Harland & Wolff plc — Employer’s Liability

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I have received notice from the Minister of Enterprise, Trade and Investment that he wishes to make a statement on Harland & Wolff plc and employer’s liability.

I thank Members for the opportunity to address them on the matter of my Department’s obligations to Harland & Wolff plc, which is the shell company left in the ownership of my Department after the privatisation of the shipbuilder Harland & Wolff in 1989.

The purpose of the statement is to inform Members of a significant potential liability that has fallen to my Department with regard to employer’s liability claims. That potential liability relates to compensation payments to the victims of asbestos-related diseases who are former Harland & Wolff employees. Many of them have been the subject of intense suffering and distress. I wish to make it clear at the outset that Harland & Wolff plc is an entirely separate legal entity from the current shipbuilding business. The potential liability and my statement have nothing to do with the trading situation of the shipbuilding business or with Harland & Wolff Group plc.

The matter of potential liabilities was first highlighted in the Executive’s position report, which was presented to the Assembly by the then Minister of Finance and Personnel, Mr Durkan, on 19 June 2001. It arises because of commitments provided by the Government in 1974 to Harland & Wolff, which were confirmed at privatisation in 1989. Those commitments have crystallised into liabilities as a result of the insolvency of Harland & Wolff plc employer’s liability insurer, Chester Street Insurance Holdings Ltd, in January last year.

As a result of the insolvency, employers’ liability policy holders, including Harland and Wolff plc and other organisations such as British Shipbuilders, are now required to pay out on agreed claims for asbestosis and associated diseases caused by exposure to asbestos. It is important to spell out what that means in human terms before I deal further with the legal and technical aspects of the case.

Before 1970, asbestos was commonly used in shipbuilding and other heavy engineering industries. Medical evidence became available that established that exposure to the substance could result in long-term illness or death. Many former workers in the industry find themselves in that situation. This is a tragedy of huge proportions, and nothing in the volumes of legal papers conveys the scale of human suffering and distress involved. Members may have seen interviews with people who suffer from asbestosis or related illnesses, and the tales of those affected are distressing.

Asbestos-related conditions take a long time to manifest themselves and experts estimate that there could be just under 3,000 claims by 2050. Legal advice, affirmed by counsel, has confirmed that my Department has an obligation to provide financial support to Harland & Wolff plc to meet these employers’ liability insurance claims.

An actuarial assessment by a leading London-based international firm of actuaries has confirmed that the extent of the liabilities could be approximately £10 million a year in each of the next four years. Total estimated liabilities could be as much as £190 million in the period to 2050.

My Department has already made a provision in its accounts for the current gross cost of those liabilities as estimated by the actuaries. The Department of Finance and Personnel has confirmed with the Treasury that, as a result of the current resource accounting and budgeting rules, the provision will count as annually managed expenditure. That will resolve the main costs of the liability, and that means that, based on the current best estimates, the maximum cost to the departmental expenditure limit that we face is our current estimate of £0·5 million this year and £10 million in 2002-03. From 1 April 2003, claims paid will not represent a new cost, as that is already reflected in the provision. In effect, the remainder of the costs will, within Treasury rules, be met outside Northern Ireland’s departmental expenditure limit and will not affect the Executive’s spending power.

However, the issue is not simply one of legal commitments and technicalities. The needs and rights of victims of those terrible illnesses are central. They have faced a range of serious medical conditions including asbestosis, mesothelioma, diffuse pleural thickening, pleural plaques and lung cancer. I understand that there is currently no effective cure for many of those diseases, which are debilitating and insidious and which often take many years to present. The responses to drugs are generally short-lived. All that is extremely distressing and traumatic for those involved and for their families, and the Assembly will wish to acknowledge their sense of worry and apprehension.

Therefore, it is important that, although I outline the legal obligations, actuarial assessment and expenditure implications, our debate should be set firmly in that human context.

