget Prentice (Labour, Lewisham East)

I have much sympathy with the amendment’s intent. We need to return to a situation where people take some responsibility for their own actions, albeit with the caveats mentioned by my hon. Friend the Member for Bassetlaw, particularly in relation to young people. I shall also talk about adults with learning difficulties, for example, who could be taken on adventure holidays. When we talk about desirable activities, we do not want to start reducing any particular group’s opportunity to participate in such activities. I have been known to say—in particular, I shall say it when we discuss claims farmers—that sometimes accidents happen. An accident is an accident and we must be very careful about pursuing it.

As I said, we do not have a claims or compensation culture in this country, and one reason for introducing the Bill is to ensure that we do not go down that road. My hon. Friend was right to try to persuade Opposition Members to draw back from their suggestion that the compensation culture was as widespread as might have appeared from earlier comments in the debate.

Amendment No. 13 is unnecessary and disproportionate. There may be some confusion about the matter because it would require the court in considering the nature of the activity to have particular regard to whether the claimant

“(a) willingly accepted a risk as his, or”—

I stress the word “or”—

“(b) entered onto land...with the intention of committing an offence.”

It is difficult to see how those factors, which are concerned with what was in the claimant’s mind, might be relevant to whether the activity itself was desirable.

The amendment is also unnecessary because we have already taken action in section 329 of the Criminal Justice Act to limit considerably the possibility of a civil claim from a criminal for trespass to the person. Nothing has changed since that Act was passed—either by way of evidence of cases in which the courts might have found in favour of the criminals or for any other reason—to justify a different approach now.

Oliver Heald (Conservative, North East Hertfordshire)

The point about clause 1 is that it is a restatement of the law to persuade people organising trips and so on of what the law actually is. One aspect of the decision in Tomlinson, which has guided clause 1 and which is not dealt with, is that an occupier should not generally be liable where the danger and harm arose from the choice of the individual to engage in a dangerous activity. Why cannot that point be restated, too?

Bridget Prentice (Labour, Lewisham East)

It is not necessary to restate that because it is clear in the Occupiers Liability Act. The occupier would not be held liable where a person decides of their own accord to pursue a dangerous activity. There was a lengthy discussion about a firefighter going into a house. It would be the householder’s common duty of care under the Occupiers Liability Act to take such care as is reasonable in all the circumstances to see that the visitor, in this case the firefighter, is reasonably safe in using the premises.

In the case of a fire, however, it would be difficult to see how the occupier would be able to make it any safer for a member of the fire brigade. It might be different if the firefighter had been called to the house to free someone from railings and the premises were dangerous in some way and the firefighter was injured. As so often in such cases, and in the examples that hon. Members have cited, it very much depends on the circumstances of the case.

As far as criminals are concerned, the courts already take the circumstances of the case into account and a number of factors limit the likelihood of any claim by a criminal succeeding. For example, courts will take into account why a trespasser was on the property. That is clearly relevant to foreseeability and the steps that it is reasonable to take to avoid risk of injury to the person or the property. The amendment seems to go further than that, because it would provide for the courts to take into account the intention of the trespasser. Courts are already perfectly capable of doing that.

Any claim by a criminal is likely to raise the common law maxim that an action does not arise from an unjust cause. It would be difficult in practical terms to assess the intentions of a claimant and establish whether they entered the land intending to commit an offence. It might be more obvious in the case of a burglar who went on to the land in the dead of night, but not all cases will be so clear-cut. As I said, the Occupiers Liability Act contains detailed provisions about liability in reference to trespassers. Another question is whether accepting a risk would be decided on the same principles as cases where one person has a duty of care to another.

There are similar problems with amendment No. 14. The factors that relate to the claimant’s age and understanding would have to be taken into account by the court in deciding whether the activity is desirable, and there is a danger that that would be unworkable. It is extremely difficult to see how those factors that are concerned with what a claimant might be expected to understand are relevant to the issue of whether the activity is desirable. For example, would the activities at a Scout or Girl Guide camp be considered more desirable if the children involved were under the age of 10 or if they were over it but the claimant were under that age? How would the provision apply to children with learning difficulties, or even adults with learning difficulties? The amendment would require the court to wrestle with such questions. Therefore, it could easily sow seeds of confusion and uncertainty to no useful purpose.

Putting those issues aside, the amendment is unnecessary and a potential source of confusion and unfairness. Courts already take into account the relevant factors when determining the duty that is owed with what is required to meet it. That includes the age, experience and awareness of the claimant and any disability that he or she has. In its report that led to the Occupiers Liability Act, the Law Commission said that

“among the circumstances which will be taken into account are the nature of the trespassory entry and the age and the character of the trespasser.”

To impose a requirement to consider those issues in regard to a particular age group is superfluous. It also has the potential to raise anomalies. For example, as it stands, the amendment would not apply to adults with learning difficulties, some of whom may have the mental capacity of a person under the age of 10. For those reasons, I ask the hon. Member for North-East Hertfordshire to withdraw the amendment.

For the sake of the hon. Member for Kettering (Mr. Hollobone), who explained to me that he had to go to another Committee and who asked about a police officer who exceeds the speed limit, I put on the record the following point. Anyone who exceeds the speed limit commits a criminal offence. In a civil claim for compensation if, for example, a pedestrian is injured by a speeding police car, the courts would take all the circumstances into account. I hope that that answers the question that he raised, but if it does not, I am happy to write to him to give him a more detailed response.

Oliver Heald (Conservative, North East Hertfordshire)

I am happy to reflect on the amendments. I just say to the Minister that we are talking in the context of a restatement of the law and not of creating new law. I beg to ask leave to withdraw the amendment.

Standing Committee E

Clause 2

Oliver Heald (Conservative, North East Hertfordshire)

I beg to move amendment No. 6, in page 1, line 13, after ‘offer', insert ‘, or provision,'.

This clause was added in the other place as a result of the efforts of my right hon. and noble Friend Lord Hunt. It is an important step forward in allowing an offer of access to rehabilitation to be made without its being an admission of negligence, and it is in keeping with the thinking of insurers and those who advise claimants, such as citizens advice bureaux. The purpose of the amendment is to add a little extra clarity by saying that if the offer were accepted the principle would still stand. I hope that the Minister will accept it.

Philip Hollobone (Conservative, Kettering)

I have some comments to make on clause 2, but as a relatively new Member I seek your guidance, Mr. Atkinson, as to whether I should make them now, on this relatively straightforward amendment, or in the stand part debate.

Peter Atkinson (Conservative, Hexham)

I think that it would be helpful if the hon. Gentleman were to continue now.

Philip Hollobone (Conservative, Kettering)

Thank you, Mr. Atkinson. The National Accident Helpline, which is based in my constituency, has a proud reputation in the field. It is concerned about clause 2. Throughout the legislation, it has been concerned about who will be covered by the measures and who will be exempt. It would like the playing field to be as level as possible.

On this clause, the National Accident Helpline wants me to ask the Minister for an assurance that it will not be possible for the acceptance of an apology, an offer of treatment or other redress to be made conditional on the abandonment of any legitimate claim. It would be good to know from her what protection the Government will put in place to ensure that the clause is not abused in that way. The National Accident Helpline is also concerned that the clause might be used by liability insurers to offer rehabilitation to legitimate claimants in order to deter them from making a claim. The result of that could be that the clause would inadvertently discourage access to justice, because a claimant might accept redress or rehabilitation that is lower than the amount that should be due. The National Accident Helpline believes that an offer of redress or rehabilitation should not be taken in all circumstances as a sufficient or satisfactory alternative to pursuing a claim through the legal system. That is why it has asked me to seek ministerial assurance on the matter.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I welcome you to the Chair, Mr. Atkinson. My hon. Friend the Member for Montgomeryshire (Lembit Öpik) gave my excuses this morning. I was at the funeral of a friend and former councillor colleague in Southwark. I have added my name to the amendment because clause 2 is a very good clause, and the amendment seeks to clarify one aspect of it that might be regarded as something that somebody might not want to do because it might suggest a liability. It adds something extra, and I hope that the Minister will be sympathetic. It is about ensuring that people are not deterred from being courteous and humane because they see that as a risk to liability.

In that context, we heard the terrible report the week before last of the little girl in Aylesbury who was injured by the side of a road while a large number of people went past her and did not stop. The proposal is about trying to minimise that sort of society and ensure that people feel that to assist others, whether or not they had been involved personally or had responsibility for the injury or harm of those people, should be regarded as separate from the later matter of liability. The Minister may have better ideas, but such an extension would not contradict the purpose of the clause, which points in the right direction and which we support.

Julian Brazier (Conservative, Canterbury)

Following your ruling, Mr. Atkinson, and the two earlier interventions, I had intended to make a brief intervention in the clause stand part debate, but I might as well make it now.

Peter Atkinson (Conservative, Hexham)

It is such a small clause that it would be sensible for the Committee to treat the discussion as a stand part debate.

Julian Brazier (Conservative, Canterbury)

Exactly. My hon. Friend the Member for Kettering (Mr. Hollobone) was absolutely right to refer to issues raised with him by a legitimate employer in his constituency. I seek clarification. I imagine that the National Accident Helpline earns revenue from litigation and, as such, has a vested interest in its taking place. If I am wrong, my hon. Friend will obviously correct me.

I share the views of my hon. Friend the Member for North-East Hertfordshire (Mr. Heald), who tabled the amendment. It is a sensible extension. I also agreed with the good, short speech of the hon. Member for North Southwark and Bermondsey (Simon Hughes), who supported the clause in general. Lord Hunt of Wirral and the others from different parties who proposed it did the country a great service.

I wish to make two additional points, the first of which is particularly relevant in several areas that are a long way away from those that we discussed when we debated clause 1. I have been told that often people end up pursuing NHS cases because they were so angry that they did not receive an apology. If that were the case, many small cases could, in fact, be avoided.

The less common, but more harrowing, example is that of social services. I declare an interest as co-chairman of the all-party group on adoption and fostering. It is incredible that social services departments are not required to tell the truth when placing extremely vulnerable children for adoption and/or fostering. Furthermore, in some cases their insurance companies actually forbid them from telling the truth. I shall give a specific example. A child may become less easy to place if the parents are told that the child has been sexually abused. If that sexual abuse took place around bath time, as is often the case, the child may as a result be absolutely terrified of going into a bathroom. If the adoptive or foster parents have not been told, it makes it much harder for them to look after the child.

Under pressure from insurance companies, I am told that it is still quite frequent practice for social services departments not to disclose things that should be disclosed about children in their care. As a result of the clause at least allowing an apology when there has been a failure to make a proper disclosure, some of the insurance sting can be unwound. It is a can of worms that Parliament on another occasion needs to go much further into, but I genuinely believe that the clause will help a little in that emotional area, which involves a relatively small number of extreme cases.

I understand the worries of one or two lawyers that the provision will mean less business for them. However, if it means that some people who could have perhaps gone to court are happy to settle with a smile and an offer of treatment or whatever, it will make a better country not a less better one, even though it means less money for the lawyers.

Lembit Öpik (Liberal Democrat, Montgomeryshire)

I support clause 2. My hon. Friend the Member for North Southwark and Bermondsey and the hon. Member for Canterbury (Mr. Brazier) have covered most of the key points, together with the mover of the amendment. I have two additional thoughts on the matter.

The amendment will most benefit those people who have expertise in a particular area. I know of one occasion when a male nurse refused to treat somebody in the street in Newcastle upon Tyne because he said that on account of his specific medical qualifications, he was more likely to be sued if the individual chose that course of action. We end up with the tragic irony that those most qualified to help people in extremis are most vulnerable to being prosecuted. The phrase “provision of” would be important in that sense.

My second point relates to the humanity of the clause. Many of us, even when we have not done anything wrong, are inclined to want to apologise because that is what people are like; people are reasonable and they care about others, especially when there has been an accident. If we also take into account the shock and trauma of an incident and the immediate effects on both the victims and the ones who have perhaps caused an accident, it becomes obvious that the clause reflects the human condition in an empathetic way. I am pleased that the Minister has included the clause, and I hope that she can accept this technical amendment, which will make it clear that individuals should not feel discouraged from helping their fellow humans in moments of great crisis.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

Having heard what you said after I spoke about this probably being a clause stand part debate, Mr. Atkinson, may I ask the Minister one point that I would have made later? This request does not specifically address it, but will she make a statement that makes it clear that if somebody who clearly was not involved in the original incident comes across it, for example someone who might offer first aid, nothing they can do when they are volunteering to assist would put them in a position where they would be liable for consequential problems that are clearly attributable to the original incident? She knows exactly what I mean.

