§ 6.50 p.m.
§ Lord PARGITER
My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
§ Moved, That the House do now resolve itself into Committee.—(Lord Pargiter.)
§ On Question, Motion agreed to.
§ House in Committee accordingly.
§ [The Lord Douglas of Barloch in the Chair.]
§ Clause 1 [Insurance against liability for employees]:1392
§ Lord DRUMALBYN moved Amendment No. 1:
Page 1, line 13, leave out ("'Regulations may") and insert—
("The Secretary of State may by regulations
(a) prohibit the limiting of the liability which is required to be insured under subsection (1) of this section by any condition or exception specified in the regulations;
Provided that nothing in the regulations shall prevent an insurer who has paid any sum in or towards the discharge of that liability by virtue only of such regulations from recovering that sum from the person on whose behalf that sum was paid.
The noble Lord said: Perhaps I should apologise at the outset for the fact that I have quite a lot to say on this small Bill in the hope that I may be able to get the assurances that I require; and I may also say that I am glad to see that the noble and learned Lord who sits on the Woolsack is here to help us on the legal side of it. Perhaps I can explain this Amendment best in this way. The purpose of this Bill is to:
require employers to insure against their liability for personal injury to their employees".
Clause 1 (1) accordingly requires that:
… every employer carrying on any business in Great Britain shall insure, and maintain insurance … against liability for bodily injury or disease sustained by his employees, and arising out of and in the course of their employment in Great Britain in that business …
§ These are familiar words in my old occupation in the Ministry of Social Security.
Every employer must insure "under one or more approved policies with an authorised insurer". Subsection (3) defines what is meant by the terms "approved policy" and "authorised insurer". The definition of "approved policy" is:
a policy of insurance not subject to any conditions or exceptions prohibited for those purposes by regulations".
§ Assuming that it really is worth while to lay a legal requirement on all employers carrying on business to do what any prudent employer already does—to insure against his liability towards his employees for bodily injuries—it must be accepted that the policies that they take out must fully cover their liability, so that any employee suffering bodily injuries or injury to health arising out of 1393 and in the course of his employment in that business will be paid full compensation by the insurers.
§ That is common ground. It follows that policies should not include any condition or exceptions the effect of which will be to release the insurer from his contractual obligation to pay the compensation. I certainly have no quarrel with the purposes of subsection (3) (a). I must say, in passing, that I could have wished for a better phrase than "approved policy", which seems to be somewhat of a misnomer; for in fact policies will not be approved by anybody but will be deemed to be approved if they do not contain any prohibited conditions or exceptions. Whether the Department concerned will be able to think up all the conditions or exemptions which ought to be prohibited, I take leave to doubt. As one commentator put it, in practice there is likely to be a series of regulations carrying out a never-ending operation of belated stable-door shutting. Perhaps this is to underestimate the ingenuity of my old Department. All the same, had there been more time I would have suggested that some such phrase as "statutory policy" should be substituted for "approved policy".
§ But if it is true that the initial regulations may well not cover enough, they could equally cover too much unless the Amendment I am moving is inserted. There are two points here. First, I suppose it is conceivable that one of the prohibited conditions could be the normal provision that entitles the insurers to treat a policy as void ab initio if there has been any failure on the part of the proposer to disclose the true facts. It is a great hardship for the employees if they are not covered by insurance when they thought that they were; as can happen when there has never been a valid contract of insurance—when what purported to be a contract was void from the start.
§ On the other hand, it would be intolerable, in my view, if the law were to validate a policy which was void because the proposal would not have been acceptable if it had revealed the true facts to the insurers. I would therefore ask the noble Baroness to give a specific assurance that there will be no attempt in regulations made under this Bill to pro 1394 hibit insurers from making it a precondition of issuing a valid approved policy that there has been full disclosure; or prohibit them from reserving to themselves the right to treat any failure in this regard as making the contract of insurance null and void. I should like to ask her to go further and to say that to do so would be ultra vires this Bill, and right outside the scope of the Bill as drafted.
§ The second point I want to raise is concerned with the prohibiting conditions. It is one which is specifically covered by the proviso in the Amendment. As I have said, it is important that employees should receive compensation under a contract of insurance if the contract itself is valid. At present they may legitimately not do so if the insured employer is in breach of the conditions of the contract; for example, where the employer is a builder or a contractor it may be a condition of the insurance that the employer shall comply with statutory regulations; or that, for example, his employees shall not work more than 12 feet below the ground level. If there is a breach of the conditions and an accident occurs, the employer cannot compel the insurer to pay; he must himself pay, and meet his liabilities as an employer. But under the regulations no doubt such a condition will fee prohibited "for the purposes of this Act"—I quote those words from the next clause. The insurer will then have to meet the employer's liabilities, and the question arises: will the insurer be able to recover the compensation paid to employees from the employer, or not?
It may of course be said that he will; that he can recover damages for breach of contract. But I am puzzled about this. What are "the purposes of the Act"? They are recited in the Long Title as:
to require employers to insure against their liability for personal injury to their employees; and for purposes connected with the matter aforesaid.
§ They must effect the insurance by means of an approved policy. But the Bill does not say in terms that an approved policy, or the contract of which it may be evidence, may include a condition which is prohibited for the purposes of the Act. It does not say that a condition which is at present included in the policy to exempt an insurer from his liability under the contract may still be included for that purpose, although it is prohibited for the 1395 purpose of his liability to the employees in whose favour the contract is made; prohibited for the purpose of the Act.
