Motion made, and Question proposed, That this House do now adjourn.—[Mr. Nicholas Baker.]

Perhaps I should explain to my hon. Friend the Minister the reasons for raising this particular subject on the Adjournment. First, for some years now I have been concerned about the way in which health authorities have to fund the payments that they make after successful claims for compensation. Secondly, unfortunately, last year, one of my constituents, Donna Horne, suffered a grievous blow to her health after treatment at Leicester hospital. Her case is sub judice and I must be careful in what I say, but the tragic case of Donna Horne brought home to me the need for more to be done to assist those who are the unfortunate victims of negligence of national health service treatment.

It was only when I was discussing Donna's case with her legal adviser that I became even more aware of the deficiencies in the common law of tort. I discovered that, even though the majority of such cases—more than 90 per cent.—are settled out of court, a settlement can still take up to 10 years or more. The idea that there should be a regular payment or a periodic or structured payment can be agreed only if the judge finds out that the defendant and plaintiff have agreed to such a decision. Unfortunately, what happens now is that, often, there seems to be some unseemly wrangle about the amount of the lump sum to be paid based on the life expectancy of the unfortunate victim. Because of that, many years of negotiation take place even when the case is settled out of court.

Because of my concern about that, I put down a question on 3 December to my right hon. and learned Friend the Attorney-General to ask him if he would consider producing guidelines which could be used by Her Majesty's judges to make orders for such structured payments. My right hon. and learned Friend replied that that was a matter for the judiciary. I am sure that my right hon. and learned Friend did not want to mislead me, but his reply was misleading. As the organisation Action for Victims of Medical Accidents has said, periodical payments such as a yearly payment, perhaps uprated by the retail prices index each year, can be awarded by a judge only if both sides to the dispute consent.

In the case of Burke v. Tower Hamlets health authority on 10 August 1989, Mr. Justice Drake held: in determining quantum of damages for the costs of future care in a case of personal injury, the court has no power to order periodical payments instead of a lump sum except when both parties to the action consent to such an award. Therefore, it is hardly surprising that Action for Victims of Medical Accidents wrote to me saying: It is only the Government that can change this by changing the law so that periodical payment orders can be made whether the Defendant consents or not. In the circumstances, there seems to be a need for the law to be changed.

I understand that there are some in Government quarters who believe that there can be reform of civil procedures in order to accelerate the progress of such cases through the legal system. But those cases are often medically complex and sometimes the prognosis is uncertain. Therefore, delay could well occur even if other steps were taken to speed up the process, particularly as it seems that the arguments about the size of the cash award could be protracted.

It is interesting that a full report drawn up by the Royal College of Physicians on the subject states on page 14: The problems associated with one-off, lump-sum payments in negligence cases might be reduced by measures to encourage the use of provisional damages and structured payments. The former would allow cases to be concluded, either by means of a lump sum or a regular payment, on the basis of an assessment of the plaintiff's present condition while reserving his or her right to seek a revision if this condition changed adversely. The latter would provide for the payment of an agreed regular sum (without the prospect of subsequent revision) to the plaintiff for the duration of his or her natural life, thereby eliminating the problem of the 'pools win' type dissipation of a large single payment. It goes on to say—this is of special interest to health authorities— Periodic payments would seem a particularly appropriate form of settlement for public bodies like health authorities to adopt since they can be assumed to have an indefinite life and need not become involved in the problems of arranging capital provision annuities which have arisen with private insurers … It is possible that courts could by primary legislation be empowered to impose structured settlements, rather than depending purely on the plaintiff's consent as at present. Therefore, I ask my hon. Friend the Minister to give my proposal serious and urgent attention. Victims of such terrible cases and their relatives would like to know that the Government are urgently addressing a problem that is increasing as more and more claims are made. I should like my hon. Friend to do what he can to convince the victims and their relatives that the Government are anxious to ensure that no unnecessary additional suffering is caused by prolonged litigation and that, by contrast, litigation should be kept to an absolute minimum.

I know that from 1 January 1990 the national health service has accepted that it will be responsible for claims against doctors and health authorities where it is said that negligence has occurred. My hon. Friend will correct me if I am wrong, but I believe that such sums still have to come from health authorities' budgets. The first £200,000 of a claim must be met by the district health authority—a matter of considerable anxiety to many health authorities. First, the timing of an award being made against them is uncertain, as is the amount, because of the present legal process. Many district health authorities suddenly confronted by a bill for £200,000 for which they have not budgeted would be in great difficulty finding the money without taking drastic action—even perhaps closing wards. If, by any chance, they are faced with two such claims in one financial year, it is almost certain that health services in their areas would have to be cut.

The regions are not in a much better position. Few have adequate sinking or reserve funds to meet such claims. Even when they have such funds, as does my region—Oxford RHA—they will soon be depleted because of the claims on them.

