Since the first election of the National Assembly for Wales fourteen years ago the Assembly has delivered much for the people of Wales and conferred a renewed sense of identity and purpose on the nation.
Insurers fully understand and respect the significant range of powers exercised by the National Assembly, powers recently increased with the support of the Welsh people. However we must also acknowledge that the devolution settlement has a degree of tension in the boundary between the powers of the UK and Wales, a tension apparent in the current debate about the best way to help the sufferers of mesothelioma.
To date, the Asbestos (Recovery of Medical Costs) Bill has proceeded through the Assembly with little scrutiny, little analysis of the costs and benefits and little in the way of careful consideration. But make no mistake; it affects every business in Wales. So yesterday’s decision by the Business Committee of the Welsh Assembly to postpone consideration of the Bill provides everyone with a chance to reflect on whether enacting this legislation really is in the best interests of Wales.
The Bill seeks to recover the costs of treating sufferers of asbestos related diseases, and reimburse these funds into the coffers of the Welsh Assembly Government. These costs would be recouped mainly from insurers, but would also lead to costs being recovered from self-insured employers as well as health boards and local authorities in their role as employers.
A competent solution?
Although the Bill may seem well intentioned, it has major flaws. There are several key reasons.
Firstly, there is an issue of jurisdiction. On the face of it, this looks like a health proposal, but really it amounts to legislating on the operation of financial services within Wales – an area that falls outside of the Assembly’s jurisdiction. This is because the Bill would retrospectively charge insurers for something which was never factored into premiums at the time insurance policies were taken out. Asbestos related diseases can take many decades to manifest themselves after exposure to asbestos, so people presenting at hospitals today will have been employed by firms that that may or may not have paid insurance premiums many years ago.
We shouldn't be changing the rules on what insurers need to pay when they can no longer factor those costs into the premiums they charge. Retrospectively taxing insurers is not only a bad principle, but the message the National Assembly of Wales is sending to the wider business community which may want to operate and invest in Wales is not a positive one; here is legislation which sees company reserves as a pot of money to be dipped into to pay for public services on the basis of a retrospectively imposed liability. This can only be damaging to how firms view Wales as a place to do business.
This is particularly important because this Bill exploits a broader principle that a tax on business can be levied to fund the NHS and this needs to be very carefully thought through. It could be the start of a major shift of responsibility for funding the Health Service, setting precedents which may not have been fully considered.
If insurers are forced by the Assembly to fund this cost, it will merely be passed onto businesses in Wales purchasing employers liability insurance. And all this would do is drive up their operating costs at a time when employers are finding times tough enough already.
Merry-go-round
The implications for public services in Wales are also severe given that local authorities and health boards will not be exempt. So squeezed public services will also face the additional costs of reimbursing the Welsh Government for the treatment costs of asbestos, simply creating a ludicrously bureaucratic merry-go-round of money.
Finally, leaving aside issues of legislative jurisdiction and the impact on public services and businesses, there is a wider question about whether this is an area that requires a Wales-only remedy. This proposal has been put forward in isolation from what is happening in Westminster, where the UK Government has introduced legislation to deliver a major new package of reform to help mesothelioma sufferers across the UK (see my last blog). This includes speeding up the legal process, registering all mesothelioma claims online, improving the tracing of insurers where employers no longer exist and helping to raise awareness of continued asbestos exposure in public buildings and people’s homes.
It also includes an agreed levy on employers’ liability insurers of £30-35 million per year which will provide support to sufferers even when they cannot find an employer or insurer to claim against. All going well, these changes should be implemented by mid-2014 and the scheme will cover England, Scotland, Wales and Northern Ireland; making the contents of the current Bill in the National Assembly largely redundant. This is a scheme the insurance industry has designed with the UK Government and is funding to ensure all sufferers of mesothelioma can get some help.
Surely then, it is far better to support the implementation of the UK wide package of reform to help mesothelioma sufferers, assist Westminster in tailoring them to the needs of deserving sufferers in Wales, whilst not sending out the message that Wales is an uncertain and difficult place to do business.