§ It may be said that the appropriate way in which to deal with this is in the regulations and not in the Bill. If that is so, I ask the noble Baroness speaking for the Government to give categorical assurances on two points: first, that it will be within the scope of the measure for there to be regulations to make such a provision; and, secondly, that the Government will ensure that such a provision is made in the regulations. Alternatively, the Government may say that of course the insurer will be entitled to recover from the employer any money paid to employees in compensation by the insurer, and that no provision to that effect is needed. I am bound to say that I should not be content with such an assurance, unless of course the noble and learned Lord, the Lord Chancellor, could say that it is absolutely impossible that the courts might hold to the contrary.
§ The insurers are very much concerned about this point, and they will not be satisfied with a mere opinion, however high, as to what the courts will decide; nor would their legal advisers be so satisfied. It follows that unless I can have an assurance from the Government that the position of insurers in this regard can and will be safeguarded in the regulations, I shall feel compelled to insist on this Amendment, even if it is defective from a drafting point of view. After all, it would be possible for the Government to put the drafting right at the next stage in the progress of the Bill. What I could not agree to is that the Bill should become law in an unsatisfactory or doubtful state in this regard. It would not be right for the insurer to have to bear the whole cost of compensation, for example, where there is an explosion due to a breach of statutory duty on the employer's part, or of the contract itself, whether or not the employer could pay. Still less would it be right for an insurer to bear the cost where the contract was vitiated from the start by fraudulent misrepresentation or concealment on the part of the employer before the policy was issued.
§ I hope that the noble Baroness, or the noble and learned Lord who normally 1396 sits on the Woolsack, will be able to say that the Government support the Amendment; or at least, if they are not absolutely certain that the Amendment is unnecessary, that they have no objection to it. In that case I hope that the noble Lord, Lord Pargiter, will be willing to accept the Amendment on behalf of the sponsor of the Bill. If, however, the Government are not absolutely certain that the Amendment is unnecessary, I hope that the noble Baroness will be able to give these three assurances. First, that it will not be ultra vires for the Secretary of State to include a provision in the regulations to the same effect; secondly, that the Government will in fact do so; and, thirdly, that in no circumstances will regulations seek to validate a contract which is null and void through misrepresentation or concealment on the part of the proposer. I beg to move.
§ 7.8 p.m.
§ Lord PARGITER
I am very glad to be able to say that the noble Lord, Lord Drumalbyn, was kind enough to give me some advance notice of his intentions, and therefore I have had the opportunity to be briefed to some extent in order to be able to deal with the very valid points that he has raised. May I say at the outset that there is nothing in this Bill, so far as I am concerned, or the sponsor in another place is concerned, to alter the Common Law regarding liability in the relationship between an employer and an employee.
The Bill represents an endeavour to ensure that the employer will take all reasonable precautions to ensure that he is in a position to meet his liabilities. There have been cases where, for various reasons, such liabilities have not been met, and employees have suffered; very often by reason of ignorance on the part of the employer. Therefore I want to make perfectly clear what is the object of the Bill. The fact that so much is to be dealt with by regulation is inevitable having regard to the nature of the discussions which will have to take place with the interested parties. It is no part of my case to endeavour to get something through the House which is not acceptable; nor could that possibly be so in the case of a Private Member's Bill, and I accept that. This is not a matter on which we can afford to have 1397 divided views; we want to carry the whole House with us in this matter.
If I may, I will deal with the likely effects of the Amendment. The Secretary of State is empowered to make regulations under this clause. Those regulations could specify prohibited conditions for the purpose of Clause l (3) (a), because these are inter-related; and also, by means of a proviso, ensure that a condition prohibiting for the purposes of the Act might nevertheless be included in an approved policy for other purposes of the contract between the insurer and the employer. That is to say, it would make it clear that conditions, such as that the employer must take all reasonable steps to ensure the safety of his employees, could appear in the policy and that the breaking of this condition would have no effect (this is important) on the insurer's duty to meet the employer's liability to his employees but would allow the insurer to recover from the employer the money paid out as a result of the employer's breach of this perfectly reasonable condition or any other conditions that may be equally reasonable.
On the first point, it is unnecessary to specify that the Secretary of State should have power to make regulations, because he already has this power under Clause 6 (1); and he has power to do so comprehensively, so that there is no question of any limitation, which this proposed Amendment would remove.
On the second point, if we take Clause 1 (3) (a) in conjunction with Clause 6 (1), which already gives the Secretary of State power to make regulations specifying the conditions to be prohibited for the purposes of this Bill, it seems that the purposes are already enshrined in the Bill. I suggest that that may meet the noble Lord's point.
I am entirely in sympathy with the purpose of the proviso to the Amendment and I can understand the concern of insurers to safeguard their right to recover money paid out in a case against an employer and their right of recovery where he has not maintained the conditions of the policy. But there are objections to placing the proviso in the Bill itself. The regulations themselves will specify the prohibited conditions, and I agree that there are going to be some problems in sorting out precisely what are these prohibited conditions. But 1398 the Department have accepted responsibility for that. It therefore follows, I think, that the logical place to make this exception will also be in the regulations. Moreover, it is easy to frame exceptions to prohibited conditions when the conditions themselves have been settled. It is rather difficult to do it in a vacuum. It is true that the Road Traffic Act has the exceptions in the Act itself, but that is because the Road Traffic Act has also written into it matters which in this Bill are to be dealt with by regulations
I am sure that the Government will be able to give the noble Lord, as the) have given to me, the necessary assurance that, should the Bill receive the Royal Assent, they will see to it that it is no part of its purpose to interfere with any provision in a policy enabling the insurer to recover from employers payments they would not have been obliged to make but for the provisions of this Bill and its regulations. The noble Lord can be assured that the sense of the proviso to his Amendment will be put into the regulations, and I hope that he will be able to accept that as being a firm intention on the part of the Government, which I have no doubt they will be able to confirm.