I have discussed the matter with the chairmen of two RHAs and both agreed that some better method of funding is badly needed. One reason why is that there is a sharp growth in the frequency and severity of medical liability claims, and the problem for many health authorities is how to meet the cost of those claims. The Government have accepted that they have overall responsibility for negligence claims, but they must also make clear provision for fulfilling that responsibility, and in such a way as not to impose a handicap on the day-to-day funding of the NHS.

I do not suggest for a moment that health authorities that are negligent should be allowed to be less vigilant. Any cases of negligence must be fully investigated and the necessary steps taken to prevent their recurrence. But, just as the Government have decided that doctors should not be expected to be financially responsible for claims against them, they should also ensure that health authority patients do not suffer because of these payments.

The timing of this debate is apposite in view of the introduction of a private Member's Bill by the hon. Member for Greenwich (Mrs. Barnes), who I am delighted to see in her place. She intends to introduce a Bill for no-fault compensation. The Government have considerable reservations about it, but I sympathise with the hon. Lady's Bill as well as understanding those reservations. If the Government do not like her Bill, they are obliged not only to show why they cannot accept it but to put forward a coherent and realistic policy to deal with cases of compensation such as the one that I have discussed tonight. When such a tragedy takes place, people want every sympathy and the knowledge that their difficult situation can be remedied as soon as possible. The health authority should feel that it can make reasonable and fair payments without having to consider their effect on the day-to-day running of their services.

The two measures that I have suggested can apply whether or not the hon. Lady's Bill comes into force. She will argue that patients will still have the right to go to law if they are not satisfied with the compensation awarded to them. If the Minister accepts that, I wonder whether he will accept my final point: that these two measures will apply whether the hon. Lady's Bill is accepted or not, but that if the Government do not accept it, these measures will become even more essential as a sign that the Government are concerned about this matter and are aware that it is a cause of growing anxiety throughout the country. They must have a realistic policy to deal with this difficulty.

I congratulate my hon. Friend the Member for Wellingborough (Mr. Fry) on securing the first Adjournment debate of the new year and on raising an issue of such obvious current concern to the House, not least as a result of the Bill promoted by the hon. Member for Greenwich (Mrs. Barnes). My hon. Friend deployed his argument in measured tones, and it was a seductive one due to the position in which the Government find themselves. I shall respond first to his closing comments.

It is clearly true that the two specific arguments that my hon. Friend advances are independent of any consideration of no-fault liability and must therefore be considered regardless of the Government's attitude to the proposals advanced by the hon. Member for Greenwich.

I entirely understand the position in which my hon. Friend found himself when he represented a constituency interest as a result of a case of medical negligence. There are difficult issues to be addressed when dealing with individual cases of such a nature, and I shall respond in some detail to both of my hon. Friend's specific proposals. I shall deal first with the argument that the health authorities are primarily responsible for compensation for proved medical negligence.

When health authority resources are scarce—and was there ever a time when they were not—health authority managers argue that responsibility for funding such an award should fall elsewhere in the national health service. I am sure that my hon. Friend recognises that, however that is presented in bureaucratic terms, the reality is that any cash paid to meet a medical negligence claim or a no-fault claim by a patient must come from the limited resources available to the NHS. It is purely a bureaucratic decision whether such sums come from the budget of a specific health authority or from some back pocket in the Department. The only way to fund such a back pocket is to top slice the total NHS budget, thereby reducing the amount committed at the beginning of the year to health authorities.

My hon. Friend will accept that there is a degree of kidology about his proposal because whatever part of the NHS the claims were met from they would still be deducted from the NHS budget, and that would reduce the amount of resources available for patient treatment either in the health authority responsible for the payment or elsewhere.

Secondly, one of the reasons for keeping the principle of allowing a claim for negligence is to ensure that the clinician and the health authority as the clinician's employer are held to account if a case of negligence can be proved. I think that that is accepted by the hon. Member for Greenwich. That is a major reason for keeping the principle of negligence, even if we accept the principle of no-fault liability. We must retain the principle that damages should be payable if negligence can be proved, but that argument is powerful only if the responsibility for meeting a negligence claim rests reasonably directly either on the clinician or on the employing authority. If a concentration of negligence claims came to a health authority, it could cause financial difficulty. No one but a blind man could fail to recognise that.

Nevertheless, it is important that the primary responsibility for funding the payment of negligence claims should rest with the body which can properly be held accountable for the fact that negligence took place. After all, in the case of claims for proven negligence, we are talking about the individual's right to redress when he suffers as a result of somebody not properly discharging his professional responsibility. All those interested in the subject agree that, in those circumstances, proper redress should be available to the individual citizen, and the person responsible for the negligence should be held to account through the agency of the health authority. I understand the force of what my hon. Friend said, but I should not want to see liability for payment of negligence claims divorced from the circumstances which gave rise to the negligence.

