Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) (Amendment) Regulations 2012

Lord De Mauley Excerpts

Tuesday 13th March 2012 Grand Committee

Moved by

[Lord De Mauley]

That the Grand Committee do report to the House that it has considered the Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) (Amendment) Regulations 2012.

Relevant document: 41st Report from the Joint Committee on Statutory Instruments

[Lord De Mauley]

My Lords, on behalf of my noble friend, Lord Freud, I will also speak to the draft Mesothelioma Lump Sum Payments (Conditions and Amounts) (Amendment) Regulations 2012.

It is a requirement that I confirm to the Committee that these provisions are compatible with the European Convention on Human Rights, and I am happy to do so. The purpose of these two regulations is to increase the amounts of lump sum compensation paid under the Pneumoconiosis etc. (Workers' Compensation) Act 1979, and the 2008 mesothelioma scheme set up by the Child Maintenance and Other Payments Act 2008. The increased amounts will be paid to those who first satisfy the conditions of entitlement on or after 1 April 2012.

The earlier drafts of these regulations contained an error in one of the rates in the dependant tables. Had the error not been corrected, it would have meant that certain dependants could have received more than a sufferer in a very small number of cases. That cannot be right and so action was taken immediately the error was identified to withdraw the earlier regulations and correct that error.

Both schemes stand apart from the main social security benefits uprating procedure and there is no legislative requirement to make annual increases in the amounts payable under these two schemes. However, in recent years, increases to the amounts paid have been made in line with the rate of inflation, and the amounts payable for 2012 are being increased by the same rate that is being applied to social security benefits —that is, uprated by CPI—of 5.2 per cent.

Both schemes fulfil an important role in providing compensation where no civil action can be taken against an employer, the person responsible for the exposure to asbestos or one of the other listed agents. They also ensure that sufferers receive compensation while they can still benefit from it.

Noble Lords will know that improved health and safety procedures—

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[Lord De Mauley]

Noble Lords will know that improved health and safety procedures have now both restricted the use of asbestos and provided a safer environment for its handling. However, we are all aware of the legacy created by the common use of asbestos before its effects on people’s health were fully understood. The Government are confronting the results of that common practice by ensuring that financial compensation is available to those affected. Indeed, that is why both of these schemes were introduced.

It might help noble Lords if I briefly summarised the specific purpose of each scheme. The Pneumoconiosis etc (Workers Compensation) Act 1979, which for simplicity of pronunciation I shall abbreviate to the “1979 Act”, provides a lump sum compensation payment to those who suffer from one of the five dust-related respiratory diseases covered by the scheme and who are unable to claim damages from employers after they have gone out of business. In outline, the diseases covered are diffuse mesothelioma, bilateral diffuse pleural thickening, pneumoconiosis, byssinosis and primary carcinoma of the lung, if accompanied by asbestosis or bilateral diffuse pleural thickening. A claim can be made by a dependant if the sufferer has died before being able to make a claim.

A person who is injured or contracts an industrial disease as a result of their work may sue the employer for damages. However, the diseases covered by the 1979 Act are known as long-latency diseases as they take a long time to develop and may not be diagnosed for a very long time after exposure to the dust that caused the illness. This is particularly so for the asbestos-related diseases within the scheme, such as primary carcinoma of the lung or mesothelioma. In some cases, it may take up to 40 years between the original exposure and the linked disease. Given that length of time, noble Lords will not find it surprising that by the time diagnosis is made, the employer responsible may no longer exist. As a result, sufferers and their dependants can find it very difficult to undertake a successful civil action to obtain compensation and the 1979 Act was introduced to help such people.

The mesothelioma lump sum payments scheme was introduced under the last Government in 2008 to provide compensation to people who contracted mesothelioma but were unable to claim compensation under the 1979 Act because their exposure to asbestos was not due to their work or because the asbestos exposure was simply unidentified. Noble Lords may recall the case of the unfortunate woman who contracted mesothelioma from washing her husband’s work clothes. The 2008 scheme means that payments can be made urgently to mesothelioma sufferers at their time of greatest need. If a sufferer dies before making a claim, a 2008 scheme payment can be made to a dependent.

The annual incidence of mesothelioma continues to increase. There are currently over 2,300 deaths from the disease in men and women each year. When other asbestos-related deaths—mainly lung cancer and asbestosis—are added, it is likely that there are now over 4,000 asbestos-related deaths in total each year. While it is always difficult to forecast exact peaks, the latest available information suggests that mesothelioma deaths in men will continue to increase to a peak of around 2,100 deaths in 2016. It is more difficult to predict when deaths in women will peak but it is likely that this will occur after the peak in men, albeit at a lower level.