May I deal with one or two points which are not necessarily germane to the Amendment but which arise from the noble Lord's speech. There will be nothing in the regulations under the Bill to prohibit insurers from making it a precondition of the issue of a valid policy that there should have been no misrepresentation or concealment on the part of an employer, and if the insurers wish to reserve to themselves the right to treat any failure in this regard as making a contract of insurance null and void, that is entirely reasonable. In any case, contracts of insurance are always liable to be made void by breach of faith between the contracting parties. The situation does not arise out of any condition of the contract but, as I understand it, it is a fundamental rule of law. There is no question of endeavouring to override this in any way at all. I am advised that any regulation made under the Bill could not override the principle. The Government have taken the view throughout that the purpose of the Bill is not to alter the existing liabilities but merely to extend the present insurance cover under 1399 basically existing conditions to all employees. I hope that the noble Lord will feel that this is sufficiently strong for his purpose and that he will not need to press his Amendment.
§ Lord DRUMALBYN
I am bound to say that from my own personal point of view I am quite happy with what the noble Lord has said, but I am also bound to say that others beside myself will be reading the proceedings of the House and they will feel much reinforced and comforted if the Government will be so good as to confirm what the noble Lord has said in this regard. I hope I am not asking too much.
The noble Lord said that the Secretary of State has power to make regulations under Clause 6 (1), which of course is true, and this meets the point which was inherent in what I said. This is not a major point, and the reason why I drafted my Amendment in this way was because it was not immediately apparent to the layman from reading Clause 6 (1) that the Secretary of State would have power to make regulations. But I am quite happy about the assurance the noble Lord has given me in that regard.
I am not quite so sure about what the noble Lord said on the basic law of contract. Not being a lawyer myself, I had thought that the two parties to a contract would have to be ad idem, but that is a different question from misrepresentation on the part of one or the other. This might give rise to damages but does not necessarily make the contract void ab initio. Perhaps the noble and learned Lord the Lord Chancellor may make this point clear. I accept what the noble Lord, Lord Pargiter, said regarding the intention, that if a contract would normally be null and void because of misrepresentation made at the proposal stage, it will still be null and void. But I was not certain about what he said when he went a little further and made a statement about the general law of contract.
§ The Lord CHANCELLOR
This is really for my noble friend Lady Phillips to deal with. I am here only because I did not think it worth while leaving the Chamber and coming back, and I do not wish to deal with the Bill. I heard what my noble friend Lord Pargiter said 1400 and so far as it is a matter of law what he said seemed to be perfectly right.
§ Baroness PHILLIPS
For the Record, and in order to reassure the noble Lord, I should like to underline what my noble friend Lord Pargiter has said and give the assurance which the noble Lord seeks, particularly in connection with the last point he raised. I would also emphasise that it is not within the scope of this Private Member's Bill to alter a fundamental principle of law.
§ Lord DRUMALBYN
I am quite happy with the assurance that has been given and beg leave to withdraw my Amendment.
§ Amendment, by leave, withdrawn.
§ Clause 1 agreed to.
§ Clause 2 [Employees to be covered]:
Lord DRUMALBYN moved Amendment No. 2:
Page 2, line 13, leave out paragraph (a).
The noble Lord said: There are two parts to Clause 2 (2), and it starts by saying
This Act shall not require any employer to insure—".
and then come paragraphs (a) and (b). If my Amendment were carried these words would apply to paragraph (b) only. What the Act does not require an employer to insure in this case is
in respect of an employee of whom the employer is the husband, wife, father, mother, grandfather, grandmother, step-father, stepmother, son, daughter, grandson, granddaughter, stepson, stepdaughter, brother, sister, half-brother or half-sister; or",
and then comes paragraph (b). This subsection exempts employers from the necessity of insuring close relatives in their employment. I have heard it described in other words, not quite accurately, as the H.M.S. "Pinafore" provision. It does not stop them from insuring close relatives; it merely says that they are not compelled to insure close relatives. I presume that where there are employees in the business other than close relatives the employer would not be so unwise as not to cover the close relatives along with the rest of his employees.
§ I wonder whether it is justifiable to allow employers not to cover close relatives whom they are employing, and 1401 possibly without any other employee. Suppose that a man employs his brother on a farm. What happens if the brother has a serious accident and the employer has no means to meet a court award of compensation? Or suppose, let us say, a Cypriot runs a restaurant and employs his sons, his daughters, his brothers and his sisters. They too could have dependants. Why should any of them not be insured for getting compensation for bodily injury incurred in the course of their employment and arising out of it, as an non-relative? Or, for that matter, why should this paragraph not apply to his uncles, aunts, nephews and nieces, who are not covered by this exemption and therefore would have to be insured? Why should the brothers, sisters, sons and daughters be in a different position? Disaster is as likely to fall on close relatives as on strangers. In a Bill that purports to be comprehensive, surely relatives should be covered by insurance no less than any other employee. I beg to move.