I remember being at a constituency function where a former Labour mayor of Southwark was taken ill. Happily, another councillor, who was a nursing sister, was able to hold the fort and do things until the ambulance arrived. As it was a Saturday night, it took a long time to do so—much longer than people were comfortable with. If the nursing sister had not been there, the rest of us, who had fewer qualifications—this is a slightly different point from the one made by my hon. Friend the Member for Montgomeryshire—might have done what we could with our first-aid knowledge, as lay people; we would not have used the professional knowledge of doctors or nurses.

It would be helpful if a statement were made about what the liability risk of such people is, because we clearly want to encourage people who are not professionals to do what they can. That is not an invitation for people to act ridiculously, foolishly or stupidly, but if people are seeking in good faith to alleviate somebody’s illness or injury, the message ought to be that it is to be encouraged; good citizenship requires it.

Bridget Prentice (Labour, Lewisham East)

This has been a short but important debate. I welcome the addition of this clause in the other place. I am grateful to the noble Lords who tabled it. My noble Friend the Baroness Ashton of Upholland was willing and happy to accept it. I have sympathy with everything that has been said in this debate. The idea that we should be more comfortable with giving an apology straightforwardly and straight away would alleviate much of the angst that people have in relation to accidents and so on. I agree that it will help to develop that attitude of good citizenship that we all support.

Having said that, I am not entirely convinced that the amendment is necessary, mainly because in practical terms the provision of any treatment would almost inevitably be preceded by an offer of treatment. It is difficult to see how it could then be reasonably argued that the provision of treatment that was offered and accepted would amount to an admission, when the offer itself is not. I will give way to the hon. Member for Montgomeryshire; I think he might be about to give his roadside example.

Lembit Öpik (Liberal Democrat, Montgomeryshire)

To save time, I shall make this point early. I accused the Minister of being pedantic in wanting to cover everything when resisting previous amendments. I now accuse her of being the opposite. I can give one example where an offer of help cannot be made: when the person is unconscious. It is necessary to make a judgment about providing medical help at that moment, regardless of the presumed wishes of the individual. I will not pursue that with the Minister: she understands my point. The Government are being a little intransigent. I suggest that that is a materially important reassurance, for all the reasons given by the various speakers.

Bridget Prentice (Labour, Lewisham East)

A little unusually, I accept what the hon. Gentleman has said. If he will allow me, I shall think about that aspect of the reasoning behind the amendment, and perhaps get back to him on Report. Given what has been said, such a provision may need to be added to the Bill.

The hon. Member for Kettering raised a constituency point. Basically, it is important to know that if someone says, “I am offering you this treatment on the basis that you do not pursue your claim”, it is entirely a matter for the claimant to make a decision as to whether they accept the treatment or not. Clause 2 does not affect the basis on which an apology, offer of treatment or other redress may be made, or indeed how it may be accepted.

Julian Brazier (Conservative, Canterbury)

Briefly, following the extremely welcome remark that the Minister made, I should like to reinforce the comments by the hon. Member for Montgomeryshire. We received some particularly telling testimony—I am not sure that I could find it, two years on—from the St. John Ambulance brigade making precisely the point that he made, during the failure of progress of my private Member’s Bill.

Bridget Prentice (Labour, Lewisham East)

I am grateful to the hon. Gentleman for that point. I was thinking of the St. John Ambulance as an organisation that might well find itself in such a situation on a fairly regular basis. Of course, it should be emphasised that anyone who provides treatment should only provide treatment for which they are appropriately qualified. They would be subject to all the other associated caveats. I leave it there, and I am happy to think again about this particular amendment and what it will add to the Bill.

David Hamilton (Labour, Midlothian)

I realise that the Minister is finishing, but I would like her to consider this point. I passed my first aid test in the 1980s, on the St. Andrew’s first aid course. The very day after I passed the test, a motorcyclist went over the top of a car. If I had just passed my test now, I would have the same concerns that have been expressed today. I had none at that time and I held on to the person until the ambulance came along. I would ask the Minister to consider that issue.

Bridget Prentice (Labour, Lewisham East)

Again, we have an example of a member of the Committee with direct experience in this area, and it is for the reasons stated that I will consider the matter.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

The Minister is being very helpful and I am grateful for her offer. I hope that she will be able to make a statement that covers the potential risk in an authoritative way. It will be very helpful for the Red Cross, St. John Ambulance and all the other people we are concerned about.

Bridget Prentice (Labour, Lewisham East)

I am happy to give the Committee that assurance. Whether the amendment is accepted or not at a later stage, I will make sure that everyone is given the absolute assurance that all Committee members want them to have.

Oliver Heald (Conservative, North East Hertfordshire)

It was constructive of the Minister to make that offer. If it helps, the amendment was suggested by Norwich Union, which felt it might be a useful technical addition. It was put forward in that spirit and I am glad that the Minister is willing to consider it. I am happy to beg to ask leave to withdraw the amendment.

Clause 3

Oliver Heald (Conservative, North East Hertfordshire)

I beg to move amendment No. 15, in clause 3, page 1, line 18, leave out ‘regulated'.

Peter Atkinson (Conservative, Hexham)

With this it will be convenient to discuss the following amendments: No. 18, in page 2, line 27, after ‘legal', insert ‘or other'.

No. 19, in page 2, line 29, after ‘another', insert—

‘( ) any service for money or money's worth to persons bringing claims'.

Oliver Heald (Conservative, North East Hertfordshire)

This group of amendments is all about ensuring that the regulation of claims management services is comprehensive. It is clear that self-regulation has not worked in this field and I welcome the Government’s decision to pass legislation that will effectively regulate claims management services.

In response to concerns raised by the Delegated Powers and Regulatory Reform Committee in the Lords and the Regulatory Reform Committee in this place, the Government have passed a significant number of amendments to what was originally proposed. Basically, that has ensured that some of the key points are in the Bill rather than leaving them to secondary legislation. I welcome that. The Minister who dealt with the matter in the Lords was very constructive.

The growth in the claims management sector came about as a result of the Government’s decision to pretty well abolish civil legal aid as it then operated and establish conditional fee agreements. As members of the Committee will know, civil legal aid has seen its budget reduced by 24 per cent. in real terms and considerable difficulties have been highlighted by the Access to Justice Alliance. Amendment No. 15 tackles the problem that two kinds of services appear to be referred to in the Bill: regulated and unregulated services. The effect of removing the word “regulated”, which is what I suggest, is that clause 3(1) would read, “A person may not provide claims management services unless—(a) he is an authorised person, (b) he is an exempt person” and the other provisions would then apply.

The question for the Minister is: what are unregulated claims management services? The word “regulated” has not been used by accident. The implication is that there must be such a thing as an unregulated claims management service, and as the Minister knows I am concerned that the Government might have worded the clause so as to ensure that some bodies that deal with claims management, such as trade unions, are exempt. If so, it is hard to see how that fits in with the clause on exemptions. I would be interested if the Minister clarified why the word “regulated” is used.

The president of the Chartered Insurance Institute, Mr. Hales, has branded claims management firms as a national disgrace and blamed them for the surge in unjust and vexatious complaints against life offices and advisers. The Law Society has talked of the significant body of evidence that the public need protectionfrom unregulated claims companies who employ unacceptable practices such as cold calling, aggressive selling, insurance mis-selling and encouraging all kinds of frivolous claims.

The Department for Constitutional Affairs report on “Effects of advertising in respect of compensation claims for personal injuries” supports that view and shows that claims management companies employ unacceptable practices. Chart 11 on page 22 of the report shows that 20 per cent. of those who made a claim found out about their claims management company from an unsolicited phone call, 18 per cent. did so from television adverts, 17 per cent. were approached in the street and 3 per cent. were approached while in hospital. Clearly we do not want the concept of the ambulance-chaser to become established in our country, and therefore firm regulation is needed.

It is no surprise that companies target the area in an aggressive way. If we consider the endowment business, the Boleat report states that insurance companies estimate that there will be about a million endowment compensation claims this year, with a typical compensation figure of £6,000. That is obviously very lucrative for claims management companies and, as the Boleat report notes, all they have to do is write one letter in order to get the money. About 30 per cent. of claims come though the claims management companies, which are taking 35 per cent. plus VAT on each transaction.

Claims management companies can expect to earn hundreds of millions of pounds through such claims. It is a serious and urgent problem, and in drawing up the legislation we must avoid any loopholes. That is why I should like the Minister to explain “regulated”.

Amendment No. 18 is small, but it would add “or other” after “legal” and therefore affect the processing of “a legal or other” claim. The idea is to be comprehensive, but there is no doubt that insurance or administration, which was not directly legal in every aspect, could be considered a part of claims management companies’ work. As the Minister will recall, when Claims Direct and the Accident Group were taken through the courts, they argued that they were insurance services and therefore exempt.

Amendment No. 19 is again designed to be comprehensive. If it were accepted, clause 3(3)(a)(iii) would read “referring or introducing one person to another,” and would be followed by a new sub-paragraph, “any service offered for money or money’s worth to persons bringing claims”. Adding those words would catch those people who carry out what are effectively claims management services, but who carefully do not present themselves as so doing. It would still exclude those who provide free advice.

It is not too far-fetched to imagine in a sector as inventive as the one under discussion that claims management companies seeking to avoid regulation may move into the rehabilitation sector and then provide all the other services as an ancillary service. I dare say that the Minister will tell me that the provision is inclusive and not exhaustive, but we must be careful.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I support the amendments. They all seem to go in the right direction. I said on Second Reading that we should have as little legislation as possible in this country. We legislate far too much. The problem is often with administration, and if we administered better we would need to legislate less. I approach all legislation on the basis that we should not legislate unless we absolutely have to and we are persuaded by the evidence. There are sufficient considered views about the issue in part 2 to make it appropriate to legislate, and therefore to regulate.

I noticed—amusingly but understandably—that at the end of our discussions about part 1, civil servant team A departed and the Bill team for part 2 arrived. There are clearly experts on this sector here to assist the Minister, and no doubt they have had many issues to consider as the Constitutional Affairs Committee and others have reported. The Government have been under much non-partisan pressure to regulate this area. The hon. Member for North-East Hertfordshire broke down using a verbal pie chart the ways in which the literature comes our way: being stopped in the street is one way; and others include advertising, and the stuff that one picks up in shops or finds in newspapers.

We are making a rod for our own back if we start part 2 with “Claims Management Services” and then state that it will deal with regulated claims management services only. There could be a wonderful debate about what a claims management service is, but it is better to have one such debate, and if necessary leave it to the courts, rather than two, the first being about whether something is a claims management service, and the second about whether it is regulated.

We are trying to deal with an abuse of the free market in which person A or company A exploits person B or organisation B. We ought to catch all the fish in the net, not start to limit the definition in the title of the clause. I see where it goes: one looks for the definition of regulated, and in typical legalese, subsection (2)(e) says that

“services are regulated if they are—”

and we get a circular definition—

“of a kind prescribed by the Secretary of State”.

We immediately set ourselves up for secondary legislation, which the Secretary of State must produce and to which Parliament must agree. The alternative definition is that services are regulated if they are

“provided in cases or circumstances of a kind prescribed by order”.

Again, there is only one way forward: secondary legislation. It is better that we define a claims management service and then leave it, letting the market decide. If there is a debate in court over whether something is a claims management service, we should let that happen.

The last reason is that, as the hon. Gentleman hinted, it is impossible to think ahead to how such things might happen. At the moment, we are thinking mainly of people who advertise on television, radio, hoardings and flyers. In the age of the internet and e-mail, people could proffer such services there, but they could also do so in other ways. A weekend community event in any of our constituencies could be sponsored by an individual or a company that wanted to advertise in a different way by selling something at a stall.

I am worried that if we start trying to define this by regulation, we will always have to be regulating. I urge the Minister to accept the amendment, resist over-prescription and over-definition, and try to ensure less unnecessary work for Parliament and lawyers, and less secondary legislation, which would be void.

Philip Hollobone (Conservative, Kettering)

There seems to be confusion in the Government’s mind about who should be covered by the draft legislation. That concern has been relayed to me by the National Accident Helpline, based in my constituency. I shall relate the angle from which it considers the Bill, particularly clause 3.

As the National Accident Helpline was mentioned by my hon. Friend the Member for Canterbury, I shall clarify that it provides initial free advice to people who have suffered a personal injury and facilitates their contact with a quality solicitor who can advise them on the merits of their claim.

Kevan Jones (Labour, North Durham)

I am interested in the hon. Gentleman’s point about initial advice. Does the claims management company give legal advice? If so, does it employ people legally qualified to do so?