The matter is urgent for several reasons. We have a responsibility to meet our obligations to victims of those diseases and their relatives who continue to suffer. Harland & Wolff plc is rapidly running out of cash and needs funds urgently so that it can meet claims as they fall due. Therefore, there is an urgent need for an assurance from the Government that sufficient funding will be made available to enable the company to trade properly.

Under company law, the directors cannot trade without an assurance that they have sufficient assets to meet all their liabilities. Therefore, I intend to provide assurance to the directors that my Department will meet its legal obligations and ensure that sufficient funds are provided to allow the company to meet its debts as they fall due.

In parallel with that assurance, my officials, in conjunction with the Department of Finance and Personnel, will seek to ensure the maximum possible recovery of expenditure from the Treasury and from the financial services compensation scheme (FSCS). The FSCS was set up to protect policy holders and others where insurers are unable to meet their liabilities under policies issued. It is funded by levies made on insurance companies. I shall provide more detail about that scheme later.

I must give Members further background information about how the situation arose. In 1975 Harland & Wolff was taken into public ownership and its share capital was acquired by the Department of Commerce — now the Department of Enterprise, Trade and Investment. After 14 years in Government ownership, the company was privatised in September 1989 through an employee and management buyout that was supported by the Norwegian shipowner and industrialist Fred Olsen.

After disposal of its shipbuilding trade through privatisation to what has become Harland & Wolff Group plc, my Department retained 100% ownership of the old company, Harland & Wolff plc. At privatisation, certain assets and liabilities remained with the old Harland & Wolff plc, in particular, all liabilities that existed at the time of the sale resulting from the conduct of the business before transfer. That was similar to arrangements made for other privatisations.

As I have said, the current position has arisen through the insolvency of Chester Street Insurance Holdings Ltd — formerly the Iron Trades Group — which acted as employers’ liability insurer for Harland & Wolff plc and for other leading UK companies, including British Shipbuilders and British Steel Corporation.

The situation, therefore, has UK-wide implications. In addition, it is likely that many of the claims will relate to Harland & Wolff plc workers who were employed and domiciled in Great Britain. Legal advice has confirmed that, as part of the contractual arrangements at privatisation, the Department has retained an obligation to guarantee funding in relation to employers’ and public liability claims, for which Chester Street Insurance Holdings Ltd acted as insurer.

My officials have consulted the departmental solicitor’s office at each stage of the process and have taken legal advice from Lovells, a leading London-based international firm of lawyers that acted for the Government at the time of privatisation in 1989. Lovells has continued to provide advice on other Harland & Wolff matters since then. That firm’s opinion has been confirmed by counsel.

As I have said, the matter of the potential liabilities was highlighted in the Executive’s position report on 19 June 2001. The extent of the potential liability was unclear at that time, and an actuarial assessment of Harland & Wolff plc’s potential future exposure was not completed until December 2001.

The actuarial assessment was undertaken by William M Mercer Ltd, a leading London-based international firm of actuaries. The final report concludes that potential claims from now to approximately 2050 could amount to £190 million gross.

Mercer’s analysis assumes that there is the potential to recover up to £49 million of the £190 million from the FSCS. Employers’ liability cover became compulsory in Northern Ireland in 1975, and the FSCS meets the balance of claims for exposures from that date onwards after recoveries are made from other sources, such as Chester Street Insurance Holdings Ltd.

However, any potential recovery from the scheme is dependent on the eligibility of Harland & Wolff plc as an applicant company. That is being investigated.

The FSCS arrangements apply to companies in Northern Ireland only in respect of agreed claims that cover periods of exposure after 1975 — that being the date at which employers’ liability insurance became compulsory in Northern Ireland. William H Mercer Ltd’s view is that the majority of exposure at Harland & Wolff plc occurred before 1975. The latent period for asbestosis and related diseases to present could be anything up to 40 years. However, although the time lag on settlement payments could reach as far out as 2050, claims are expected to peak in the next few years.