§ Lord PARGITER
As I understand it, the effect of the Amendment would be to compel an employer to insure his liability even including liability to husbands and wives as well as other relatives. This particular clause was not originally part of the Bill but was put in by the Government. The Government, as it appears to me, had good reasons for inserting it. The exact arrangements in family businesses are not always easy to determine; in fact, they are indeterminate; they do not in many cases depend on any contract. at all; and in few cases would there be any formal arrangement among them. It is not always clear, for example, whether sons are employees or partners of the father. The difficulties are even greater when the parties are husband and wife.
What it was sought to do was to eliminate the possibility of having to decide, after really time-consuming inquiries, whether someone is a partner and thus not liable to be insured, or an employee, and therefore liable. Moreover, we did not want to bring, and the Government did not want to bring, purely family businesses within the scope of the Bill. As the noble Lord has said, there is nothing to prevent them from insuring, as they might prudently do in these cases. But this question of the determination as to whether a person is 1402 an employee or a partner or, in the case of these near relatives, something other than an employee, might cause considerable difficulty, both with the insurers and also with any case that might arise from the operation of the Act. The exemption is confined to near relatives. As one reads it, one feels like saying:Old Uncle Tom Cobley and all",but that is not really the case. The exemption is kept within what might be regarded as a family arrangement; and having regard to all the difficulties that may arise, I suggest that it might be wise to retain this provision. If, after a period of time, we see that there are cases uncovered which ought to have been covered, then an amendment can be made, but let us start off in this way. The Bill is comprehensive with regard to people who can be truly classified as employees without raising complications. I hope, therefore, that the noble Lord will accept the provision as it is.
§ Lord AIREDALE
I am bound to say, with all respect to the noble Lord, Lord Pargiter, that that did not sound a very convincing reply. I should have thought it was most important that employers should look after their employees who were their close relatives, every bit as much as their employees who were not related to them. I cannot think that the number of cases would be large in which a court of law, or even somebody in Whitehall, would boggle at deciding whether somebody was a partner or an employee. There are one or two clear guides in this respect. We have the selective employment tax. I used to employ a builder who had two apprentice sons in respect of whom selective employment tax is paid. Presumably there would be no difficulty in deciding that those two boys were employees. If that builder had erected defective scaffolding and one of his sons had been badly injured, I think it would have been very sad if that boy had not been able to get proper compensation—because his father was only a small builder and not a wealthy man—upon the ground that somebody had thought that a court or a civil servant might have some difficulty in some case or other in deciding whether a person was a partner or an employee.
I wish that the noble Lord, with all the persuasive powers which I know him 1403 to possess, had succeeded in resisting the efforts of the Government to introduce into the Bill this clause which seems to me to be rather contrary to Christian charity. After all, charity begins at home, and it seems sad if we cannot ensure that employers insure their own close relatives just as much as total strangers who work for them.
§ Lord DRUMALBYN
The problem here, as I understand it, is one of enforceability more than anything else. Of course, I am well aware of the origin of this particular clause, and anybody who has to try to sort out whether a person is to be insured as self-employed or employed obviously is faced with many difficulties. But I wonder whether this Clause is really applicable in a case like that. Somebody must be legally responsible for doing what the law requires in the way of paying selective employment tax, or whatever it is. Why should not that person insure all his employees? If these people are on a list of employees in any way, then they will have to be insured, and I should have thought that they ought to be insured. The question is whether they are on such a list. Do they appear on the normal P.A.Y.E. return, coupled with the insurance return? Or is a weekly stamp paid in respect of them? I suppose that is the question in this case. But all these things have to be sorted out and are sorted out by the Ministry of Social Security, so it must be determined whether they are employees, or partners, or whatever they may be. That must be determined; it must be known. That being so, however difficult it may be to do, and however difficult it would be to enforce it afterwards, it still has to be done. That being so, I cannot see why they should not be covered by insurance if also they are due to pay their contributions to the National Insurance scheme as insured persons. If the noble Lord could explain this, and explain why they should not be put in the same position, I should be very grateful, otherwise, I should have thought this was a good Amendment.
§ 7.31 p.m.
§ Lord PARGITER
I have sympathy with that point of view, but I believe that the problems in this question of determining the situation of an employee are very real and may lead to very con 1404 siderable difficulties. Let us assume that this is in. All these things have to be discussed and determined between the interested parties. There are the insurers, and so on, who I am quite sure would raise very considerable objections on this particular point—on the question of determining an employee in a family business. The fact that they pay insurance would not in itself determine them to be employees. It might be argued that they ought to be paying as self-employed persons, not as employed persons. In itself it would not be a determination as to whether or not in law they were employees. I am not a lawyer, and I am just putting this as being difficult to provide.
§ Lord DRUMALBYN
May I interrupt? Surely it must be true that either they have to pay as self-employed persons, if they are partners, or as insured persons. If they have to pay as employed persons why should not they also be covered by insurance under this Bill? Either they pay as self-employed persons, or they pay as employed persons. If they pay as employed persons they should be covered by this Bill. If, on the other hand, they are paying as self-employed persons, and ought really to be paying as employed persons, this is something that has to be settled; and probably this would have to be determined by the Ministry of Social Security, and argued out by them. In that case this Clause is wrongly drafted, and it should be related as to whether they are paying National Insurance contributions as self-employed or as employed persons.