Philip Hollobone (Conservative, Kettering)

I am grateful for that intervention. Yes, the company employs law graduates to provide initial advice. It is almost like a first-aid legal service for those people before they are passed on to solicitors.

Kevan Jones (Labour, North Durham)

That is not a clear-cut answer, because there are law graduates and many people with law degrees who are not qualified solicitors covered by the Law Society. Who regulates such individuals?

Philip Hollobone (Conservative, Kettering)

That is a good question, and I shall undertake to give the hon. Gentleman a definitive answer in writing.

Kevan Jones (Labour, North Durham)

Does that not explain the underhand way in which such companies operate? They are trying to give the public the impression that they are some type of legal organisation when clearly they are not, if they are not employed or governed by the Law Society as firms of solicitors are. Is that not exactly why the sector needs regulation?

Philip Hollobone (Conservative, Kettering)

That is exactly the point. We need regulation, and the National Accident Helpline welcomes the Bill. It wants a level playing field so that as many organisations involved with claims management and legal services as possible are brought under the same regulation. It is concerned that the Government’s thinking in introducing the Bill is not clear enough in the definitions of who should be caught by its provisions, particularly clause 3. I shall come back to the hon. Gentleman with the answer to his question.

The helpline is not a claims management company, but it will be caught by the Bill. It has a very good reputation in the field, and its intention is to ensure that genuine accident victims can access justice and are protected from unscrupulous players in the market. The helpline has been working closely with the Department for Constitutional Affairs in the drafting of the Bill, which it sees as a valuable opportunity to introduce quality regulation to the marketplace to tackle disreputable practice. I am sure that we all agree that such practice has damaged the sector’s reputation.

Kevan Jones (Labour, North Durham)

I am interested in the hon. Gentleman’s fierce defence of an organisation that I do not think can be defended. Will he tell me why someone who has had an accident should not go directly to a solicitor who has expertise and legal knowledge of accident law? Why should he have to go through a middleman such as the National Accident Helpline, which has no legal qualification and acts as a barrier between the claimant and justice?

Philip Hollobone (Conservative, Kettering)

My understanding is that there is no obligation for anybody to access the National Accident Helpline. Anyone can go straight to a solicitor if they so wish.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

Surely we should avoid as often as possible sending people to lawyers.

Kevan Jones (Labour, North Durham)

No.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

The hon. Gentleman and I clearly have different views, but if somebody can go to an organisation that can give preliminary advice—I am not defending this particular organisation, but there are citizens advice bureaux and all sorts of other places—the last thing we should do is expect anybody to talk to a lawyer when they want first advice. The lawyers should come last in the list—and I am a lawyer.

Kevan Jones (Labour, North Durham)

Not a very good one.

Peter Atkinson (Conservative, Hexham)

Mr. Hollobone, you had better have the Floor.

Philip Hollobone (Conservative, Kettering)

I am grateful for the intervention.

The Bill makes it clear that the detailed implementation of regulation will take place via secondary legislation. During consideration in the Lords and in the response to the report of the Delegated Powers and Regulatory Reform Committee, the Department made considerable progress in fleshing out some areas of the Bill and providing more detail on how it was envisaged the regulation would work. The National Accident Helpline is concerned that there is a need for greater clarification in a number of areas—in particular, who is covered by the legislation.

Oliver Heald (Conservative, North East Hertfordshire)

I am sure that my hon. Friend will put me right if I am wrong, but is not the National Accident Helpline made up of solicitors? It is a network of solicitors, and it has solicitors in each part of the country. Someone ringing up the helpline is told which one is in their locality. It is not right to think of the helpline as an operation independent of solicitors.

Philip Hollobone (Conservative, Kettering)

I am sure that my hon. Friend is absolutely right. Perhaps I may copy him in on the correspondence that I will have with the hon. Member for North Durham (Mr. Jones).

Michael Clapham (Labour, Barnsley West and Penistone)

On the back of the previous intervention, if the National Accident Helpline is a network of solicitors and acts to garner claims that go out to various areas, where do its fees come from? Are they levied on the claimant who telephones it for help, are they deducted by the solicitor and paid back to the National Accident Helpline, or is the payment made in another way?

Philip Hollobone (Conservative, Kettering)

I do not want to put on the parliamentary record an inaccurate answer to that legitimate and detailed question, but I undertake to ask the National Accident Helpline, in writing, to contact the hon. Gentleman and outline its fee structure.

John Mann (Labour, Bassetlaw)

I am sure that the hon. Gentleman will be able to answer this question: what is the remedy for a consumer complaint if a consumer is unhappy about the action taken or advice given by the helpline?

Philip Hollobone (Conservative, Kettering)

That is one of the elements of the Bill that we are discussing. Whatever arrangements apply to the National Accident Helpline under clause 3 should also apply to all the other organisations covered by the clause.

John Mann (Labour, Bassetlaw)

Just to clarify my question, what is the remedy for the consumer under current law?

Philip Hollobone (Conservative, Kettering)

I do not know.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I shall try to keep my intervention to two sentences. The answer to the question put to the hon. Gentleman is that the first stage is that people get free advice over the phone—that advice is not regulated and is given by a law graduate—and they are then passed on to a solicitor who is regulated in the same way as every other solicitor. That is how the National Accident Helpline works. The measure would regulate it from the beginning of the process and not from the second stage. [Interruption.] No, the first stage is free.

Philip Hollobone (Conservative, Kettering)

I confirm that when customers phone the helpline, the initial advice given to them is free. There is no charge for it. If they go on to engage with one of the solicitors in the helpline network, there is a fee at that stage.

Kevan Jones (Labour, North Durham)

Those are important points. What happens if someone rings the helpline and is put in touch with a law graduate, which is what the hon. Member for North Southwark and Bermondsey described the individuals as being, and that person gives the wrong advice? Who regulates the advice that that person gives? Clearly, the solicitor is regulated as a solicitor. A law graduate might be involved, but clearly they are not so regulated. Like my hon. Friend the Member for Bassetlaw (John Mann), I am intrigued to know what the payment situation is between the helpline and the solicitors.

Philip Hollobone (Conservative, Kettering)

Absolutely. That is why it is appropriate to answer the questions asked by the hon. Gentleman and the hon. Member for Bassetlaw in the best way, which is by asking the National Accident Helpline to write to them with the details of its structure.

I could make the same point about citizens advice bureaux. I used to be a volunteer at the Kettering bureau. I do not know what the complaints procedure is if someone goes to a citizens advice bureau and a volunteer gives the wrong advice.

John Mann (Labour, Bassetlaw)

With respect to the hon. Gentleman, whom I thank for giving way for a third time, we are attempting to legislate. It is, therefore, not good enough for him to say, “I will get a third party to write to you.” We are expected—perhaps even this afternoon—to make decisions on the clause, so the question is fundamental. What are the consumer rights? The financial relationship is also fundamental. Are the consumer rights proposed in the Bill sufficient in their strength and breadth to ensure full consumer rights at all stages? That question is fundamental to the issue at stake this afternoon.

Mr. Hollobonerose—

Peter Atkinson (Conservative, Hexham)

Order. Before the hon. Member for Kettering continues, I must point out that he is not responsible for the National Accident Helpline. We are in danger of extending the debate too widely.

Philip Hollobone (Conservative, Kettering)

Thank you, Mr. Atkinson. I am happy to take interventions, but as you rightly say I am not employed by the helpline. I speak on its behalf as its constituency MP. However, I do not think that the hon. Member for Bassetlaw and I disagree. We are talking about bringing in new legislation to cover a variety of different organisations and individuals who work in the sector, among them the National Accident Helpline. The fundamental points that the helpline is asking for are that the playing field be as level as possible and that the definition of who is captured by the Bill be comprehensively examined by Parliament before the law is passed.

The helpline has been working constructively with the Department to consider the model rules for authorisation that set out which claims, management activities and business models will be covered by the regulations. The definition is extremely broad. Clause 3 mentions those who provide “financial services or assistance”. That could cover individuals going from door to door and street canvassing, but the broad definition could also cover before-the-event insurers, who manage and sell claims to solicitors; liability insurers involved in third party capture of claimants who are not their policy holders, to divert them from independent legal advice; individuals passing on claims to solicitors for reward; and, potentially, even banks and bank managers involved in arranging litigation funding.

The Department’s thinking on breadth in relation to those who will be covered needs to be probed further, which is what we are doing this afternoon, to ensure a level playing field. The helpline is firmly of the view that the Department needs to give more clarity on who it intends to be covered.

Currently, it is envisaged that it will be the responsibility of personal injury lawyers to ensure that the conduct of individuals introducing claims to them complies with business rules. The helpline believes that individuals who seek out and pass on “warm” leads are often the most disreputable players in the sector and that their activities have caused much of the damage to its reputation that the Government are trying to tackle through the Bill.

The helpline contends that it is unrealistic to rely on solicitors receiving leads to investigate sources and methods and to regulate them. To exclude such individuals from direct regulation could be unjustified and potentially greatly damaging to the effectiveness of any new regulatory regime. Expecting other authorised businesses to be responsible for policing such individuals would not be effective.

Kevan Jones (Labour, North Durham)

I have some sympathy with that argument, because I think that one of the biggest scandals of the Law Society and the chronic obstructive pulmonary disease scheme, and its involvement in claims handling, is that the Law Society and lawyers have not been careful about whom they deal with.

The hon. Gentleman said, however, that the National Accident Helpline should not be covered and that it is different from other types of claims handling organisation. Will he give evidence for how it is different? It advertises nationally, and the people who give the initial advice are clearly not legally qualified, so why should it have a different status from that of the doorstep sellers whom myself and other hon. Members have come across in the COPD scheme?

Philip Hollobone (Conservative, Kettering)

I think that it was asking not for a separate status, but for the Government to define who is going to be caught by the legislation and to ensure that those engaged in the sector are regulated to the same level. That is the point that the helpline wants to get across. And that concludes my remarks.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I would like to say a word or two prompted by that exchange. Again, I hold no brief for these people, although they sent me one like they did others. [Interruption.] The hon. Member for North Durham (Mr. Jones) must not be ridiculous. He must assume that we all act in good faith unless he has reason to believe otherwise, rather than make gratuitous and potentially offensive comments that have no base.

As I understand it, the helpline is a confederation of companies that set up, as it were, a collective access point for their service. It acts as many other companies do; if a person phones a solicitor’s office, instead of getting through to a solicitor first time, they will normally speak to a non-qualified person, after which they might get through to a legal assistant. In the bigger firms, it might take a long time to get through to a solicitor. They will have someone with some legal expertise giving initial advice who then passes people on to a solicitor. That seems to be a perfectly valid way for solicitors to work together as a co-operative or collective.

On liability, my understanding is that although a person who answers the phone and gives the initial advice is technically employed either by the company in question or one of the solicitor’s firms, they will be governed by the liability of the solicitor’s firm. The helpline is saying that it wants to be governed by the claims management service. It never said that it does not; it said that the sector should be regulated. It is perfectly happy to be within the system, but is seeking to ensure that everybody doing the same job is equally regulated by claims management service systems.

Kevan Jones (Labour, North Durham)

I totally disagree with the hon. Gentleman. I see no purpose for such organisations. He said that if a person goes to a solicitor they do not talk to one directly, and that it correct, but at least the advice that they give is covered by Law Society rules.

Those other people are frankly just middlemen. That is the important thing. I wish that the hon. Gentleman would listen to some of the horrendous cases that I and other Members have had to deal with. Claims handling companies, including the one that we have been discussing, are not making it clear that they are not solicitors. That is the important point and the reason why they need to be regulated. Is he advocating the company only on the basis of a brief that he has been sent? He should do more research before fiercely defending an organisation about which he clearly knows little.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I want to make it clear that I am not an advocate for that organisation at all.

Kevan Jones (Labour, North Durham)

You are doing a good job of it.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I am seeking to ensure that we have a debate on the facts. Other organisations such as Citizens Advice, the Association of Personal Injury Lawyers and others have written to me about the Bill. The company that we have been discussing has no more influence over me than anybody else. I form my own views, and I hope that the hon. Gentleman does too.

However, the argument is as follows. Of course the Law Society regulates lawyers and those who work for solicitors’ companies. In the past, that has not been a happy and successful operation. The number of complaints against solicitors has been legion, the handling of the complaints has been lousy and until recently people often got a bad deal. For many years I had many reasons to complain about solicitors on behalf of constituents.

Mercifully, there is to be an independent regulator of solicitors, as there should have been a long time ago—especially for those who use public money. I hope that the hon. Gentleman will also consider the evidence showing that over the years solicitors have not had a good track record in doing their job properly all the time, giving good advice or being regulated. The Legal Services Bill, introduced by the Minister the other day, seeks to put that right, because the Government have at last been persuaded that in-house self-regulation has not done the job properly.