Payment levels under the 1979 Act scheme are based on the level of the disablement assessment and the age of the sufferer at the time that the disease is diagnosed. The highest amounts are paid to those who have been diagnosed at an early age and with the highest level of disablement. Under the 2008 scheme, as well as under the 1979 Act, all mesothelioma disablement assessments are made at the 100 per cent rate. This means that for someone suffering from mesothelioma the amount of payment under both schemes will vary only according to the age of the person at the time of diagnosis.

Over 50 per cent of claims under the 1979 Act are made in respect of mesothelioma, a particularly unpleasant and fatal disease, caused almost exclusively by exposure to asbestos. Those diagnosed with mesothelioma usually have a short life expectancy, generally between 12 and 18 months. It is common that the sufferer is severely disabled very soon after diagnosis. I am sure we all agree that no amount of money can ever compensate sufferers or their families for the damage caused by these diseases, but it is right that they receive financial compensation, and as quickly as possible. These regulations help ensure that the level of government compensation provided by both schemes maintains its value. I commend the increase of the payment scales to noble Lords and ask approval to implement them.

[Lord Avebury]

My Lords, I am most grateful to the Minister for his careful explanation of these two orders. There are one or two questions that I would like to put to him. First, he says that there is no statutory obligation to continue uprating these payments at the level that they have been in the past. I wonder what guarantee there is that, in the future, the percentage upratings that we are looking at now will continue to be maintained. If there is not any statutory obligation, how can the victims of these awful diseases come to the expectation that they will not be left in the lurch if there is some financial emergency and that, as with many other poor and vulnerable people, they will not be made to contribute some of the miserable pittance that they are awarded towards the repayment of the deficit that we all know is constantly in the Government’s mind?

My noble friend pointed to the legacy of these frightful diseases, which may continue to emerge for 40 years after the sufferer has first been in contact with the substance concerned, whether it be industrial dust or, in the case of mesothelioma, asbestos. Have the Government formed any estimate of the total cost of dealing with these diseases in terms of the compensation that will become available over the long tail that we expect to develop in the future? I was pleased to note from his speech that this peak will be reached for men in 2016, and for women a little bit later, but we know that thereafter sufferers will continue to emerge and some 60,000 of them are expected to be discovered at some point in the future.

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[Lord McKenzie of Luton]

My Lords, I thank the noble Lord, Lord De Mauley. I know he has stepped into the breach at fairly short notice because the noble Lord, Lord Freud, is unwell. We send our best wishes to him. I thank noble Lords who have contributed, particularly my noble friend Lord Jones. He is absolutely right; we should not see these orders each year just as a technical uprating. They are a chance to reflect on their history and what they mean. My noble friend, together with the noble Lord, Lord Wigley, were, in my noble friend’s terms, participants in and witnesses to what went on in those communities. People of my generation, brought up in the relative safety of the south-east, only read about it and listened to it. It is a good opportunity to remind ourselves what we owe to those mining and quarrying communities.

As the Minister said, there is no statutory obligation to uprate these compensation amounts so I would say that a CPI uprating—so far as it goes—is welcome. Had the noble Lord, Lord Freud, been in post, we might have engendered a bit of a debate about the difference between RPI and CPI and which is the more robust statistic. I will, however, forgo that on this occasion. I am sure that the Minister will be grateful for that. We aligned the payments under the 2008 Act with the 1979 Act a couple of years ago; they were not aligned when they were introduced. That was one aspiration. There was another aspiration to narrow the gap between the amounts due to claimants and the amounts due to dependants. I should be grateful if the Minister could tell us whether that is still an aspiration of the Government.

As we have heard, the concept is that the 2008 scheme was to be funded out of compensation recoveries—compensation from civil cases. Therefore, can we have an update on the levels of recovery; what percentage of 2008 scheme payments are covered by this; and what the estimate over the CSR period is? I follow the noble Lord, Lord Avebury, on the question that he posed on behalf of the noble Lord, Lord Alton—and, indeed, the noble Lord, Lord Wigley—about how this works with changes that have been made to the Legal Aid, Sentencing and Punishment of Offenders Bill. My understanding—I have not followed the intricacies of that Bill in great detail—is that there are government concerns about conditional fee arrangements being exploited, and that 25 per cent of success fees will, in future, be met out of the compensation payments. I think that is the proposition.

Therefore, my question to the Minister is: what will be the impact on the compensation recovery arrangements that help to fund the 2008 scheme if there will be that reduction in compensation recoveries? Presumably that will impact, at some stage, on the levels of compensation that will be due under the 2008 scheme. Indeed, it depends on the relationship between the overall compensation in individual cases and the level of compensation under the 2008 Act scheme, but it adds a challenge for the Government. Why should they go down that path in these circumstances as, in a sense, they risk taking the hit on these deductions themselves? I should be grateful if the Minister would give us a read across to what is happening in that legislation and what it means for compensation levels going forward.