§ Lord PARGITER
With respect, if it were written into the Bill that the condition would be whether they were employed persons or self-employed persons, taking this particular point, it would not be in the circumstances we are talking about. The determination of a claim with regard to the liability of an insurance company to pay would not be determined by the Ministry at all; it would have to be determined in the courts. The courts would be looking at many things other than the purely simple question as to whether the person was paying the right form of insurance. That is all that issue would amount to. It would not necessarily mean very much, so far as a court of law was concerned.
1405 It is indicative of the difficulties which may easily arise. We run into them immediately, even before we get to the stage of regulations. I hope the Committee will be prepared to accept that the Government feel that there are real difficulties at this stage—after all, these are Departmental matters—in including families. It is better left so that we deal with this broadly, where there can be no question of any dispute at all in the broad mass of employees, and that we leave it at that. I agree entirely that if we find this is not working, and that there are people who ought to be covered, we should look at it again.
Let us look at the sad situation of a father who employs his sons and who cannot pay up because he has not insured them. In the circumstances, I should not be sorry for the father but I should be sorry for the sons. What would a decent father do? He would say, "I might incur liabilities here which are beyond my purse, and I might do my sons infinite harm as a result. Therefore, I will insure." There is nothing to prevent him from insuring. All we are doing is to exempt him from the absolute responsibility of insuring. I agree that if it could be done clearly and cleanly it might be better to do it in the way that is now suggested. There are difficulties, however, in that, and I hope that we may accept the position as it is at this particular stage. I should be one of the first to assist in seeking an Amendment to the Bill if it were found that certain classes of people who ought to be included are being excluded from the benefits of the Bill.
§ Lord AIREDALE
Surely the answer to what the noble Lord has just said is that the type of employer who puts up the defective scaffolding which causes the accident is just the type of employer who does not bother to insure the chap, unless he is compelled by statute to do so, just as he is compelled by statute to insure everybody else who does not happen to be his close relative.
§ Lord DRUMALBYN
I think that the Committee, small as it is, is in some difficulty over this point. It is a question of whether these particular words should be there or not. In my view, it is perfectly easy to sort out through insurance 1406 if we had a draft in that form. But we do not have a draft before us at the present time, and in the circumstances I cannot do more, while keeping all the options open, than ask leave to withdraw this Amendment at the present time.
§ Amendment, by leave, withdrawn.
§ On Question, Whether Clause 2 shall be agreed to?
§ Lord AIREDALE
I think it is just worth mentioning, in passing, that although we are told this part of the Bill was inserted at the request of the Government, the Government have made no attempt whatever in the debate that we have just had to justify it.
§ Lord PARGITER
Maybe I have inadequately stated the Government's case; and, if so, I apologise. I can assure your Lordships that it was the Government's case that I was endeavouring to deploy.
§ Baroness PHILLIPS
I should just like to underline this. This is a Private Member's Bill, and since the noble Lord, Lord Pargiter, has stated the case for the Government, it was hardly necessary for me to repeat it, even though the noble Lord opposite does not appear to be convinced by it. I stand subject to correction, but surely the wife stands in a slightly different position from anybody mentioned by the noble Lord, Lord Drumalbyn. A wife can contract out. Therefore, she would be the exception to the employed or self-employed person. So I think the case is not perhaps quite so clear in family business as the noble Lord has stated. I should like to reinforce the point on which the Government stand, that there is nothing to prevent an employer from insuring his employees. A good employer would naturally insure them. I cannot visualise the hardhearted husband employing his wife, sending her on a defective scaffold—I find this a slightly hypothetical situation.
§ Clause 2 agreed to.
§ Clause 3 agreed to.1407
§ Clause 4 [Certificates of insurance]:
§ 7.40 p.m.
Lord DRUMALBYN moved Amendment No. 3:
Page 3, line 2, leave out ("on") and insert ("of").
The noble Lord said: This does not sound a very world-shaking Amendment. As the clause now reads, subsection (1) says:
Provision may be made by regulations for securing that certificates of insurance in such form and containing such particulars as may be prescribed by the regulations, are issued by insurers to employers entering into contracts of insurance in accordance with the requirements of this Act and for the surrender in such circumstances as may be so prescribed on certificates so issued.
That subsection makes sense. No one can say that it docs not. I am told that this form of words has been the same throughout, and certainly it is the same form of words as appears in the Commons Hansard. It is a pity that there are no commas in the final phrase, because had there been commas this could have been represented as a misprint. Had the subsection said:
and for the surrender, in such circumstances as may be so prescribed, on certificates so issued,
that would not have made sense. In that case, of course, the word with which my Amendment deals would have to be "of". That, I believe, is what is intended. At any rate, it makes a little more sense.
§ I find myself in some difficulty about this matter because I do not know what the procedure is. I should be perfectly willing to accept that this is a misprint which can be dealt with in this House if it can properly be treated in this way, in spite of the fact that the Bill has gone through all its stages in the Commons in this way. The other place is so sensitive about any alterations made by this House, that I should like to be reassured that they would not treat our amending of this Bill in this way as a constitutional issue. But, quite seriously, while I have always been told that one can make an Amendment if what is said in the Bill plainly would not make sense otherwise, and this word "on" could be treated as a pure misprint, unfortunately this provision does make sense as it stands, and I am not quite certain what is the appropriate action to be taken. Obviously, we want 1408 to have it corrected because it should not go out as a statute in this form. Therefore, I put down an Amendment and I am bound to move it. I beg to move.