Kevan Jones (Labour, North Durham)

I agree with my hon. Friend the Member for Bassetlaw that for the past two years in a row a record number of complaints have been made to the Law Society about solicitors.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

That is right. We agree about that. The Minister and the Government have moved down that road.

Just to be clear, let me say that the organisation made no suggestion that it wanted to be outwith the system; it wants to be inside the system. My understanding is that it is making the simple, general point that all those who act as intermediaries should be within, not outside, the system.

There are organisations with very good reputations, such as Citizens Advice. The bureaux are made up not only of lawyers; I regularly use mine and refer constituents to it in respect of all sorts of matters. Some who work there are lawyers; some are not. Some are experts in giving people advice, including about personal injuries, benefits and immigration. One does not have to be a lawyer to be an expert, and one certainly does not have to be a lawyer to judge where it is appropriate to pass a case. I hope that the hon. Gentleman will be fair to such organisations, which are not made up only of lawyers or those employed by them.

Michael Clapham (Labour, Barnsley West and Penistone)

The point that we are seeking to make, of which the hon. Gentleman would have been well aware if he represented a mining community, is that since the COPD and vibration white finger schemes came into being, there has been a great proliferation of such claims firms, which in many circumstances levy very high fees on the person who seeks advice. They then merely put the case to a solicitor. A person seeking advice on how to pursue a claim for damages can go immediately to a solicitor; there is no need at all for the intermediary.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I understand the hon. Gentleman’s point and I know about his exact complaint. Companies have taken money off people and given them no service, no good service or no competent service.

According to the Home Office list, I deal with the second highest number of immigration cases of any MP; my neighbour, the Minister of State, Department for Constitutional Affairs, the right hon. and learned Member for Camberwell and Peckham (Ms Harman), has the highest. For many years, I have regularly asked people at my advice surgeries whether they were seeing a lawyer. When they say yes, I say that they should not. People normally get bad advice; the lawyers ask for money up front. Incompetent people who are not lawyers sometimes work at lawyers’ firms, and although the system is regulated, a lot are rogues and vagabonds who ought not to be doing the job.

Michael Clapham (Labour, Barnsley West and Penistone)

That could be the London experience.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

It is absolutely the London experience. So I am entirely sympathetic, because in the days when there were docks in Bermondsey, and many dock workers, there was a comparable experience. Huge numbers of my constituents were members of the Transport and General Workers Union and worked in the docks. Generally, if people were wise, they would take their causes to the union. Sometimes that union not be the TGWU, but it would represent their interests perfectly properly, as one would expect. We should be careful that people do not fall into the wrong hands.

The logic of the hon. Gentleman’s argument, which he might wish to make clear to the Committee, is that only lawyers should deal with claims of the type envisaged by the Bill. If that were the case, he would argue that nobody should be allowed to do any processing of claims other than registered lawyers. That argument can be made, but I do not understand it to be the intention of the Bill or of the Government. The Government’s suggestion is that there are people other than lawyers who will be allowed to process claims, and I think that provided those people are regulated, accountable and liable, so that they can be taken to the cleaners if they do not do a decent job, we should not be directing all the work to lawyers.

Kevan Jones (Labour, North Durham)

I hope that the outcome of this regulation is that we see the end of claims management companies, and I think that a lot of them will close once the regulations come into force because of the sharp practices of which my hon. Friend the Member for Barnsley, West and Penistone (Mr. Clapham) is well aware. The hon. Gentleman says, “process a claim,” and it needs to be exactly that. If it is about filling in a form and passing the matter to a solicitor, that needs to be clear. One of the terrible things that I and my hon. Friends who represent coal mining constituencies have come across is that those involved pass themselves off as having some type of quasi-legal position, when clearly they do not.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I understand that point too. Over the years it has been a little battle of mine to make sure that when people turn up at court to represent someone, they do not get away with giving the impression that they are lawyers, when they are not. They are clerks, not lawyers. One can go into a solicitor’s office and receive advice, and often it is not a lawyer that gives the advice—sometimes it is a clerk or someone who is in the legal assistants’ profession. I am always careful to check when people write to me from a law firm whether the name at the bottom of the letter is the name of one of the solicitors at the top or that of somebody else.

I am absolutely against people passing themselves off as one thing or another. I do not think I share the view that there should be nobody in England who does this work other than lawyers, but the hon. Gentleman will argue his case. When the Minister responds, I should be interested to hear whether the Government expect that after enactment, when the regulator has been set up, it will be not just the really dubious characters that go, but all claims management companies, and whether that is Government policy. I do not understand that to be what the Government expect and want, but let us hear the answer.

Like the hon. Gentleman—I think that we are all going generally in the same direction and I suspect that that is why we are all here—I hope that the Bill will get rid of the cowboys who are out to get a quick buck and then disappear. It was the same with the legislation on minicabs, which was pressed by my then hon. Friend the Member for Richmond Park—now Baroness Tonge—among other hon. Members. Minicabs were not properly regulated. Now that they are regulated, people—women in particular—feel much safer and the regime is tighter, as it should be. The measure has not got rid of minicabs, however; they still exist, but they are licensed and regulated, but the liability is much greater.

John Mann (Labour, Bassetlaw)

I seek your advice, Mr. Atkinson, on whether at this stage make general comments of the type made by the hon. Gentleman, or speak about the clause standing part of the Bill.

Peter Atkinson (Conservative, Hexham)

As we are on the first group of amendments to quite a large section of the Bill, it makes more sense for the Committee to proceed as we have been doing, so if the hon. Gentleman continued I am sure that that would be to the advantage of the Committee.

John Mann (Labour, Bassetlaw)

Thank you, Mr Atkinson.

I want to put some questions to the Minister that I shall illustrate with a specific claims management company called Vendside Ltd. Hon. Members may be familiar with that company. Opposition Members may be particularly familiar, because I understand that the company has written to them this week making various allegations against a collusion of Labour MPs, myself included. If any hon. Members have such a letter, I would be keen to be given a copy. It demonstrates the nature of some claims handlers.

I want to be absolutely certain that the legislation will ensure that collusion between a claims handler and a solicitor is fully covered. There are two forms of collusion. In one form, there is an integral relationship, whether formalised or informal, whereby the claims handler gives cases to a specific solicitor or a small group of solicitors—as we have seen not only with Vendside but with other claims handlers dealing with claims in the mining industry. In other words, the solicitor has a vested interest in defending the reputation of the claims handler and its attempts to raise finance, because the claims handler is giving them lots of business. That is well documented among a range of claims handlers, of which Vendside is only one. It is essential that we do not allow consumer complaints to fall between the two stools.

The second aspect is particularly relevant to Vendside Ltd. As well as having a range of solicitors whom it works through—a panel of six different solicitors over the past six years—it employs its own solicitor to advocate on its behalf. At the moment, that is Brooke North in Leeds. If one does a press search, one sees that a Mr. Stopdale, a solicitor from Brooke North, has been quoted repeatedly on various issues over the past few weeks—in essence, it would be reasonable to say, advocating the case of Vendside Ltd.

The case of Vendside Ltd. throws up another complication. I understand from correspondence and my research that it is a fully owned subsidiary of the Union of Democratic Mineworkers. That raises all sorts of complications, because a trade union is not able to levy VAT, but a limited liability company is able to do so. It is unclear, at times, who is actually who in the UDM and Vendside, because they have the same solicitor. A year ago they had different solicitors, and made a point of that. Now they have just one solicitor. The letter that has been sent to certain Opposition Members is headed “UDM Nottingham section/Vendside Ltd.”. It is written on Vendside headed paper, but the person who signed the letter is a president. Vendside does not have a president; the person who signed the letter is the president of the UDM. The president of the UDM is signing letters as the president of the UDM on the headed paper of that limited liability company.

That confusion could be used to negate consumer rights. The consumer is bound to be confused about whom they are dealing with. There may be legal technicalities, too. The law in relation to a trade union, any kind of friendly society or akin organisation is somewhat different. It is governed in statute as opposed to the law relating to a limited liability company. Therefore, the question of whether things will fall between the two is rather important.

In addition, who will carry out the claims management regulation? Is there an equivalent in terms of the reality—the sanctions and the powers? Otherwise, organisations would set up in one form or another, or transfer matters in one form or another, purely to ensure that consumer rights are minimised. That would be a particularly unhealthy arrangement. I shall give an illustration.

Let us consider hearing loss claims in both the textile and the mining industries. A claims handler, Vendside Ltd., acquired the claim. It was passed to a solicitor who passed it to another solicitor. That solicitor has used a medical company that was owned partly by the first solicitor. Some of the people working for Vendside Ltd. have been doing what was described as marketing work and, between them, different fees have been passing backwards and forwards. I referred to a set of minutes on Second Reading that outlined how some of those finances worked. As for detailed consideration today, how do we ensure a system that does not allow—this is beyond triangulation—a position in which four or five different parties are involved?

Oliver Heald (Conservative, North East Hertfordshire)

I follow what the hon. Gentleman is saying; I agree. Does he agree with me that the danger is that, if we leave a loophole, those sort of people will move into it? Different arrangements have been alighted on; he has mentioned some of them. He will be aware of the scandal of the National Union of Mineworkers accepting the proceeds of misrepresentations made by solicitors seemingly on its behalf and then taking a kick-back out of the miners’ compensation. Whatever loopholes there are will be exploited, because a lot of money is involved. Should not everybody be covered?

John Mann (Labour, Bassetlaw)

I have taken many cases that relate to claims that originated through the NUM, but one is successful because the solicitors concerned have had through the Law Society a series of adjudications made against them. Last week, Raleys solicitors were instructed by the Law Society to pay back the money that was deducted because it failed to give proper cost advice to the individual. It has been asked to pay an additional £400 compensation. There are many individual consumer complaints, some of which are with the Law Society, and many more will be following. There the consumer has found that there is redress.

However, what is unique about Vendside Ltd. is that the redress is there for those who go through solicitors. Adjudications have been made against firms such as Moss and Beresfords. Probably 85 per cent. are going that way. For reasons that have not been explained, which are not the Minister’s responsibility because they are that of a different Department and predate her ministerial elevation—and highly appropriate that was—the Government chose to have an agreement with the claims handler. In fact, there are three: one for hearing loss, one for COPD and one for vibration white finger.

The consumer redress when claims are handled by the claims handler without the solicitor is purely through the civil courts. The dilemma in going to the civil courts is that one can throw large amounts of money at the matter through appeals. Therefore, the individuals—in my case, my constituent—are not those who readily go to court; they tend to regard courts as places to avoid. Their perception of a court is in respect of arrest on a criminal charge. I have carried out a survey on the matter; people do not readily go to court. The idea that they would have proper consumer redress by going through the civil courts is nonsense. There is a loophole whereby, if one goes via a solicitor, one has the potential of redress. In my view, that is beginning to work well. It needed some campaigning to get the Law Society to act responsibly in respect of regulation, but after much pressure it is doing so now. However, if one goes solely through a claims handler, and in an agreement made by the Government one has no redress, where does one go? That is absolutely fundamental to how this matter is handled.

The situation is even worse, however. Not only does one have no redress, but I have had to request on behalf of constituents some of the basics that would be available if one went through a solicitor, such as the client file. One would want that because, as I have found in a series of cases—I shall not go into the detail because that is not relevant—the service is part of the compensation claim, and there could be serious money resting on it, so one needs to see whether that has been put in. My argument against a solicitor when it has not been put in is that the solicitor might well be liable. Solicitors have paid out some significant sums for negligence because they have failed to put that part of the compensation claim in. One can check that only if one examines the full file. Slowly but surely, through the Law Society, I am getting hold of the files, going through them and assessing them. I am not a solicitor, but my judgment as to whether such matters should be further investigated is reasonable, so I can give sound advice to my constituents.

Vendside Ltd., and its solicitors, Brooke North, refused to release the files. If one took that route, one would not even be able to see one’s own file. Consumer rights are about not just complaint but ownership of one’s file. At the moment, one has no redress whatever in that respect.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

It would be interesting to know whether the hon. Gentleman believes that only lawyers should be able to do that work. I think that I am right in saying that, as of today, if he has a file on a case of his with a law firm, he does not have the right to see that file either. He will have that right only when he has settled all his bills and terminated his contract, and even then it will be limited. I am not sure, but I think that that is the position.