If the Department of Enterprise, Trade and Investment were not to confirm to the directors of Harland & Wolff plc that it would meet its obligations, the directors would have no alternative but to seek a winding-up of the company. In those circumstances, the receiver or liquidator would still look to the Government to fulfil their legal obligations to Harland & Wolff plc on foot of the undertakings given in 1974 and 1989. There would also be a further period of uncertainty and distress for the claimants.

The situation is extremely regrettable. However, it has arisen due to commitments made in 1974 and at privatisation, and the unforeseen insolvency of Chester Street Insurance Holdings Ltd. I assure Members that I shall make certain that my officials take every step to monitor the situation, to minimise liabilities and to ensure that maximum recovery is obtained from all available sources.

I have outlined to Members the obligations that have fallen on my Department because of arrangements at privatisation and the insolvency of Chester Street Insurance Holdings Ltd. I have highlighted the urgency of the situation for the company, and I shall ensure that it is provided with sufficient funds with which to meet those obligations. However, I have also emphasised the acute human dimension and the real difficulties faced by those affected by those serious asbestos-related conditions.

The Department of Enterprise, Trade and Investment has a clear duty, as owner of Harland & Wolff plc and on the basis of professional advice taken, to respond plainly and unequivocally today and to remove uncertainty for sufferers of those harrowing conditions.

Finally, I wish to express my appreciation to my Colleague Dr Farren and to Department of Finance and Personnel officials for the assistance that they have offered to my Department in recent weeks.

The Deputy Chairperson of the Committee for Enterprise, Trade and Investment (Mr Neeson): It is only right that the Assembly accepts its legal responsibilities. Over the years, I have known many people who have suffered from asbestosis caused by their employment in the shipyard. It is a terrible disease. In many cases, it has resulted in fatalities.

Can the Minister tell the House whether any of the Department of Enterprise, Trade and Investment’s programmes for 2002 and 2003 will be affected by the compensation that is expected to be paid out? Can he clarify whether the Department’s budget will be affected by further compensation claims after 2003? Finally, is the Minister aware of any similar situation in which an organisation has been privatised and similar problems could arise in future?

I said in my statement that the Department of Enterprise, Trade and Investment has made a bid in the February monitoring round to cover the figure of £500,000 that we believe is necessary in the current financial year. Next year, a liability of anything up to £10 million could fall on my Department in regard to its obligations in this matter. The Department will make bids through the normal procedures with the Department of Finance and Personnel. We must await the outcome of final decisions on the Department’s total budget. As I said in my statement, Departments are moving towards a different type of budgeting in the longer term.

That different type of budgeting is best described as resource accounting, under which, after 2002-03, liabilities that are currently provided for will be treated as annually managed expenditure. In practice, that means that the liability is already clear, the Treasury knows what it is and provision is made for it in accounts. That will be conducted nationally.

Mr Neeson’s final question was whether similar situations existed in other privatised companies — the answer is "Yes". British Shipbuilders, a state-owned amalgamation of shipbuilding industries, is directly affected by the insolvency of Chester Street Insurance Holdings Ltd. The British Steel Corporation, the former owners of Corus, is also affected directly by the insolvency. The Department of Trade and Industry in London is in the same boat as us.

The matters are being dealt with under annually managed expenditure. My understanding is that, after 2002-03, the spending power of the block will not be affected by those liabilities.

I note that regulations that relate to compensation for various lung diseases in existing companies currently go through the Department for Employment and Learning.

Will the Minister confirm that the matter is being dealt with urgently? Sadly, any delay may mean that some of the workers and family members who are affected will no longer be alive to benefit from compensation payments. Can he further outline the likely claims on public expenditure in future years?

The matter is being dealt with urgently because the Harland & Wolff Group plc, which is wholly owned by my Department, has a board of directors who must confirm the company’s annual accounts. The directors must be satisfied that there are sufficient resources to meet the company’s debts. Those debts are determined by court decisions in respect of individual claims. The directors must respond annually by submitting and signing the accounts, and by having them audited. Therefore, the auditors must know that the directors are satisfied that there are sufficient assets to meet liabilities.