My hon. Friend spoke at some length about what he, his constituent and her legal advisers understandably see as the inadequacies of the law of tort in dealing with claims of medical negligence. It is common ground that the law in this sector is inadequate in some respects. That is why Lord Hailsham, when he was Lord Chancellor, established a civil justice review to improve the machinery of civil justice in England and Wales by means of reforms in jurisdiction, procedure and court administration, and in particular to reduce delay, cost and complexity. That review reported in June 1988 and many of its proposals found their way into legislation through the Courts and Legal Services Act 1989. The Government are committed to doing everything in their power to make the operation of the civil justice system, and in this context the law on medical negligence, effective.

I do not accept the argument advanced by the hon. Member for Greenwich that because the law is inadequate in some respects that is sufficient reason to overturn the principle underlying the law. The principle is right, although I accept my hon. Friend's point that in practice the operation of the law is not as good as it should be and therefore should be improved. The Government are firmly committed to doing that.

Is the Minister convinced that the law of tort, with its confrontational approach, is appropriate in the situations which can arise in the NHS? For example, a patient may have a confident, long-standing relationship with his doctor but something goes seriously wrong, although that is nobody's fault. In an organisation as large as the NHS, there can be accidents. The only form of redress is through the confrontational legal process, which has major disadvantages for all concerned. Is there not a more civilised way to deal with the problem?

The hon. Lady will have an opportunity to deploy her argument in due time. I believe that it is common ground between us that, when a clinician is negligent, the right of a citizen to redress for that negligence should not be withdrawn. That should not be done differently from the way in which the law of tort is generally pursued in the courts. I do not think that the hon. Lady has any proposals which would change the way in which a claim for medical negligence, where that can be proved against a clinician and employing health authority, will be proceeded with.

My hon. Friend the Member for Wellingborough talked about structured payments and phased payments in the event of a medical negligence claim. Those matters were the subject of a review by the Pearson commission in 1978. It was recommended by a majority that provision should be made for damages in the form of periodic payments for future pecuniary loss caused by death or serious and lasting injury.

The Government consulted on the recommendation and found that the idea met with almost universal hostility. That was mainly on the ground that plaintiffs and defendants like a lump sum. Against the background of the consultation—there was virtually no support for the principle of setting up new machinery for dealing with phased payments—the Government decided not to proceed with the Pearson commission's recommendation. As my hon. Friend knows, however, the law allows for the possibility of phased payments. In 1987, that possibility was made somewhat easier to implement when the Inland Revenue reached agreement with the Association of British Insurers that income payments in damages awards would be tax free. Despite the fact that the tax position has improved when a phased payment is made as a result of a medical negligence claim, few such payments are made.

I heard what my hon. Friend said about phased payments and I shall take the matter away and reconsider it, but it is something that has been considered by the Government in the past. The Pearson commission recommended the same line as that which my hon. Friend has suggested, but when the Government consulted they did not find much support for it. That is not to say that we should dismiss the proposal, however, and I have said that I will reconsider it.

I am grateful to my hon. Friend for the way in which he approached the debate. My approach is to recognise the shortcomings of the existing system and then to urge that we try to make it work better. I take that view because we must accept that medical care is never risk free. It is an artificial process involving artificial interference with a patient. There will always be a residual risk, even when the doctor is entirely diligent, that medical care will not be successful and may even lead to damage to the patient.

The question that the House will ultimately have to address when the hon. Member for Greenwich introduces her Bill is who should take on the risk of cases in which the doctor is diligent. There is no dispute that when the doctor is negligent it is for the health authority and the health service to make recompense for the negligence. Should the state take on the risk if the doctor is diligent, even though any patient who goes for medical treatment must accept that there is always a risk attached to that treatment? If the doctor is diligent, it seems to me reasonable to ask the individual to take the risk on himself, especially when we bear in mind that if the state were to take upon itself the underwriting of the risk the effect would be not to eliminate all difficulty or unhappiness arising from disability but merely to move the boundary. We provide for damages in cases in which the NHS is negligent, but not where it is diligent. The effect of the proposal of the hon. Member for Greenwich would be to move—

Order. I have been patient. The Minister is going beyond the subject of the debate and anticipating an issue which will be coming before the House.

I am grateful to you, Mr. Deputy Speaker. I was seeking to express my gratitude to my hon. Friend the Member for Wellingborough for recognising that the arguments do not in themselves undermine the basis on which the law currently operates.

Our objective should be to ensure that the present law, which holds clinicians to account when they are negligent but does not seek to impose on the health service an obligation to underwrite risk when they are diligent, operates more fairly and effectively in future. That principle is one that the Government wholeheartedly embrace, and I shall seek to demonstrate to my hon. Friend and to the rest of the House that we are able to take practical steps to make that principle real in the months ahead.

Question put and agreed to.

Adjourned accordingly at twenty-six minutes to Eleven o'clock.