John Mann (Labour, Bassetlaw)

Again, I shall not go into the detail of the battles that I have been fighting on that matter. Suffice it to say, we are winning the cases in getting access to the files. It took a bit of a public campaign to get that moving, but that is now happening and the files are coming through. The Law Society has been very clear in that respect—if a file is complete, one can get hold of it and see whether there is a negligence issue. If one suspects that there is, one has the opportunity to do something about it. The point about Vendside Ltd. as a claims handler, and the three absurd agreements that the Government signed, is that one does not even have that basic right.

Michael Clapham (Labour, Barnsley West and Penistone)

My hon. Friend will have come across cases in which, in addition to those from the claims handler, charges have been levied by solicitors. Most such solicitors have no contact with trade unions, but he might have found that they have levied as much as £1,000 per claim. One such firm, Beresfords in Doncaster, has agreed as a result of pressure from MPs to refund claimants. It is not just the claims handlers; in the mining cases we have found solicitors, too, who have levied additional fees.

John Mann (Labour, Bassetlaw)

They certainly have; I have uncovered many of them. The Leeds solicitor, Irwin Mitchell, was charging 25 per cent. The company with the most money, Thompson’s, was charging constituents such as my Mr. Allen directly. A range of solicitors charge levies or success fees—few of the leading ones do not—but that is a separate issue, because there is a remedy there. I do not think that the powers of the Law Society are strong enough to enforce adjudications without all the palaver that we have had with Raleys, such as appeals and solicitors’ disciplinary tribunals. In my view, the Law Society should strike off solicitors who refuse to abide by the club rules. It is straightforward. If that is not happening, we should legislate so that it does and so that such people are not entitled to be solicitors any more.

I come to claims handlers. The hon. Member for North Southwark and Bermondsey asked who should be allowed to proceed with cases. That is a vexed question. In relation to the mining and hearing loss claims, I see no basis for the Government to sign an agreement with a claims handler. From the evidence, the Government should cancel that arrangement forthwith, because consumer rights are not built into it.

The only way that I would be prepared to countenance the idea that a claims handler should proceed with cases is if the consumer rights were equivalent to going through a solicitor. There may well be arguments—my hon. Friend the Member for North Durham will doubtless put them at some stage—that claims handlers should not be allowed to do so anyway. Even if that were the case, it could be considered only on the basis of equivalence of rights.

There are two other aspects. One relates to Vendside and the hearing loss claims. It is not just the mining industry; the textile industry is involved as well. One of the perplexities that I am still struggling to understand—I am still asking questions—is that I found women who worked together who appeared to have equivalent industrial deafness, some of whose claims have proceeded while others have not. There seems to be an interesting unwillingness to take claims to court, and that decision appears to be made by the insurers’ solicitors. Someone goes to a claims handler, and the claims handler gives the case to a solicitor, who perhaps passes it to a second solicitor. A third solicitor then judges that there is no claim, and that is the insurers’ solicitor.

Something in that does not add up. If that is right, proper and within the law, the law is wrong. If a woman with deafness takes a claim for industrial deafness, whether the employer is liable is arguable, but if the claim has proceeded through a claims handler, a solicitor and perhaps another solicitor and is then stopped by the insurers’ solicitor, that is rather dubious.

The fundamental question is how that fits into the draft legislation, particularly when there is a financial relationship, with fees being paid, and greater triangulation among the parties. I could see how there might be an unduly close financial relationship between the claims handler and perhaps even the insurer or the insurer’s broker. The remit and role of the Financial Services Authority and the Association of British Insurers in that context must be examined. Otherwise, the sort of ruses that took place with hearing loss claims, which appear to have been legal, will recur. In 2000, a hearing loss claim settled in a couple of months at costs of around £600 or £700 to the claimant’s solicitor suddenly became a five-year process in which £3,000 to £4,000 went in all directions for what appears to be wholly unnecessary insurance, third parties in medical investigations, repayments to the first set of solicitors, claims handlers and their marketing companies. If all that unnecessary expense is legal, we must ensure that the law is tightened so that it does not happen.

Vendside is not alone, but it is the biggest offender in my area in terms of volume and the most litigious in trying to ensure that what it does is not challenged. I faced three spurious and unsuccessful complaints to the Parliamentary Commissioner for Standards, all of which were dismissed. Letters are now being sent to Opposition Members. I hope that they do not file them appropriately too quickly; I hope that they will let colleagues involved know that they have received letters.

Oliver Heald (Conservative, North East Hertfordshire)

I feel rather left out. I have not had one of those letters. Can the hon. Gentleman let me have a copy?

John Mann (Labour, Bassetlaw)

I shall put the hon. Gentleman on the mailing list. Numerous Opposition Members have been happy to let me know that they have had letters and have then been perfectly happy to let me see a copy of the letter in which I was named. Other colleagues are not named, but there is collusion between some of us, and I suspect that some in this room may be involved in the collusion.

Julian Brazier (Conservative, Canterbury)

May I reassure the hon. Gentleman that I have received no such letter? I suspect that the authors would have found me unsympathetic to their activities.

John Mann (Labour, Bassetlaw)

That perhaps shows how some claims handlers are as effective at targeting Members of Parliament as they are at handling some of their claimant cases.

The irony is that Vendside is not the worst. There are worse companies—P and R Associates, for example. The amount of money that is deducted from my constituents is sometimes more than £3,000. IDC is another example; again, solicitors have deducted thousands of pounds. I suppose that the worst of all in terms of what it has done is Union and General Services. The name sounds good: an ex-union official, a Mr. Revill of Thorne in Doncaster, set it up with, I guess, some of his associates or friends. That company charged a fee for passing cases on to solicitors and then went into voluntary liquidation. It may have done that because it suddenly found that its outgoings were greater than its incomings, but there could be another reason why a claims handler would go into voluntary liquidation. How could one pursue it through the civil courts? The ability of a small claims handler without the resources that an organisation such as Vendside has to keep using appeals through the courts to try to reverse decisions that it could lose if my constituents or others were successful could be negated if it went into voluntary liquidation as a limited liability company and disappeared. How will we deal with a consumer complaint against a claims handler that goes into liquidation? There needs to be at least equivalence with the powers to deal with solicitors.

Does my hon. Friend the Minister not feel that it is appropriate for us to build into the Bill a requirement for Vendside Ltd, with its unique agreement with the Government, to repay the money to the claimants? The Government, using their employer responsibility, have paid the costs and have done so very generously, so there has been double charging. Is it not incumbent on the Government, as it is a Government agreement, and on Parliament to ensure that the consumer gets proper redress by legislating to ensure that the money is repaid?

Kevan Jones (Labour, North Durham)

I welcome regulation of claims handlers, but I hope that they are put out of business by it, because I see no purpose whatever to those organisations. I congratulate my hon. Friend the Minister on her approach to the issue. She has stated the important fact that the consumer’s interest and rights should come first. Like my hon. Friend the Member for Bassetlaw, I believe that that is the important point.

My concerns about the phrasing of the clause are somewhat similar to those of my hon. Friend, and I would like answers. I am concerned about cases that will fall between the two stools. I accept that the draft Legal Services Bill is coming, which will tackle the woeful way in which the Law Society has dealt with some cases. I agree with the hon. Member for North Southwark and Bermondsey that the Law Society does not merit any great accolades in this respect. It is clear that the claims handling scandal in the chronic obstructive pulmonary disease scheme could not have gone on without the collusion of solicitors—solicitors working closely together.

I shall give two examples to illustrate my concern about what will happen even with the new regulation. The first, to which my hon. Friend the Member for Bassetlaw has referred, concerns Freeclaim IDC, which was started in the 1990s in Ashington in Northumberland under the name Industrial Disease Compensation. It has operated two scams.

The first involved the chronic obstructive pulmonary disease scheme, when IDC said that it would indemnify people’s claims even though it knew there was no cost involved. One case referred to me involved a man named Mr. Jobes. His only redress to recover the £3,600 that the company stole—I do not use the word lightly—from his compensation was for me to take the case to the Law Society. Credit is due to the Law Society case officer, who was tenacious in pressing the matter. The claim was passed on by IDC to a Liverpool-based company called Silverbeck Rymer, and the Law Society found that, as in the cases taken up by my hon. Friend the Member for Bassetlaw, the company was negligent in the cost advice that it gave to the client. The decision went to appeal and resulted in Silverbeck Rymer having to pay the £3,600 back to Mr. Jobes. It was a successful case, but my concern is that Silverbeck Rymer clearly had a number of cases with IDC. I intend to take the matter up with the Law Society to find out in how many other cases IDC has done the same thing. Unless people complain they will not get justice. That is the important point.

Under the regulation, if IDC were ever to get regulated—I would argue strongly that it should not—would there be a mechanism for the Secretary of State or the regulator to examine a number of problems in relation to a company? It is clear thatMr. Jobes is not the only person to have been scammed in such a way. The Law Society can investigate only if there is a complaint. We need a mechanism whereby if a complaint is made in one case, other cases can also be examined.

Where is the dividing line between a solicitor and a claims management company? In its literature, IDC calls itself a “panel of solicitors,” giving the impression that it is some type of legal organisation when clearly the people in question have no legal qualifications. It says that its “panel of solicitors” is made up of “experts in their field”. They are not. Often, they are solicitors’ firms that are down on their luck and want cases to put through their books because of the hard times upon which some high street solicitors have fallen.

We must also clarify the matter of advertising and the farming of claims, which relates to another case that demonstrates IDC’s second scam. Once the Jobes scam was exposed, IDC changed the system to charge people not on a percentage basis but through an administration fee for getting the claim and passing it on to a solicitor. It said that it was charging a “modest” fee of £100 plus VAT, which people might say is fine until they find out that the solicitors actually collect the administration fee at the end of a case and pass it on to IDC. My constituent Mr. Barker cannot understand why he has to pay that fee, given that all IDC did was pass his case on. The “panel of solicitors” that IDC used in his case were a company called Mincoffs in Newcastle, whose submission in relation to the Law Society complaint that I have already put in is very enlightening. It appears that Mincoffs is paying for the cases to be passed on. More disturbingly—this is very worrying—I have it in writing that Mincoffs is paying for what it calls “sponsorship advice sessions” and other materials in local working men’s clubs.

Where do we draw the line drawn between the claims handling firm and the solicitor, because in this case they are on a panel and IDC is badging it, and Mincoffs were clearly paying for the advice session or promotional material? It is important that this Bill and the draft legal services Bill do not create a loophole or chasm that people can fall through between the regulation of claims handlers and the regulation of solicitors. I know the Minister does not want such a situation to arise.

John Mann (Labour, Bassetlaw)

My hon. Friend makes an excellent point. In the context of what he is saying, how does he consider the case of Vendside and Indiclaim? Vendside is a claims handler, and that is generally accepted. Indiclaim is the marketing arm of the Union of Democratic Mineworkers. Nobody had heard of Indiclaim until it was discovered that certain solicitors, as well assisting in getting the Vendside fee, were paying up to £500 per claim, in the case of one solicitor, to Indiclaim, a company that was owned by one of the members of Vendside. Until then, the operation was totally secret. Would Indiclaim be a claims handler, or could it be a ruse out to get out of complying with legislation?

Kevan Jones (Labour, North Durham)

My hon. Friend makes a good point. That is why it is important to raise these things now and get clarification. The hon. Member for North-East Hertfordshire said that such people are ingenious and will create scams and new organisations. They develop what they call “their product” as it goes along. The important thing is that if a claims handling company then sets up marketing companies, as my hon. Friend suggests, or a solicitor does it, they need to fall within this regulation. This must be dealt with in terms of ownership or some direct connection, otherwise I foresee that these people will just reinvent themselves.

My hon. Friend touched on my final point: claims handling companies going bust or being put into liquidation. I know of numerous cases, as does my hon. Friend the Member for Barnsley, West and Penistone, in which various claims handling companies were set up off the shelf for, as I call it, raping the COPD scheme. They got in plenty of claims, sold them to solicitors—or had some relationship with solicitors—and as soon as the scheme finished, they wound up it completely.

People might ask whether that matters, because the claims were passed over to solicitors who could deal with them, but it does, because the COPD scheme and some other legal actions have time limits and deadlines. In a number of cases, people have been phoned up and door-knocked by these companies, and have filled in forms thinking that they were registering a claim only to find that the company, or various companies, had gone into liquidation without registering the claims with solicitors. What recourse do such people have? Some would say that it is under civil law, but that is not really so because the company has gone bust and the directors have disappeared. It is interesting to consider the backgrounds of some of the directors who have been involved in everything from double glazing to timeshare scams.

David Hamilton (Labour, Midlothian)

I shall give a breather to the double act that is taking place. I, too, have a concern about the number of solicitors and claim partners who deal with clients in Scotland only to find that Scottish law is different from English statute. When they discover that, they back off, leaving people high and dry in Scotland.