§ Baroness PHILLIPS
As the noble Lord, Lord Drumalbyn, has said, this Amendment would put right a misprint which has crept into the Bill in the Commons. The Notice of Amendments given up to and including June 11, 1969, recorded Mr. Watkins's Amendment correctly as askingfor the surrender in such circumstances as may be so prescribed of certificates so issued".This was printed wrongly on the Order Paper for July 11 asfor the surrender in such circumstances as may be so prescribed on certificates so issued".The latter version makes no sense.
§ Baroness PHILLIPS
Well, the effect of the Amendment would be to restore the originally intended version, and I am happy to accept it.
§ Lord DRUMALBYN
I am grateful to the noble Baroness. I am only sorry that it is necessary to make the Amendment and that it cannot be done in some other way.
§ Lord PARGITER
I should like to be clear that in fact this is an Amendment which corrects a misprint. I do not know constitutionally quite what that means; whether it means that the Bill has to be reported as amended. If it is a misprint, is it necessary to report the Bill as amended if it is accepted on all sides as a misprint? If it is accepted as a misprint on everybody's part, and we have an assurance that this will be corrected in the next print of the Bill, I should hope that we might then be in a position to be quite clear.
§ Baroness PHILLIPS
I am informed that we accept this alteration to the Bill as an Amendment, and at the next stage we shall of course have to deal with the point vis-à-vis the Standing Orders.
§ On Question, Amendment agreed to.
§ Clause 4, as amended, agreed to.1409
§ Clause 5 [Penalty for failure to insure]:
§ On Question, Whether Clause 5 shall stand part of the Bill?
§ Lord DRUMALBYN
I have something to say on Clause 5. This clause deals with penalties. At first sight the penalties for failure to cover employees by insurance seem fairly light. The clause says:An employer who on any day is not insured in accordance with this Act when required to be so shall be guilty of an offence and shall be liable on summary conviction to a fine not exceeding two hundred pounds".Of course, in a big firm that would be quite a small fine. However, the noble Baroness has been good enough to tell me that this way of reading the Clause is not correct, and I am told that it means that if it is discovered that an employer has failed—and I put a fairly extreme case—over a period of five years to cover his employees, he is liable to a fine of £200 for every day throughout the five years on which any of his employees have worked, presuming it can be proved that they have worked on that day: and assuming there is always a watchman or a caretaker of some sort, that would mean a possible fine of £365, 200. Perhaps the noble Baroness will confirm that the interpretation, at any rate, is that it means £200 for every day, and not just on any day, on which the person was not insured. Perhaps she would also say whether an employer would be liable for a fine for every day he was not insured if his contract of insurance was null and void from the start because of his own mis-statements or non-disclosure. This, of course, raises a very important point. I do not think I gave the noble Baroness notice of this question, but I propose to elaborate, so perhaps the noble Baroness, with her advisers, will have time to think out the answers to that point.
This Bill has had a quite remarkably fair wind; indeed, it has been extremely lucky. In saying that I am not in the least detracting from the vigilance and determination of the sponsor. But there was one ill-wind which has blown it quite a lot of good from the point of view of getting it through Parliament. I refer to the fire at the furniture establishment in the James Watt Street in which 22 people died. On the Second Reading of this Bill the noble Lord, Lord Pargiter, wisely expressed the hope that we might 1410 proceed with this Bill as if certain remarks made in another place on the Report stage, which were extremely and, I think we shall agree, unjustly critical of the insurance company in that case, had not been made at all. For my part, I said that I thought we would all wish that those remarks had not been made and that they were better forgotten.
Unfortunately, at the Trades Union Congress some things were said which cannot be lightly passed over. They were said by Mr. Alfred Tompkins, General Secretary of the National Union of Furniture Trade Operatives, on a motion requesting the Government to take urgent action so that (and this is what was reported in the Scotsman, of September 6, I think) never again should a group of workers find themselves unprotected for adequate insurance compensation in the event of a similar disaster in the future. I do not dissent from that motion in the slightest. I would merely point out that this Bill does not, and cannot, fully give effect to it, for reasons we have been into already, although once the regulations have been made it will go a considerable way in that direction. I do not see how it is possible to say that where there is no contract of insurance at all any particular insurance company, or, for that matter, a consortium of all insurance companies dealing in this kind of business, should accept, or have laid upon them, responsibility for paying compensation. I would point out that this is quite a different case from motor insurance, though I do not warn: to go in detail into the differences involved.
While I do not dissent from the T.U.C. motion, I must dissent very strongly from, and deprecate, the remarks of Mr. Tompkins. I entirely sympathise with his solicitude for the interests of the members of his union and their dependants, but it is a pity that he permitted that solicitude to lead him into criticism of the General Accident Corporation which I think is quite unwarranted. Not only had the General Accident Corporation no legal or moral obligation whatsoever to pay compensation, but it is extremely doubtful whether they would have been legally entitled to spend the money of their policy-holders and share-holders in paying compensation on a contract which did not exist. Mr. Tompkins described the proposal 1411 forms as having been—and these were his words—"technically invalid", but surely the truth is that those proposal forms just did not form the basis of a contract of insurance and therefore there was no contract, valid or invalid. According to the Scotsman Mr. Tompkins went on to say—
§ The Lord CHANCELLOR
I do not want to interrupt the noble Lord, but he is rather inviting a reply. Are we to have a long discussion about the fire case? Because I could say a lot of things about it. I should have thought, with great respect, that with regard to this Bill it was undesirable that we should have a long discussion as to whether the insurance company was right or not in a particular case.