In my statement, I said that I intended to confirm to the directors that my Department will meet the liabilities with regard to those matters so that the company’s directors will be satisfied that they have assets to meet their liabilities. If I did not do so, the company would have to go into liquidation. However, that would save the public purse nothing. We are in this position because of undertakings that were given in 1974, and in 1989 at the time of privatisation, that that was happening nationally. Without those undertakings, the company would be unable to trade.

The anticipated amount of required resources for this financial year is £0·5 million. In the next financial year, that could rise to £10 million, depending on the flow of claims and on the level and speed of settlements. There is always some doubt about that. There will be continuous annual monitoring. Actuaries will give annual updates on what the current and future liabilities are likely to be.

The issue concerns provisions. I repeat that we are pursuing every avenue to minimise the resources required to meet those claims. There is a compensation scheme, which has some technical limitations. Nevertheless, we shall pursue it. My colleagues in the Department of Finance and Personnel are fully engaged with the Treasury on the matter, and together every avenue will be pursued.

I take this opportunity to welcome the return of the Deputy Chairperson of the Committee for Enterprise, Trade and Investment following his illness. We are delighted to see him. We missed him — even if at times that was only to ensure a quorum.

More seriously, I welcome the Minister’s efforts to face up to an awful situation. Asbestosis, mesothelioma and their array of attendant problems are a major human tragedy. In my day job, I treat several patients who suffer from the effects of asbestosis, and it is one of the worst possible afflictions.

Several problems concern the old Harland & Wolff plc and the new Harland & Wolff Group plc. Although I do not wish to pursue those in detail today, perhaps the Minister will provide further information on paper as to the structures and how such matters fit together.

The Minister said that much of the exposure came before 1975. There followed a period of exposure from 1975 to 1989. How much exposure was there after 1989? How much money has been settled to date in respect of existing cases? That might be relevant to future settlements.

Why was none of that foreseen in 1989 at the time of privatisation? Surely steps should have been taken at that time to sort out the respective liabilities of the old and the new companies.

Are there contingent liabilities other than those associated with asbestos? What else might emerge from the woodwork? I urge the Minister —

Order. The opportunity is for Members to ask a question. I am usually fairly generous when it is two or three, but when it is 20 —

My question is multifaceted.

It is, and many other Members wish to ask questions on the issue. Therefore, I ask the Member to restrict himself to the questions he has already asked and to allow the Minister to answer them.

I admit that I am struggling to keep up, but I shall try to cover as many points as possible. Through his work, the Member will be far more familiar with the outworkings of those diseases than will most of the Members.

The Government have no involvement in exposure after 1989. That is a private matter for the insurers of the new company and its own public liability insurers. We have no ongoing trading activities with the old company; therefore my understanding is that no liabilities exist.

I shall write to the Member to detail how much has been settled to date. I do not have that information to hand. However, there are currently approximately 800 unresolved claims in the system. Work continues on those every week.

Of course, not all claims are met. However, it gives an idea of the scale of the problem. The Department expects the number of claims to peak over the next three to four years, because of the time that elapses between people’s exposure to asbestos and their making a claim.

The Member asked whether the situation could have been foreseen. The approach taken was no different from that taken in other privatisations. In the 1980s the Thatcher Government pushed forward a series of privatisations in the public sector, and the privatisation of Harland & Wolff was dealt with in the same way. When deals are done in the private sector, it is not unusual for the outgoing shareholder to accept responsibility for existing liabilities.

I have just received information that will give Members a sense of the scale of the situation. When the insurance company was declared insolvent in January, 720 claims were at various stages of negotiation. A further 107 claims have since been received, bringing the total to 827. Of those, 638 were from Northern Ireland-based claimants, and 189 were from Great Britain-based claimants. On 19 February, 414 claims had been settled, and 413 were outstanding. Since January 2001, payments made directly by Harland & Wolff for settled claims for damages have amounted to £2,714,335. A further £786,000 has been paid for plaintiffs’ costs. Since January payments made directly by the Iron Trades Group in settlement of Harland & Wolff’s defence costs have amounted to £457,000.