I have had to deal with numerous cases in Scotland involving English claims handlers, who are governed by the Law Society of England and Wales, not by the Law Society of Scotland. We are beginning to get a number of claims by people who have missed the boat simply because they thought that they had made the claim only to find that they were time-barred because they dealt with claims handlers at that point. In dealing with the compensation legislation, I hope that the Minister will examine that problem. Although the Bill covers England and Wales, I hope she will act accordingly to ensure that Scotland is incorporated into it.

Kevan Jones (Labour, North Durham)

My hon. Friend makes a good point, and it takes us back to the fundamental point raised by my hon. Friends the Members for Sherwood (Paddy Tipping), for Bassetlaw and for Barnsley, West and Penistone. The people we are dealing with—the consumers—are not used to dealing with solicitors. When they are phoned up or doorstepped, they think that by filling in a form with a claims handling company, they are registering a claim. We cannot blame them for thinking that because some of the forms are in legalese and look like legal documents to the layman. When people are left high and dry by these companies, they have no legal redress at all. I am interested to know what redress those individuals will have under the provisions. If a solicitor makes a mistake by not registering a claim, they have recourse to the Law Society, but claims handling companies are not covered.

There will be situations in which people set up companies simply for the purpose of registering a number of claims and then sell what they can. Perhaps they will stick the more difficult ones in a drawer and forget about them. People have no legal redress in such situations, and it is important that we get clarification on that important point.

Lembit Öpik (Liberal Democrat, Montgomeryshire)

What interests me about what the hon. Gentleman says is the impression that some companies give that by simply filling in the form, people can somehow get redress for their grievance. Does he accept that that is because the claims culture, in the context in which he is discussing it, is driven by the profit motive? One does not condemn the companies for that, but it underlines the importance of properly regulating them.

Kevan Jones (Labour, North Durham)

It does, and that it is an important point. These companies are in it for the money. They are not interested in anything else, and in some cases they do not even give any legal advice. They do not really care about that; all they care about is getting a number of forms filled in that they can sell on. The collusion of certain solicitors’ firms with these claim handlers has made the situation more difficult recently by giving people the impression that there are claims to be made.

The hon. Gentleman’s point was also made in the Select Committee report and by the regulator—that the claims culture myth is being built up by such people. They do not do what a lot of solicitors do and what I certainly used to do as a trade union legal officer. When certain people came to see me, I said, “Sorry, you don’t have a claim,” but it is not in the interests of these firms to say that because they want the money. That is what concerns me.

No one should use a claim handling firm in any circumstance: they should go directly to a solicitor to get advice, and they will tell somebody if they do not have a claim. The cases I dealt with concerned asbestos, whereby chest X-rays were taken for individuals. One gentleman came forward, and when I said there was no case because he was not suffering from pleural plaques, he asked, “Why can’t I get any money?” I told him, “Because you’re not ill. You’re not going to die from a lethal disease.” If that case were dealt with by a claims handling company, no doubt it would have sold him insurance and taken him through the entire system. That would mean two things: first, giving bad advice and building up people’s hopes when there was not a claim, and, secondly, a creating a culture, as referred to by the hon. Member for Montgomeryshire, where claims are made when they should not be.

The regulation of claims forms is long overdue. I welcome the provisions and the Minister’s customer-focus. I hope that she addresses the points that my hon. Friend the Member for Bassetlaw and I raised. We must not allow loopholes or chasms between this legislation and the legal services legislation that lead to people not getting the consumer rights they deserve.

Bridget Prentice (Labour, Lewisham East)

This has been a helpful and comprehensive debate. I absolutely and completely agree with my hon. Friend. The whole point of the provisions is that consumer rights come first. That underlines this element of the Bill.

Philip Hollobone (Conservative, Kettering)

The Minister said that she completely agreed with the hon. Member for Bassetlaw, who said, if I remember correctly, that he hoped that the introduction of the Bill would lead to the end of the claims handling industry. Does she see that as the objective of the legislation?

Bridget Prentice (Labour, Lewisham East)

I wish the hon. Gentleman would not look unnecessarily for negativity. I said—I shall repeat it, because I feel passionately about it—that I agree with my hon. Friend the Member for North Durham that the purpose of the clause is to put consumer rights at the heart of the Bill. That is part of the reason why we introduced this element of the Bill, and I do not resile from it at all.

Let me briefly set out exactly what clause 3 is about. I shall then try to respond not only to the amendments tabled by the hon. Member for North-East Hertfordshire, but to some of the other issues raised. Clause 3 defines “claims management services” and prohibits individuals from providing regulated claims management services without authorisation from the regulator or an exemption by order of the Secretary of State.

Individuals acting in a voluntary capacity are specifically excluded from the scope of the regulation for good reason. We do not want to impose unnecessary burdens on individuals who might offer advice to friends or on those who offer their services on a voluntary basis for not-for-profit organisations. A volunteer in the citizens advice bureau will not be caught by the clause. In this context, an authorised person will be an individual, company or organisation authorised by the regulator. That single authorisation will cover the employees of that company or organisation.

We do not want to over-regulate, so we are very conscious of what the Better Regulation Task Force says on the issues. That is why we have structured the Bill to allow for flexibility and proportionate regulation. We do not want to impose any unnecessary burdens in seriously protecting consumers who might have been disadvantaged by the activities of some claims companies. I have provided Committee members with a draft copy of the order underclause 3(2)(e), and I hope that it has assisted the consideration of this part of the Bill.

Before I deal with the amendments, let me try to deal with some of the issues that have been raised. The hon. Member for North-East Hertfordshire wanted to know how the clause on exemptions would fit in. Those who provide regulated claims management services will be those specified in clause 3(2)(e). Those considered not to need authorisation could therefore be exempted. That would include solicitors, barristers, the not-for-profit sector and trade unions, which we shall come to later.

The hon. Member for North Southwark and Bermondsey joined the hon. Member for North-East Hertfordshire in asking about the use of the word “regulated”. The point of taking a wide definition of claims management services is to ensure that all kinds of service, wherever provided, can be captured. Equally, however, we do not want to regulate areas that do not need it.

The hon. Member for North Southwark and Bermondsey asked for an example of something that would be unregulated. The one that comes to mind is that of a surveyor where a motorway is being constructed. There is evidence of surveyors speaking to people in the vicinity about whether they need to make a claim for blight. There is not a serious problem at the moment, but the clause would allow us to bring such things into regulation should that be necessary later. That is the point of doing so much through the secondary legislation route. I hope that that ensures that the regulations targeted only at those who need to be regulated. We followed the approach used by the Financial Services Authority in regulating its remit. Our approach also has the benefit of legal certainty, rather than leaving the matter to the courts.

I turn to the debate about the National Accident Helpline. To clarify, as there seemed to be confusion throughout the Committee about the helpline’s purpose and how it is funded, it is a claims management company. It captures claims and refers them to solicitors. It is involved in claims handling activities and it has a network of solicitors but it is not regulated by the Law Society. It also sells after-the-event insurance and can arrange loans for claimants to pay their insurance premium. Those are the things that some of my hon. Friends have serious concerns about.

The helpline is funded by referral fees from solicitors and by the commission that it gets from the insurance and the loans. It would be regulated under the scheme. I am perfectly prepared to accept what the hon. Member for Kettering said—the helpline has been willing to work with us on the issue and it would have no worries about being regulated under the scheme, as it believes that it is providing a high-quality service and therefore does not think that it would be removed from the system on the grounds that it was undermining it. It is a good example of the sort of organisation that would be regulated under the clause.

Of course, anyone who is regulated under the clause and does not meet the standards that the regulator sets can be removed from the scheme and other penalties may be attached to them, including up to two years’ imprisonment. We are not thinking of the issue as light regulation, as heavy burdens are placed on companies to ensure that they raise their game and their standards.

Kevan Jones (Labour, North Durham)

I am grateful for that clarification. The helpline is a claims handler like any of the other cowboys in the industry. Does the Minister agree that it is important that organisations such as the National Accident Helpline make it clear to clients that they are not solicitors but middlemen and that they also sell insurance? It is important that the consumer knows that, so that he or she has the choice to go directly to a solicitor rather than going through that middleman.

Bridget Prentice (Labour, Lewisham East)

My hon. Friend makes an important point and one that was raised before. He mentioned it in his contribution. An important feature of the authorisation criteria is that the claims management company will have to provide details about the information that it provides to claimants. That information will be useful to the regulator if complaints are received about fees charged. We do not intend that the regulator should be prescriptive about the level of fees, but it should be transparent and clear, in particular about any free services and whether charges are met under another scheme. Any complaints from a claims company that does not comply with that requirement would be in breach of the terms and conditions of the authorisation and would therefore face disciplinary action.

Kevan Jones (Labour, North Durham)

I have a point about the notion of free legal advice. Will the Minister agree that if a claims handling company is giving free legal advice, it should be exactly that—it must be given by a qualified individual who is on a par with someone regulated by the Law Society and not just by a law graduate who has no experience? It is clear that I, and others, could set up a claims handling company with people who had a law degree but had not practised for many years, and give free legal advice, which would be of no use in helping that individual.

Bridget Prentice (Labour, Lewisham East)

My hon. Friend makes an important point. The information given to the client must make it absolutely clear what the client will receive from the company. In his speech, he also talked about the investigation of allegations and the regulator will be able not only to investigate complaints but to take the initiative himself and carry out audits and investigate allegations from individual claimants, MPs, or anyone else. That will include the powers to seize information and documents and to obtain a warrant to enter and search premises, and there are strong controls over what will be done. Of course, the regulator will be able to enforce clear and effective sanctions.

My hon. Friend the Member for Bassetlaw wanted to raise the issue of the confusion between Vendside and the Union of Democratic Mineworkers. Again, I agree that there has to be clarity for the consumer about who is dealing with their claim and whether that person is regulated. Under the proposals in this part of the Bill, Vendside would require authorisation and would have to comply with the regulators’ rules. The model rules that we have already published state that authorised businesses must ensure that all information given to the client is clear, transparent and not misleading. If Vendside is not capable of doing that, it would not get authorisation.

John Mann (Labour, Bassetlaw)

Would Indiclaim, described as the marketing arm of the UDM, be similarly regulated as a claims handler?

Bridget Prentice (Labour, Lewisham East)

I want to come to the issue of marketing companies. Companies will not be able to evade regulation by setting themselves up as marketing companies. Authorised companies will be required to declare to the regulator any links that they have with parent or subsidiary companies and any previous companies that the directors have worked for.

My hon. Friend the Member for Bassetlaw raised the issue of a company putting itself into voluntary liquidation in order to avoid anything. Effective enforcement is essential to prevent any company evading regulation. There will be compliance checks and audits that can flush out any early concerns about a business that might be failing. The regulator does not have to wait for an audit to take place but can take action to suspend or cancel authorisation if he feels it is appropriate to do so.

In dealing with complaints, it should also be said that authorised persons will have to set up an internal complaints procedure. Where the consumer feels that their complaint has not been handled appropriately or to their satisfaction under the internal procedure, they can refer the matter directly to the regulator. Again, if the investigation of that complaint uncovers a breach of the rules, that could result in disciplinary action, including suspension or cancellation of authorisation.

My hon. Friend also talked about the collusion between solicitors and claims handlers. There is nothing to stop solicitors and claims handlers from working together, but if they are providing regulated claims management services, solicitors will be regulated by the Law Society and the claims handlers by the regulator. We will ensure that all regulators work in a joined-up fashion so that they address all the abuses, if there are any, and safeguard consumer rights. The provision is an interim measure because, as the hon. Member for North Southwark and Bermondsey has mentioned, once the Legal Services Bill becomes law that regulation will come under the auspices of the legal services board.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I should have waited for the Minister to finish what she was planning to say. I have been thinking of the one case that she gave as an argument for keeping in the word “regulate” and resisting the amendment, which was that of a surveyor.

Surveyors would be governed by their professional code of conduct and their organisation. They would have to be members of their professional body and therefore would have been covered. If a local authority officer comes and gives advice to someone who is also talking about the prospect of a claim if a building gets put up or if a road comes past them, would they fall outside the regulatory processes? Would there be no way in which things said by people employed with public money to do a public job would be covered by this legislation? I have not yet heard a very persuasive argument for resisting the amendment, only one little example that I think is covered in other areas anyway.