§ Lord DRUMALBYN
The noble and learned Lord is welcome to reply if he wishes, but I am moving to a particular point that I want to make on this clause, and I also thought it right to question what Mr. Tompkins had said. He went on to sayThe insurance company had beaten off the possibility of court action over the compensation issue by offering a £25, 000 ex-gratia payment to the dependants in return for all their signatures promising not to pursue claims against either the General Accident Corporation or the furniture company.I do not know exactly what the terms of the offer were, but I do know that the offer made by the General Accident Corporation still stands. I also know that the amount the General Accident Corporation are offering is more than they themselves would have had to pay if the purported policy had been valid. The rest of the loss, which might have been nearly ten times that sum, I am told, would not have fallen on the General Accident Corporation.
I also know that the dependants could not possibly have succeeded in an action—the noble and learned Lord may criticise this, but I understand they could not have succeeded in an action—against the General Accident Corporation on the basis of a contract which was null and void. The noble and learned Lord may dispute that the contract was null and void, or he may say that there had been no misrepresentation, but this is certainly not my information and it is not the published position of the company. I 1412 may say that of course I have not been asked to raise this matter by the General Accident Corporation; I am raising it on my own initiative. The point of it all, so far as this Clause is concerned, is that the penalties imposed under it could be used to establish a fund out of which the Government could pay compensation to employees in respect of whom a contract of insurance did not exist but ought to have existed.
I hope the Government are not going to say that for the good name of British insurance, after the Act comes into operation the insurance industry itself should pay compensation when an employer has failed to cover his employees by an approved policy. It is one thing to require an approved policy under which an insurer cannot escape from paying compensation to the beneficiaries of a policy; it is quite a different thing to say that if there is no policy or no beneficiary an insurer, or all insurers together, should pay out compensation to all and sundry for loss or for hardship.
To me this is a point of principle. Even if the insurance industry were to offer to get the Government "off the hook" on this issue I think it would be quite wrong for the Government to allow them to do so. This is a matter for the community as a whole, and I would say that under this particular provision these fines, which clearly can be very substantial indeed in a case of evasion or omission, should go to meeting the responsibility of the community. That is the reason why I have raised this matter, because I feel strongly that it would be quite wrong to expect an insurance company or a consortium of insurers as a whole to meet what is in fact the gap in this Bill.
§ Baroness PHILLIPS
I will reply specifically to the questions raised by the noble Lord on the matter of penalties. As the noble Lord will remember, the Bill as originally drafted made a provision for penalties of imprisonment up to three months and a fine of £200, or both. An Amendment was accepted at the Report stage in another place to delete imprisonment from the penalties, because ideas about proper penalties have changed and sentences of three months' imprisonment on summary conviction are no longer thought appropriate. A fine is quite adequate. I understand that the 1413 Clause is intended to give power for a fine of £200 to be imposed for every day an employer is uninsured. The penalties apply wherever an employer is found guilty of not being insured and would apply whatever the reason for not being insured. But to be found guilty there would have to be a prosecution. The penalty prescribed is the maximum for each offence.
§ Clause 5 agreed to.
§ Clause 6 [Regulations]:
§ On Question, Whether Clause 6 shall stand part of the Bill?
§ Lord DRUMALBYN
I am a little puzzled by subsection (1) of this clause, which says that any Statutory Instrument made by the Secretary of State under this Bill should be subject to annulment in pursuance of a Resolution of either House of Parliament. It does not place a time limit for debating such a Resolution. I believe the normal period is 40 days, running only while Parliament is in session. I should like to ask whether I am right in thinking that the provision as to 40 days applies automatically under the Statutory Instruments Act.
§ Baroness PHILLIPS
I can confirm that this clause attracts the provisions of the Statutory Instruments Act, as the noble Lord has said, and that a Prayer to annul any Instrument (namely, the Regulations) made under this Bill may be put down within 40 days of laying. The laying day counts as the first day, but time when Parliament is Dissolved or Prorogued, or both Houses are adjourned for more than four days, does not count.
§ Clause 6 agreed to.
§ Clause 7 [Short title, Extent and Commencement]:
§ 8 p.m.
Lord DRUMALBYN moved Amendment No. 4:
Page 4, line 6, leave out ("and") and insert ("provided that no such date shall be earlier than on the expiry of six months from the laying of regulations before Parliament under sections 1, 2, 3 and 4 of this Act.
The noble Lord said: The point of this Amendment is that subsection (3) of Clause 7 as it stands says:
This Act shall come into force for any purpose on such date as the Secretary of State
may by Order contained in a Statutory Instrument appoint …
I propose then to insert my proviso. In other words, the regulations would have to be laid, and from the date of laying at least six months would have to elapse before the Act came into force. The purpose of that, of course, is simply to ensure that a reasonable period shall be allowed before the Bill comes into operation. A reasonable period will be needed for several purposes: first of all, to modify and adapt existing insurance policies so as to conform with the provisions of the Bill and enable them to qualify as approved policies. This may mean a good deal of negotiation, since the rates are bound to be higher to cover the risks involved and dispensing with conditions prohibited by the regulations for the purposes of this measure.
Many employers are not now covered by insurance policies. One has to remember how very wide this goes. Anyone carrying on any business in Great Britain must insure, and "business" includes
a trade or profession, and … any activity carried out by a body of persons, whether corporate or unincorporate".