Prior to its insolvency, claims were made against the insurers. I do not know the scale of that, but if Members wish to pursue that matter, I will facilitate them.

Go raibh maith agat, a Cheann Comhairle. I thank the Minister for his statement. He has told a disturbing tale on two levels. Of primary concern is the suffering experienced by former employees of Harland & Wolff, but of secondary concern is the cost to the public purse of the British Government’s failed privatisation policy, for which the public must now pay.

The Minister estimates that the claims will cost the Executive up to £10·5 million by 2003. Following that, the claims are not expected to affect the Executive’s spending power. However, has the Department of Finance and Personnel estimated the cost to the health budget of dealing with an increase in diseases that are directly related to asbestos? What strain will that put on the Executive’s spending power?

The Member referred to the impact of the privatisation policy. He should be aware that the liability arose because of the insolvency of the insurer, not because of privatisation. The Member should also be aware that when the company was in public ownership, vast sums of public money were required to sustain it — there was an ongoing cost associated with the company’s being in public ownership. Many companies in public ownership were spectacularly unsuccessful, which meant a higher cost to the public purse.

Inevitably, the health budget will be affected by significant costs, but that must be put in the context of the costs to the Health Service of smoking-related diseases and drug and alcohol abuse. I do not know what the cost will be. My Colleague in the Department of Health, Social Services and Public Safety may be able to give some guidance. Undoubtedly, the cost will be considerable. Once the illnesses manifest themselves, in many cases they require intense treatment over a long period. I am happy to refer the matter of quantifying the cost to the Minister of Health, Social Services and Public Safety.

I pay tribute to the Minister for showing the humane face of Government in his recognition of the suffering of those people. If I interpret his statement correctly, he has placed the most vulnerable, those who are suffering, higher on the agenda than is often the case.

Will the Minister confirm that, in accepting liability, approximately 30% of the moneys that we will pay out will go to members of the legal profession, who are fit and well? Those who suffer from the diseases might be described as the "walking dead", because there is only one outcome of those debilitating illnesses. The long and laborious legal process will ensure that some of the sufferers will not benefit from our liability. Since the Minister is now offering Harland & Wolff plc the wherewithal to pay compensation, can he and the Department expedite the process so that those who suffer from these illnesses will at least feel that their pain has been acknowledged?

I am sorry to take so long, Mr Speaker. I am conscious of your previous intervention.

The British Government seem to have a cunning plan as regards asbestosis. They argue that the insurance company or the company during whose employment a person contracted asbestosis are the only companies that can be held liable. That is a move away from previous cases where insurance companies had to accept partial liability for a person with the illness who could prove that they had worked in many companies, during whose employment they were exposed to asbestos. Will the Minister confirm that the moneys that he will provide to Harland & Wolff plc are to cover compensation for partial liability, rather than single liability cases only?

The Member is correct to highlight the vulnerability of that large group of people. I have tried to express my views and those of the Executive in that regard. When I read out the costs of some of the claims that have been met so far, I indicated the substantial contribution towards legal costs that is required. I cannot confirm the figure of 30%. However, the cash amounts are on record, and the Member can calculate the costs when he reads Hansard in the morning.

The claims process can be a long-drawn-out one, and it must be considered from several viewpoints. Not everyone who is suffering from an illness related to employment with Harland & Wolff plc is a resident of Northern Ireland. Harland & Wolff plc had staff in Great Britain who worked as subcontractors in several shipyards over a long period. Some 189 people, out of a total of 638, are based in Great Britain.