Bridget Prentice (Labour, Lewisham East)

In the case of surveyors, there is a suggestion that some are going out and looking for individuals and giving them advice. However, the hon. Gentleman is right that they should be covered by their own professional organisation. What I am saying is that if they started to act as claims handlers, we would need to look at whether or not they would be brought into legislation. As far as local authorities are concerned, if a local authority was giving bad advice, there are other ways that people can deal with them through the local authority ombudsman. That would be the best way to look at that. However, if I may, I will return to that.

Finally, I will turn to my hon. Friend the Member for Midlothian (Mr. Hamilton). We are in discussions with the Scottish Executive about the way that we deal with things in Scotland. I have to say that, luckily for Scotland, there does not seem to be the same problem with unregulated claims that we have in England. However, it would be possible for the Scottish Executive to follow similar lines to the ones that we are using here, if they felt that that would become an issue. Claims management companies operate much less extensively in Scotland and Northern Ireland than they do in England and Wales. In Scotland, that is partly because of a different legal system.

David Hamilton (Labour, Midlothian)

To clarify, there is a specific problem in Scotland about ex-coal miners. In my own area, I do not have the same problems as have been exhibited by my colleagues. However, there are many cases in Ayrshire, Lanarkshire and Fife in which people have been stripped of money to which they feel entitled. It does happen. However, Scotland has a population of 5 million against England’s 50 million; that is why it is less.

Bridget Prentice (Labour, Lewisham East)

I take what my hon. Friend says. I have just found what I needed to know about surveyors. There is limited evidence that there are surveyors who have been effectively acting as claims handlers. They liaise with the Highways Agency to seek compensation for people whose homes might be blighted or who are near newly constructed motorways. The compensation is supposed to reflect the loss of value suffered by the properties.

To be fair, we are not aware of any consumer being disadvantaged by that activity. If it came to light that consumers were being disadvantaged, we have the order-making power that would bring that under the regulatory net.

Oliver Heald (Conservative, North East Hertfordshire)

Why would that not be covered by the hon. Lady’s definitions section, which mentions giving advice in relation to the making of a claim? Why does she need the extra, bolt-on bit about regulating and having an order-making power? Why not just cover everybody in the claims handling business? Then, if she wants to exempt those to whom other regulatory regimes apply, fine.

Bridget Prentice (Labour, Lewisham East)

The reason not to target everybody is that we want targeting to be proportionate. That is why we deliberately picked out the five areas where we think that there are problems at the moment. The potential for the regulatory net is very wide. However, this way we have flexibility to ensure that we can act quickly to impose regulation in areas where there is an immediate problem, and to avoid overregulation where there is not a problem.

We have consulted extensively with stakeholders, including APIL, the Association of British Insurers and the Criminal Injuries Compensation Authority, and with our own legal services consumer panel, which involves Citizens Advice, the National Consumer Council, the Office of Fair Trading, and Which?, all of which have welcomed what we are doing—as has everyone who has advised us. That is why we want to make it a matter of targeting.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I am just working out that the Minister is now saying that she wants to include the word “regulated” because the Government have five initial groups in mind: personal injury, surveying, employment, criminal injuries compensation, and compensation for the mis-selling of financial products. Will she tell us whether she is aware of any other claims management activities in existence, in relation to which she does not believe there to be abuse, so that they would fall outside the system? I am also intrigued as to why Scotland and Northern Ireland do not have the same issue. A note later would be helpful.

Bridget Prentice (Labour, Lewisham East)

On the second point, part of the reason why Scotland does not have the problem is because of the different Scottish legal system. Our advice from Scotland is that there is not the plethora of claims management companies in Scotland that there is in England.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

Perhaps they just have not got that far yet.

Bridget Prentice (Labour, Lewisham East)

Maybe, and no doubt when they do, we shall have the opportunity and the flexibility to regulate appropriately. One reason why I cannot yet cite examples is that, to be honest, we do not really know what is out there, which is why we need flexibility. We do not want to overregulate, but if a problem arises we shall have the flexibility to regulate in secondary legislation.

Kevan Jones (Labour, North Durham)

I know that my hon. Friend has tried to cover all the points that were mentioned. One point that I mentioned related to claims handlers who register claims but do not pass them on to a law firm, so that the claim goes out of time. How would claimants who suffer as a result of that be redressed? It is a detailed point, but perhaps if she cannot give an answer now she will reflect on it and respond in writing. It is an issue of concern to me and many other Members who have dealt with claims handling companies. Claims fall out of time either because companies go bust or because there is simple neglect in passing on claims that are time-limited in law.

Bridget Prentice (Labour, Lewisham East)

I understand what my hon. Friend is saying. I need to reflect and come back to him on it, but I suspect that it is something that we should examine in terms of the regulation.

On the details of the amendments, I agree with the hon. Member for North-East Hertfordshire and the principle behind his amendment: all claims companies providing claims management should be captured. However, I hope that the definition in clause 3, in its entirety, covers his concerns.

I understand that the purpose of amendment No. 18 is to ensure that representation that is not strictly legal, such as the mis-selling of endowment policies—that is the most obvious example—is covered. Again, I think that the wide definition in clause 3 does what is intended and applies the description “claims management services” to any advice or service in relation to the making of the claim. So the definition includes all the aspects of making a claim.

For the avoidance of any doubt, however, the clause also specifies that the provision of services could include

“the provision of services by way of or in relation to legal representation”.

That does not mean that other representation is excluded. I would argue the contrary. The words “in particular” indicate that the list in subsection (3)(a) is not exhaustive so it is unnecessary to mention activities that would obviously fall within “the provision of services”. That includes representation that is not necessarily legal.

Amendment No. 19 is also unnecessary, again because I think that the definition in clause 3 covers the concerns and has been constructed carefully to cover organisations whether or not they are to receive payments. That therefore would apply to companies acting as a call centre that simply take details about claims from consumers and pass them on to a solicitor for a fee. As I have said extensively, the definition in clause 3 is wide to ensure that all related activities are covered. I ask the hon. Gentleman therefore not to press the amendment.

Briefly, the hon. Gentleman mentioned the activities of rehabilitation farmers. There is still some dispute in the industry as to whether there is as yet such a thing as a rehab farmer, but if credit rehabilitation farmers act in the context of making a claim or giving advice, those services would fall within the regulatory ambit of the Bill. Those providing such services would be caught and would have to seek authorisation.

The debate has been extensive and has shown the need for clause 3. There are unscrupulous people out there undermining consumer confidence. I think that the way in which we have constructed the clause provides the wide definition needed to ensure that claims farmers are caught and regulated when necessary. Equally, if people are not involved in any of the activities where we feel that there are problems, they will not be overregulated. That is in accordance with the Better Regulation Commission principles. So I ask the hon. Gentleman to withdraw his amendment and I ask the Committee to accept the clause.

Oliver Heald (Conservative, North East Hertfordshire)

On the basis of the Minister’s assurances, and in order to give me a moment to research the role of surveyors, I beg to ask leave to withdraw the amendment.

Oliver Heald (Conservative, North East Hertfordshire)

I beg to move amendment No. 17, in clause 3, page 2, line 9, after second ‘services', insert

‘offered in England or Wales'.

The amendment attempts to ensure that if such ingenious claims management services try to operate from outside the United Kingdom, services within England and Wales will be regulated. I understand that the Claims Standards Council on its website has already flagged up the problem of companies and individuals operating from bases in places such as Fuengirola and South Africa. I should be grateful to hear the Minister’s response.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I have just one question on that. I can see the argument, but how will one know that they are operating from Fuengirola or the Cayman Islands? The public find it difficult enough to find out whether their lawyers are legally qualified. The chances of their discovering whether they come from Tenerife or Timbuktu are even more remote.

Bridget Prentice (Labour, Lewisham East)

I understand the intention behind the amendment, and it is perfectly reasonable. All that I would say to the hon. Member for North-East Hertfordshire is that while there is nothing to prevent a company from basing itself outside the jurisdiction and continuing to offer regulated claims management services, it still has to be authorised to do that; otherwise it is committing an offence and is liable to prosecution. We could get into a debate about extradition, but I do not wish us to do that here, and my hon. Friend the Member for Worcester (Mr. Foster) would have a horrible look on his face if I went down that road. However, I can say that they would have to be regulated. We would also have the power to ask other providers to co-operate in not dealing with unauthorised providers. It would not be in the Law Society’s interests, for example, for lawyers to deal with unauthorised providers.

John Mann (Labour, Bassetlaw)

There have been examples of offshore insurance companies—from the Isle of Man, for example—in recent times. Does that mean that a claims handler and a solicitor will need to declare to their regulators whether they have offshore accounts? If not, why not?

Bridget Prentice (Labour, Lewisham East)

I am not sure that I can give my hon. Friend a comprehensive answer to that question. I suspect—I shall check—that Financial Services Authority rules cover it. If they do not, I shall ensure that I come back to him with a clearer answer.

Oliver Heald (Conservative, North East Hertfordshire)

I think that the Financial Services and Markets Act 2000 specifically extended the jurisdiction out to the Isle of Man and the Channel Islands. The hon. Member for Bassetlaw raises the intriguing possibility of having what amounts to an alternative business structure combining insurance, claims handling and solicitors’ activities based in the Isle of Man. What would be the Minister’s response to that? I do not trust the people involved in that area.

Bridget Prentice (Labour, Lewisham East)

I am not a financial expert by any means, so I am loth to comment. However, I undertake to get back to the Committee on that question, because it is important and we would all want clarification as to what would happen in the case of somebody with offshore activities.

Oliver Heald (Conservative, North East Hertfordshire)

Perhaps the Minister would write to the Committee before Report to explain what happens in terms of the Isle of Man, the Channel Islands and any other obvious problem areas in the European Union. That would be extremely helpful.

Bridget Prentice (Labour, Lewisham East)

I will certainly give the Committee that assurance.

Oliver Heald (Conservative, North East Hertfordshire)

On the basis of that very constructive response from the Minister, I shall not seek to divide the Committee. I beg to ask leave to withdraw the amendment.

Clause 4

Oliver Heald (Conservative, North East Hertfordshire)

I beg to move amendment No. 20, in clause 4, page 2, line 40, leave out ‘may' and insert ‘shall'.

Peter Atkinson (Conservative, Hexham)

With this it will be convenient to discuss amendment No. 25, in clause 4, page 2, line 40, leave out ‘a person' and insert ‘the Financial Services Authority'.

Oliver Heald (Conservative, North East Hertfordshire)

These two amendments touch on an issue that would have been covered had I moved amendment No. 16. That is the need to get on with this, and to introduce some robust arrangements that will act relatively quickly in this area. Amendment No. 25 says that the FSA should be the regulator. I tabled this slightly probing amendment because the FSA is the most appropriate body to regulate the claims management industry. It may be difficult to persuade the FSA to take it on, but I wonder whether that is the end of the matter. Baroness Ashton of Upholland said in the other place that the FSA does not wish to take it on, but is that the end of it?

I suppose that my point is a bit more fundamental. Who tells the regulator what it should and should not do? I hate to say it, because I am sure that the Minister does not look at the matter entirely in this way, but it seems as though the FSA has been allowed to say, “Sorry, chum. Okay, we do the insurance industry and a lot of this work is, in effect, in the insurance sector—after-event insurance—but we are not prepared to take it on.” Who governs the country? Is it Ministers or Parliament who say what happens or is the FSA entitled to pick and choose? If Ministers genuinely do not feel that it is appropriate for the FSA to do this it would be a different matter, but if it is just that it has rather a lot on and it would be inconvenient to take up such institutions, I wonder whether we should accept that and let it get away with that.

Amendment No. 20 would impose a duty to appoint a regulator, rather than making it a permissive power. Ministers have searched the regulation world high and low looking for a regulator to take this function on. It seems that, in the interim, we will be left with the Lord Chancellor, plus a trading standards organisation. Is the Minister able to give us any more idea than previously about what the final position will be? From what I have read in the draft Legal Services Bill, the Legal Services Commission is not to be the front-line regulator; it has a more supervisory role, overseeing the activities of organisations like the Bar Council and the Law Society. Its role is, in a sense, to give those organisations a licence or supervise them, not to do the job. What is the Minister really proposing as the long-term solution? Does he envisage a separate front-line regulator in this area? Clearly, it cannot be the Claims Standards Council, because that does not seem to be a robust or effective body.

These two amendments are trying to clarify why the FSA, which deals with insurance, is not the regulator, why the Minister will only have discretion to appoint a regulator and what the final outcome is supposed to be.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

On amendment No. 20, I assume that the Minister will say that this is the normal drafting for such things. However, I agree with the purport behind it, which is that we need to get on.