It seems to me to include everybody employed in any kind of business, even a charity or church and the like. So the second purpose is to give employers time to become aware that they must take out insurance for their employees and to take it out. Most of them will not be exempted under the regulations. We do not know exactly who will or will not be exempted under the regulations to be made under Clause 3, but in any case those not exempted will need time to negotiate insurance cover. The third purpose is to give time for employers to comply with the provisions as to the obtaining and displaying of certificates of insurance under Clause 4.
§ My only doubt is whether six months from the laying of the regulations before Parliament will be long enough. It is unlikely that insurance companies and employers will be able to do very much until the time within which a Prayer for the annulment of any regulations may be debated has elapsed. There is always the possibility of regulations being annulled, and the possibility is much stronger than usual in this case because the regulations will be breaking entirely new ground and will be made under what is, after all, not 1415 a Government Bill. In the worst case, if the regulations were laid just before the Summer Recess and Parliament did not resume until October 21, which is the normal time, I calculate that there would be very little more than two months for insurers and employers to make the necessary provision. That is certainly an absolute minimum. That is admittedly the worst case. The Prayer on the regulations might be made much sooner than the last date by which it has to be made, and we could gain perhaps a month in that way in the kind of circumstances I have indicated. But still, one has to bear in mind the worst case.
§ I recognise that it is not absolutely indispensable, although I think it would be desirable, for all the regulations under Clauses 1, 2, 3 and 4 to be laid before the Bill comes into operation. For example, it would not be necessary for regulations to be laid under Clause 1 (3) (d) specifying the circumstances in which employers not having a place of business in Great Britain would be covered by the Bill. The reason for that of course is that until the regulations were laid no employers without a place of business in Great Britain would have to bother about the Bill at all. In the same way, under Clause 2 (2) (b) employers would not have to cover employees not originally resident in Great Britain unless and until regulations required them to do so. So those two regulations could be left out, and I would be perfectly willing to omit those from this Amendment if Lord Pargiter were prepared to advise the Government to accept it in that form. It would be better, in my view, if all the regulations to be laid were laid at one time so that everyone will know in advance exactly what their obligations will be. I hope that the Government will be able to tell us that this is the intention, even though the regulations under Clause l (3) (d) and Clause 2 (2) (b) are not absolutely as urgent as the others.
§ Although I doubt whether the six months is quite long enough, I submit to your Lordships that this is an Amendment that ought to be made, so that everybody will know exactly where they stand under the Bill long before it comes into operation and will have time to take the appropriate measures, undertake the 1416 negotiations, take out fresh insurance and the like. I beg to move.
§ Lord PARGITER
As I understand the purpose of the Amendment, it is that after all the regulations are made, before the Bill is brought into operation, insurers have six months to change their policies. This problem of the regulations is bound to present difficulties. The noble Lord has already mentioned the fact that there is the question of non-resident employees whom it might be felt desirable—not necessarily to begin with—to bring within the scope of the Bill at some subsequent stage. If we are going to wait to bring in regulations until we have covered points of that kind or any further points that might arise, very considerable time might elapse and the Bill lapse almost into anomymity. I can sympathise with the reasoning. It may well be that actually putting a period in might be unduly restrictive; it might restrict it in a way which would leave the Bill less flexible than it would otherwise be. After all, this matter has to be negotiated. The insurance companies, collectively or individually, will undoubtedly give some indication of the period they want after the regulations are laid in order to be able to comply with them, to be sure to comply with them, because nothing would be worse than if we started the Bill off on the basis that half the policies were not properly drawn and the cover was not as it was intended to be. It would lead to endless confusion, which would be better avoided by making sure that there is adequate time for these matters to be dealt with before the regulations come into operation. Therefore, I fully accept that this is a desirable thing to do, that there shall be a period. I am assured that that is the Government's intention also.
It may well be more than six months, in some cases, before the regulations are brought into operation. After all, in the last analysis the sanction still rests with us. These dates have to be put into the regulations anyway; one cannot say at a date which is not mentioned in the regulations; the date must be in the regulations. If the interests concerned are not satisfied with the date in the regulations, or if the House is not satisfied, it is obvious that they will not accept the regulations. Therefore it seems to me 1417 that, with the assurance I have from the Government, there will be a period that is adequate for the purpose—and obviously a period agreed very largely with the insurance companies—and that therefore there is not likely to be any particular difficulty about this. If a period of longer than six months is necessary in some cases it will be given. I should have thought that the necessary assurances are there. There can be no undue rush about this. I take the view that we have been waiting a great many years to get this particular piece of insurance: it is obviously something that should have been done years and years ago, and if we wait another six months to get it all nice and tidy and cleaned up I shall not complain. Therefore, I hope it will be accepted that an adequate period of time, which may well be more than six months with regard at least to some of the regulations, will be forthcoming, and will be embodied in the regulations as they are laid and will be there for the approval, or otherwise, of the House.
§ 8.11 p.m.
§ Baroness PHILLIPS
I am happy to be able to assure the Committee on 1418 behalf of the Government that in regard to these regulations, which are essential to the proper administration of the Bill, there will be an adequate period—six months, eight months or even more—for the insurers to make the changes which are necessary before the appointed day, when the Bill and the first regulations come into operation. Further assurances on behalf of the Government can be given that an appropriate period will also be allowed in respect of regulations which may be made later.
§ Lord DRUMALBYN
I am most grateful to the noble Baroness and to the noble Lord, Lord Pargiter, for that assurance. I think it will help the Bill along, and I am sure that it is the right thing to do. I beg leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Remaining clause agreed to.
§ House resumed: Bill reported with the Amendment.
§ House adjourned at thirteen minutes past eight o'clock.