A recent court ruling was made in the Fairchild case that, before compensation will be paid, the applicant must prove that he or she contracted the disease because of exposure to the substance at a single place of employment. Employees, therefore, who moved from one company to another cannot prove that they contracted the disease at a specific company. That is my understanding of the Fairchild ruling. Thus, a significant burden of proof is imposed on the applicant. If a person was employed exclusively by Harland & Wolff plc, it will be much easier for him to prove the validity of his case. However, if that employee moved between companies, it will be much more difficult for him to do so. The Fairchild case will be appealed — it is an evolving situation, and it is not clear how it will be resolved. The Member is correct that that has become a significant hurdle for many who may have been exposed to the substance when working for several employers, but I cannot give him any further comfort on the partial liability issue until the case is resolved.

I thank the Minister for his statement, which was excellent as usual. How prevalent are the complications of asbestosis, such as neoplasia, pleural and peritoneal mesothelioma and Caplan’s syndrome, and, more specifically, how do those diseases affect the relatives of the sufferers?

The Member is far more able than I am to comment on those illnesses. However, it is clear from the list of illnesses that he read out, some of which I mentioned in my statement, that exposure to asbestos results in a range of diseases that affect people to varying degrees.

The Member raised a significant point about sufferers’ relatives. The distress of relatives whose loved ones have contracted such illnesses is only one of the problems to be considered. The situation is potentially similar to that caused by passive smoking in that relatives of people who were exposed to asbestos at work have made claims in their own right. They ingested substances from fibres that workers transported home on their clothing and, thus, some 30 years later, contracted illnesses that are directly related to asbestos fibres. That evidence was not immediately apparent and has emerged only recently.

Relatives are affected by this in two ways: first, they undergo the trauma of a loved one’s illness, and, secondly, as a result of secondary exposure, many contract the illnesses themselves. Sadly, this affects many people, some of whom are not yet aware that they were exposed to asbestos, or of the many insidious and debilitating illnesses that, as Dr Adamson has pointed out, can result from such exposure. The Executive must examine these matters seriously.

Lest it be seen as a precedent, I point out that I permitted the Minister to answer that question because he wanted to express something of the human suffering involved, which is entirely appropriate. Had the question been interpreted as a request for a professional opinion, it would have been inadmissible. Even if the Minister had been qualified to respond, questions in pursuit of a professional opinion — for example, legal, medical or other — are inadmissible. Questions to Ministers must relate to their departmental responsibilities. I mention that not to obstruct the question, which the Minister has fully answered, but lest its admissibility be seen as a precedent in any other circumstances. Professional opinion questions are not admissible.

I welcome the Minister’s statement and the report. He has made a direct attempt to address the delivery of insurance cover and assistance to those who suffered. In my constituency there has been a tradition of people working in the shipyard. Recently I was involved in the case of a constituent who tried to claim damages after the death of her husband, who had suffered from asbestosis. A settlement was made.

What is the timescale between making a claim and receiving a settlement? Many families have waited 12 months, 18 months, or even years, just for their applications to be processed. When can claimants expect to receive the cheques — which is the best way to put it — in compensation for the disease from which they and their families have suffered? Why is 2050 the cut-off date? Also, how can we directly help the families, whom we want to look after?

The Member, like others, has had first-hand experience of the impact of these diseases. The approach has to include compassion, on the one hand, and realism — given the legal framework — on the other.

This is a complicated process. As I said, 827 claims have been lodged. At insolvency, in January 2001, there were 720 claims at various stages. Since then, 107 claims have been received, bringing the total to 827. Four hundred and fourteen claims had been settled by 19 February 2002. Therefore half of the total claims outstanding have been settled within this period. Some claims are disallowed, and I have given the reasons. The timescale could be 12 months or longer in some cases. I am conscious that the process should not be prolonged unduly, as highlighted by the Member for East Belfast Mr Ervine, and Mr Shannon. However, public funds are being used, and technicalities will affect whether liability is clearly accepted. As I said, there is an outstanding court case that could delay the process. However, I will take the Member’s point on board.