On amendment No. 25, the Minister knows that our view is that the FSA, although a prospective candidate, would not be the logical regulator—whether it has said that it wanted to do so is a separate question—and that the logical regulator is the regulator in the wings, coming through in the draft Legal Services Bill. I accept that it is better to have an interim arrangement and then hand it over to that regulatory body, because there is a closer affinity between the services that lawyers purport to offer and these sorts of services, rather than those currently regulated by the FSA and these services.

Oliver Heald (Conservative, North East Hertfordshire)

I fully take the hon. Gentleman’s point that that structure may be robust, but within it the Legal Services Commission sits at the top, overseeing the regulatory activities of the Bar Council, the Law Society, the Institute of Legal Executives and various other bodies in the legal world. At the moment there is no front-line regulator for claims handlers and, although the structure will be in place, that is still a live issue, is it not?

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I accept that. My fairly spontaneous response is that there will be a fourth satellite to deal with the industry, coming under the general umbrella of the new legal services board but not dealing with the other three distinct professional groups.

John Mann (Labour, Bassetlaw)

Will ongoing consumer complaints be immediately admissible to the regulator, and will the regulator be given guidance on relevant Law Society policy decisions made over the past year or two that could provide good guidance on how the regulator should deal with complaints against claims handlers?

Philip Hollobone (Conservative, Kettering)

The question of who is the regulator must be followed by the question of who pays for the regulator. The clause allows the Secretary of State to pay grants to the regulator, and in another place Baroness Ashton has stated that she envisages an initial grant of £750,000 to launch it. The regulator will have the power under paragraph 7 of the schedule to charge

“fees in connection with applications for, or the grant of, authorisation”

or

“periodic fees for authorised persons”.

Those are considerable powers, and I would welcome further assurances from the Minister about the level of fees envisaged.

The matter of funding should be about having a level playing field for the fees involved and ensuring that all those covered by the regulations pay for the regulator rather than just some of the participants. We need further to explore how to set the level of fees, as it is likely that there will be different levels depending on a number of factors, such as turnover, type of activity and so on. In another place Baroness Ashton stated that she believes the number of players in the market will drop dramatically once a system of regulation is introduced. I am sure that all members of the Committee would welcome that, even if we approach the matter from different perspectives. It means that there can be no certainty about the level of fees or whether the system can be self-funding.

Bridget Prentice (Labour, Lewisham East)

I appreciate the concerns that the hon. Gentleman has expressed about who should regulate. I said on Second Reading, and repeat now, that we have decided that the DCA should be the regulator for a couple of good reasons. First, as the hon. Member for North Southwark and Bermondsey said today and made clear on Second Reading, it is an interim solution pending the wider reform of legal services. In the longer term it would be ideal to have an organisation independent of Government to regulate the service, but we need to act quickly and effectively to tackle the abuses that consumers are experiencing. That is why the Secretary of State being regulator fits the bill.

We considered a number of existing regulators, but none proved suitable. The hon. Member for North-East Hertfordshire mentioned the Claims Standards Council as one example. Irrespective of the desire of some existing organisations to take on the role, we did not believe that the Financial Services Authority, with its existing responsibilities, was a particularly suitable candidate, and the same might be said for the Office of Fair Trading. Both have tightly defined remits and it would not be appropriate to distract either organisation from its core regulatory work.

The hon. Member for North Southwark and Bermondsey said on Second Reading and reiterated today that the industry should be regulated by what he referred to as a member of the family of regulating legal services. Like him, I believe that claims management services are much more akin to legal services than to financial ones. Yes, sometimes claims management companies carry out insurance and so on after the event and, in that case, they would be regulated by the FSA. However, as for claims management, they should be regulated by the Secretary of State. The hon. Gentleman was right. When companies undertake that type of service after the event, they should be regulated by the FSA, but it only gives authorisation in respect of the insurance activity, not the claims management activity. In claims management, profits are made from the fees that would come from solicitors, so it seems more appropriate that such matters are regulated under the system.

Baroness Ashton of Upholland had discussions with the Economic Secretary to the Treasury when the Bill was discussed in the other place. They agreed that the FSA should concentrate on doing what it is good at, which is regulating financial services. We have invited expressions of interest from trading standards departments to run the monitoring and compliance of the function and I hope, if I can, to give members of the Committee more details about the regulatory regime before the Bill leaves the House and, indeed, give them details about the appointment of the appropriate senior individual in the DCA to lead the implementation.

Oliver Heald (Conservative, North East Hertfordshire)

Does the hon. Lady accept that, when the legal services board is set up, it should be completely independent of the Government? It should not have any conflicts of interest. If the Secretary of State is to be one of the regulators underneath the legal services board, which he has appointed, does she agree that there would be a problem of independence, conflicts of interest and the like? Is it not the case that there must be an ultimate solution that has some independent regulator under the legal services board?

Bridget Prentice (Labour, Lewisham East)

Yes, I agree absolutely. Of course, the legal services board will be able to regulate directly if it chose to do so. We will be looking carefully at that matter to reach a suitable long-term solution.

When the impact of the regulation of the market becomes clear and the wider reforms of the legal services are further advanced, we might be able to make a much better decision about the longer-term solution for delivery regulation within the framework. On that basis, I ask the hon. Gentleman to withdraw amendment No. 20.

Amendment No. 25 suggests that the Secretary of State could designate only the FSA as regulator. I have already covered the reasons why that would not be appropriate. I say to my hon. Friend the Member for Bassetlaw that clause 8 will allow for transitional provisions and that will, for example, give the regulator discretion to investigate complaints in respect of conduct that had started before the Bill becomes law.

I say to the hon. Member for Kettering that we will be consulting on the formula for setting the level of fees. We envisage that it is likely to include a one-off application fee and an annual fee based on turnover. Obviously, that will be proportionate. We have the funds in place to ensure that the regime can be set up properly and that the consumer can benefit immediately from the Bill when it is enacted.

John Mann (Labour, Bassetlaw)

The Minister did not quite answer my point about whether direction will be given to the regulator to take into consideration the Law Society’s policy decisions made over the past couple of years that have implications for claims handlers.

Bridget Prentice (Labour, Lewisham East)

I will certainly consider that. One of the problems regarding the extent of an investigation in the transition period is that there might not be appropriate records of any action taken by the claims management company, but I shall certainly consider the Law Society’s role and whether we need to make anything clearer so that the aspect that my hon. Friend rightly raises can be covered in the transition.

Oliver Heald (Conservative, North East Hertfordshire)

Having considered the Minister’s response, I think that it is right to reflect further on the matter, so I beg to ask leave to withdraw the amendment.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I beg to move amendment No. 30, in clause 4, page 3, line 11, and end insert

‘, and ensuring maximum clarity and simplicity of all relevant documents,'.

This is a very simple amendment to try to ensure that the regulator, if we are to have one, does the most important job of all, which is to ensure that anybody providing information provides it as clearly as possible. We all spend our lives complaining that anything that is or could be legal or results in a right, an entitlement, a claim, an action or damages is often governed by small print. That is the bugbear of insurance policies: people claim insurance and are suddenly told, “I’m sorry, you’re excluded,” because of the small print.

I want to ensure that we say as clearly as possible that the documents that issue from the industry should have the maximum clarity and simplicity. It is a sort of plain English request, and the amendment would ensure that it happens. There is a terrible danger when we get into the bureaucracy that a regulator concerned about regulating the things that matter behind the scenes will not be concerned about creating simple processes.

If bright and rich people are caught by people trying to flog claims, they will survive relatively untrammelled: the financial consequences will be less serious for them, and they will be able to cope. If they are very bright, it is on their own head. The people whom we need to protect are the vulnerable: those who are not so bright, and certainly not rich, who discover that they have been caught out.

I hope that the Minister, whether or not she accepts the exact wording, will accept the burden of the case behind the amendment and will consider putting similar wording into the Bill. I am not one of those who seeks to make Bills longer rather than shorter, but it must be a clear duty. We are concerned that the industry should tell people what it means so that they can understand it and there is no confusion.

Oliver Heald (Conservative, North East Hertfordshire)

I have some sympathy with the amendment. It is obviously a good idea that there should be as much clarity as possible, and simplicity is always a good thing. I am put in mind of the new Coroners Bill, the draft of which has been published with a plain English explanation next to the legal provisions. We should try to encourage things to be written in a way that people can understand.

If claims handlers have a role, part of that role is access to justice: explaining to people who might not realise it that they have a claim. There have been plenty of examples of that not being done in a straightforward way, and I am one of the first to say that the area should be properly regulated, but if claims handlers are talking to, communicating with or giving documents to people, it is a good idea for those documents to be simple and straightforward and to have the clarity suggested by the hon. Gentleman.

Bridget Prentice (Labour, Lewisham East)

I have every sympathy with the amendment. I totally agree with the hon. Member for North Southwark and Bermondsey on the principle behind his amendment. I do not think, though, that it is necessary to put it into the Bill.

The regulator is required under clause 4(2)(c) to promote the interests of persons using regulated claims management services. The provision implicitly includes advice and guidance for those wishing to pursue a compensation claim in the regulated areas. It is right that consumers have clear and relevant information on the claims process and what they can expect from authorised persons.

We will produce a leaflet aimed at those using claims management services. It will be written in plain and unambiguous terms, clearly setting out the obligations of those working in the regulated areas to provide details of the standard of services that they will provide. The leaflet will also include information on charges, cooling-off periods and consumers’ routes of redress if they have any cause for complaint. We also intend that the authorised persons should provide information and documents that are clear and easy to understand. The model rules that we published in March state that all information given to the client should be clear, transparent, fair and not misleading.

The hon. Member for North Southwark and Bermondsey raised the issue of plain English, and I totally endorse it. We all support the example that the hon. Member for North-East Hertfordshire gave of a plain English explanatory note to the Coroners Bill, and that is what we want in all our communication with the public, so that the legal system and legal services are more accessible to them.

I hope that hon. Members agree that the draft regulations already sent to them are a good example of plain English. Having said that, I have made the regulations a hostage to fortune, and someone will find some gobbledegook in the middle of them and come back to me about it. I endorse the principle behind the amendment, but the Bill does not need it and I ask the hon. Gentleman to withdraw it.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

In a moment when I have nothing better to do, I shall look at the rules to see if I can find anything, and if I do, I shall bring it to the Minister’s attention. I accept her statement that absolute clarity is dealt with in the rules. Without troubling her to rise again, when the regulator is set up, which might be in the Department at first, will she be kind enough to write to them pointing out that the issue was raised and that she, on behalf of the Government, supported the view that there should be clarity? With that additional authority on behalf of the Committee and the Government, I am very happy to beg to ask leave to withdraw the amendment.

Oliver Heald (Conservative, North East Hertfordshire)

I beg to move amendment No. 21, in clause 4, page 3, line 18, at end insert—

‘(d) is independent of any provider of claims management services,'.

I shall be interested to hear the Minister’s response to the amendment.

Bridget Prentice (Labour, Lewisham East)

Again, I very much accept the principle that the hon. Gentleman advocates in the amendment. The regulator should have some independence from the industry that is being regulated, and that would apply if the power to designate an existing body as a regulator was used. The existing provision, subsection (2)(b), is an adequate safeguard. We must retain the flexibility to designate a regulator, and in the longer term, there might be a body that is suitable for that designation. As we said during an earlier debate, once the legal services board is set up and the power to designate a regulator is transferred to it, there might be an opportunity to designate a regulator. I support the hon. Gentleman on that point.

I could not agree more that commercial interests should not influence the regulator, but the existing requirement to avoid conflicts of interest will ensure that and provide clear consumer protection. On that basis, I hope that the hon. Gentleman will withdraw the amendment.

Oliver Heald (Conservative, North East Hertfordshire)

I welcome that assurance, and it is good that the Minister has put it on the record. On that basis, I beg to ask leave to withdraw the amendment.

Simon Hughes (Liberal Democrat, North Southwark and Bermondsey)

I have one question to put to the Minister. I am conscious that we are coming to the end of our enthralled attention to the matter for the day. It is a question that I might have asked under the previous clause but can equally well ask under this one. I am happy for the Minister to reply later.

The Minister identified the five areas that the regulator will be asked to regulate on. I listed them earlier. Will she ensure that they use the same definitions as solicitors have to use when they advertise their business? Nowadays solicitors can advertise. They do so by category of subject: welfare law, housing law, employment law and so on. Can we ensure that there is consistency of definition, so that if there is a claims regulation business to do with, for example, employment or criminal injuries compensation, it uses the same list of services that one can find among the list of services that solicitors offer? That may need negotiation with the Law Society. I am not sure whether the society is governed by regulation on how legal services are advertised. It seems to me that there is logic in having consistency between the two.

The rest of the debate is in Hansard.