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Backbench MPs are seeking to block controversial plans they believe will prevent victims of asbestos-related diseases suing their employers for damages.

Last week ministers laid an order before Parliament that removes the legal requirement for companies to retain records of liability insurance policies. As a result, thousands of workers affected by long-latent diseases such as asbestosis and mesothelioma will be unable to trace the insurers of their employers — and bring a claim.

The reason, ministers say, is that the cost of retaining policies is a burden on business and that the law is not effectively enforced by the Health and Safety Executive.

Personal injury lawyers, asbestos victims’ groups and MPs say that the cost to business is small and compliance could be easily enforced through setting up a statutory central database for policies that would ensure retained policies are not lost or misplaced.

An early day motion has been tabled by MPs expressing “profound disappointment” at the Government’s decision to repeal the regulation requiring employers’ liability compulsory insurance policies to be retained for 40 years. In the motion, the MPs say they are “deeply concerned at the impact this will have on workers suffering from industrial diseases, such as mesothelioma, who will be unable to obtain legally awarded damages because they will not be able to trace their employers’ liability insurance policies”.

Andrew Dismore, Labour MP for Hendon, said: “We are calling on the Government to set up a central electronic database for the compulsory recording of all employers’ liability insurance policies before the repeal of regulation 4(4) of the Employers’ Liability (Compulsory Insurance) Regulations 1998.”

In a second move, MPs have tabled a motion to annul the statutory instrument that the Government has laid to repeal the legislation from October 1.

“It can be a real nightmare tracking down whether an employer had insurance or not. A central database would be much more effective and a lot cheaper,” Dismore added.

Amanda Stevens, president of the Association of Personal Injury Lawyers (Apil), said: “Once the employer is no longer trading, as is often the case when such diseases come to light years after exposure, the victim needs to trace the original insurers to claim compensation.

“Repeal of this regulation means that highly vulnerable people could be left without the means to obtain the compensation they need, and to which they are entitled.”

The Asbestos Victims Support Groups Forum UK said: “There are robust systems to record and trace motor insurance and there is no justification for weak, voluntary systems to apply to employers’ liability insurance.

“This retrograde decision makes a nonsense of the Government’s stated intention to speed up mesothelioma claims and help sufferers.”

Katherine McNaughton, whose husband Daniel died from an asbestos-related lung cancer, said: “My husband died as a result of work he did cutting asbestos roofing sheets in the 1950s and 1960s.

“He died without compensation because his employer’s insurance policies were not retained and his employer had ceased trading. For the Government to remove the duty on employers to retain insurance policies for 40 years is an insult to my late husband and to hundreds of asbestos victims and their families who have lost compensation. It is a disgrace.”

A spokesman for the Department for Work and Pensions said: “Eligible businesses will still have to hold employers’ liability insurance and would risk a £2,500 penalty for every day without cover.

“The regulation being revoked is ineffective as it carried no penalty for non-compliance and did not apply to business that had ceased to trade.”

She added that it was “good business practice” to keep records as long as employees may make a claim. Any business that could not prove it had insurance at the relevant time might find itself meeting compensation costs, rather than its insurers.

The department is working with groups representing employers, employees, insurers and the legal profession to find a way to address “the issues around tracing historic liability insurance policies”, she added.

Anything short of repeal of the statutory instrument is unlikely to appease the MPs and lawyers’ groups. Ministers have, however, recently done something right — in their eyes at least, if not those of insurers, even if they are trailing action by Scotland.

The Scottish Executive published a Bill last month to overrule the impact of last year’s House of Lords’ ruling in which sufferers of pleural plaques, the asbestos-related condition, could not sue for damages.

In a more cautious step, the Government has agreed to consult on the possibility of a no-fault scheme to give financial support to those given the diagnosis of the condition.

Insurers have given warning that the potential cost to the industry could be as much as £28.6 billion. Neil Hackett, manager of the Disease and Illness Claims Unit of Garwyn, the specialist loss adjusters, said: “If this was an open-ended scheme, we could see scan vans starting their country-wide tours.”

Denise Kitchener, chief executive of Apil, welcomed the move to consult. The law lords’ ruling, she said, had been a “devastating blow” for pleural plaques sufferers. “While the Lords’ decision was a financial victory for the insurance industry, it was at the expense of all those victims who had faith in our justice system,” she said.

The Government’s decision to consult was “testament” to its importance — and showed “the genuine trauma felt by those diagnosed with pleural plaques cannot be ignored”.

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