After calculating the dates of exposure to the disease and people’s estimated lifespans, it was felt that nobody who might have been exposed to the disease would be alive after 2050. In other words, fewer are thought to have been exposed post-1975 therefore, allowing for individual lifespans, it is unlikely that the majority of sufferers would live beyond 2050. The estimates could vary, but by 2050 the number of claims will have petered down to single figures. The bulk of the claims is expected in the next four or five years.

Go raibh maith agat, a Cheann Comhairle. First, I offer my sympathy to those who have been affected by asbestos-related diseases. It is a terrible affliction.

It is a concern that, once again, the Assembly is paying for commitments made and arrangements negotiated by the British Government in 1974 and during the privatisation of Harland & Wolff plc.

When did Chester Street Insurance Holdings Ltd become insolvent? Did the company become insolvent as a result of the potentially large claims? Are the claims related only to Harland & Wolff plc or to other companies as well? How much was paid to the insurers, and will any of that money be recouped? Go raibh maith agat.

The privatisation was negotiated by the British Government as part of a series of privatisations. However, the nature of negotiations in subsequent privatisations has not been much different, no special arrangements were made during the privatisation of Harland & Wolff plc that did not apply to other companies.

The reasons for the insurer’s insolvency include the huge scale of the settlements and the fact that the volume and amount of claims have been higher than the underwriters anticipated. Therefore the company’s liabilities were deemed to be far in excess of its assets at the time, and it went into receivership.

There were approximately 2,000 policy holders, of which Harland & Wolff plc is one. That might give you a flavour of the scale of the situation. British Steel Corporation had thousands of employees, and British Shipbuilders covered many shipyards in the UK. Harland & Wolff plc is only one cog in the wheel. The issue extends far beyond our shores and involves a large national liability.

The financial services compensation scheme may be available to Harland & Wolff plc to enable it to recover some moneys, but its availability depends on the company’s eligibility. What are the requirements for eligibility? If such money were recovered, how long would it take for that to be made clear? Would that money be returned to the UK Treasury, rather than to the Northern Ireland Executive?

With regard to the latter point, if the moneys are recovered from the financial services compensation scheme, they will return to the person and the part of the block that pays the money. In most cases, that would be to the Treasury, because it will pay most of the bill. The financial services compensation scheme is levied on the insurance industry. In other words, all insurers pay into the scheme. It is similar to the Association of British Travel Agents (ABTA) scheme. The industry pays into a compensation scheme to cover situations where a company makes serious mistakes. It is designed to protect the policy holder.

Employers’ liability insurance became compulsory in only 1975. Therefore the scheme applies only to post-1975 cases. If one applies to the compensation scheme, eligibility must be approved. One eligibility criterion will relate to the dates when the claims can be deemed relevant. There will be a cut-off point in 1975; and some claims will flow from before that date, and others after it. Another will relate to the eligibility of publicly-owned companies as opposed to privately-owned companies. All those legal technicalities must be drawn out.

With the Department of Finance and Personnel, we have made a commitment to do all in our power to maximise recoveries from the scheme. We should get on with that work and do what we can. In the meantime, it is likely that cash payments will have to be made in this, and the next, financial year. If we are eligible to receive compensation, that will come later. We must make the cash provision now to allow the company to trade and to pay compensation to the victims, as has been requested.

If compensation is awarded, I suspect that it will be divided. If compensation is eligible for individual claims out of moneys that we will have paid, we will have a claim on that. If it is awarded on the bulk of claims — paid by Her Majesty’s Treasury — that money will revert there.

Assembly:
Finance and Personnel Committee

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Resolved:

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Business Committee

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Standards and Privileges Committee

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Committee on Procedures

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Assembly Standing Orders

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The Chairperson of the Committee on Procedures (Mr C Murphy):

Go raibh maith agat, a Cheann Comhairle. I beg to move:

The amendment proposes a new Standing Order to enable a provision of the Northern Ireland Act 1998 to be addressed in Standing Orders. The proposed Standing Order outlines an appointment procedure to the Assembly Commission.

Provision is made for the establishment of the Assembly Commission under section 40 of the Northern Ireland Act 1998. The Act also sets out the Commission's functions and powers. It also implies that Standing Orders should prescribe an appointment procedure to the Assembly Commission. Standing Orders do not currently make provision for that.

In consultation with the Assembly Commission, the Committee on Procedures felt that the gap should be addressed, and the amendment does that. The Assembly Commission has approved the proposed Standing Order, and it has also been scrutinised by the Assembly legal adviser.

The proposed Standing Order raises several issues. The first relates to the number of members of the Commission. As stated in section 40(3) of the Northern Ireland Act 1998, the number of members, in addition to the Speaker, should be five. The Assembly, and the Committee on Procedures, are content that the number should remain as is outlined in the Act.

The proposed Standing Order outlines eligibility for appointments to the Assembly Commission and the procedure for filling vacancies, should they arise. The Assembly Commission and the Committee on Procedures felt that the Chairpersons and Deputy Chairpersons of Statutory Committees should not be eligible for appointment to the Assembly Commission. The Chairpersons and Deputy Chairpersons of the Public Accounts Committee and the Audit Committee should also not be eligible. That measure is to ensure that there is no potential conflict of interest with the Public Accounts Committee and the Audit Committee.

The demands and time imposed on the Chairpersons and Deputy Chairpersons of the Statutory Committees meant that it would be unreasonable to expect them to find the additional time required to sit on the Assembly Commission. It was also considered unreasonable that those Members already in receipt of an allowance as office holders should not receive a further allowance for membership of the Assembly Commission.

One final condition that is being incorporated is that appointments to the Commission should require cross- community support. That was suggested by the Assembly Commission, because it is there to represent the interests of all Members of the Assembly, and not party interests. Appointments to the Assembly Commission should require the support of all sides of the House. That was considered to be a greater safeguard to the position of the Commission.

The purpose of the proposed Standing Order is to address a provision in the Northern Ireland Act 1998 that Standing Orders should specify an appointments procedure to the Assembly Commission. The proposed Standing Order makes provision for that in an open and transparent manner.

As a member of the Assembly Commission, I support the amendment. The proposed Standing Order establishes a clear and unambiguous mechanism for appointments to the Assembly Commission. It provides for the initial appointment of the body corporate at the beginning of a new mandate, and also allows for the appointment of individual Commissioners as vacancies arise.

The Committee on Procedures consulted with the Assembly Commission on the wording of the proposed Standing Order, and it is the Commission's view that the proposed Standing Order is fit for the purpose.

I wish to raise two points. The first concerns the number of members of the Commission. I would appreciate clarification, but I assume that this does not preclude any proposal on behalf of the Assembly to increase the number of members of the Commission, if that is the Assembly's wish.

Secondly, I seek clarification on the issue of those members of Committees, especially of the Public Accounts and Audit Committees, who, according to the proposed Standing Order, are not eligible to stand for election to the Commission. Mr Conor Murphy said that there was a potential conflict of interest, and I would like clarification as to what sort of conflict of interest there could be for a member of the Public Accounts or Audit Committees, as those who hold office on those Committees receive no payment for their involvement. What about other Committees? Correct me if I am wrong, but do the Committee on Procedures and other Committees not fall into that category?

The Deputy Chairperson of the Committee on Procedures (Mr Dalton): I support the amendment. Essentially, it is a tidying-up measure. The Northern Ireland Act 1998 made provision for the appointment of a specified number of members to the Commission. Procedures, and Standing Orders should have stated how they would be appointed. The House has not made Standing Orders to deal with that situation. It has been remiss of us, and we should use this opportunity to correct it.

I shall address the points raised by the Member for North Down, Ms Morrice. The 1998 Act, not the Committee on Procedures, specifies the number of members of the Commission. The membership of the Assembly Commission is relatively large compared with the House of Commons. Its Commission has five members to deal with 652 MPs, as opposed to our five members who deal with 108 Members, and possibly even less in the future.

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