I hope that the Minister gave us the projected numbers and what was going to happen in the upcoming years. We have discussed progress on the Employers’ Liability Tracing Office—the ELTO—before, which I think was, again, the point being pursued by the noble Lord, Lord Avebury. We know that the noble Lord, Lord Freud, has previously, expressly taken a direct interest in that. The FSA consultation proposes that the ELTO cover all employer liability policies—entered into, renewed or for which claims were made—on or after 1 November 1999. However, the FSA policy statement requires only the recording of new policies— I think from April 2012. Therefore, what is the progress on back-filling the pursuit of those policies to 1999? Clearly, people’s ability to trace those policies is particularly important. We know the challenges posed, as the Minister and others have expressed, by long latency of the conditions with which we are faced.

I also ask the Minister whether any progress has been made on ELI, which will be the insurance bureau of last resort—a parallel to the Motor Insurance Bureau—so that when policies could not be traced there would be a collective compensation pot. There was a consultation document on that in, I think, the first quarter of 2010. I sought an update on progress before and would be grateful if the Minister could let us know the current position.

My noble friend Lady Donaghy talked in particular about her work in looking at the construction sector, and the importance of and the debt we owe to the Health and Safety Executive. We are at the moment in a rather ironic situation where the Government are consulting on asbestos regulations because the Commission has challenged the status quo about whether that was an effective translation of what it required. We have a Government now, thankfully I think, supporting the previous Government’s position on this. We usually hear that the EU is all about gold-plating and the UK Government follows suit.

I also take the opportunity to ask about the HSE’s resources. In particular what is happening on the proposed charging regime for the field operations directive, which was an integral part of its funding arrangements for the current CSR period? We are, as I say, indebted to the HSE for the tremendous work it does. My noble friend Lord Jones made the point that 20 years ago people did not realise that asbestos was dangerous. They played with it. It was a source of amusement. The research, work and preventive stuff that the HSE does is a route to making sure that history does not repeat itself, although we are still living, as are those tens of thousands of people the noble Lord referred to, with the challenges of the past.

Finally, given that these orders are all about the risks that workers and their families take, and the terrible suffering that comes from these conditions, can I just put it in the context of what is now International Workers’ Memorial Day? It was officially recognised a couple of years ago but has been marked in one way or another for many years. Can the Minister give us an update on what the Government are proposing to do to mark and acknowledge that day? Perhaps in closing I can remind him of the slogan that goes with that:

“Remember the dead and fight for the living”.

[Lord De Mauley]

Perhaps I can start by thanking all noble Lords who have participated in this brief debate for the sensitive way in which they have done it. As we have discussed, we are talking about some very terrible diseases and these things need to be approached in this way.

A large number of questions have been asked. Let me see how many of them I can tackle now. If I cannot, I hope noble Lords will forgive me if I write afterwards. My noble friend Lord Avebury pointed out that there was no statutory obligation to maintain the level of payments and asked what the Government’s position was. I think the noble Lord, Lord McKenzie, also referred to that. The Government have no plans to make any changes to these two schemes. We review them regularly to ensure they remain well targeted and we will continue to consider uprating as appropriate.

My noble friend asked what is being done to support people who need to trace employers’ liability insurance. I appreciate that the Government’s response to the consultation is taking longer to publish than many had hoped. However, the issues raised are complex and we remain in active discussions with all the stakeholders to make sure we get this right. We are still carefully considering all the issues and we will bring forward our proposals in due course.

My noble friend asked whether there was a long-term estimate of the cost over what he described as the “long tail”. We have not estimated the cost to the Government of these two schemes over the long tail. If I can find anything out from my noble friend, I will write to him, but I am not aware that we have made estimates. He asked about the possibility of extending the 1979 Act where diseases cannot be traced back to employers. I have to inform the Committee that there are no plans to extend the coverage of the 1979 Act to those whose disease was not covered by their employment. The 2008 scheme covers those people who contracted mesothelioma outside work, but mesothelioma is a special case because of the very short life expectancy of sufferers.

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[Lord Avebury]

Could I ask the noble Lord a question put to him earlier? As he knows, there is still a large gap between the payments to living victims of mesothelioma and those made to their estates after they have died. For example, the payment to a sufferer aged 67 is £17,416, while the payment to his dependants if he dies at that age is only £7,915. There is still an enormous gap between these two figures. There was a commitment by the previous Government to reduce and, over a period, to eliminate this differential. Could my noble friend say whether it is the Government’s policy to continue with that diminution of the gap and, if so, whether there is any date by which they hope the process will be completed?

[Lord De Mauley]

My Lords, as I have made clear, there is an issue about the availability of resources. We think it is very important that they are targeted principally on sufferers of the disease, but we recognise the plight of dependants. That is why, under the previous Government, dependants’ amounts were increased by up to £5,000. If I can add to that from my notes I will do so, but I will possibly do so in writing, if I may.

When I came to the points of the noble Lord, Lord McKenzie, I meant to thank him for his good wishes to my noble friend Lord Freud. I will send on his message. Closely allied to that is my thanks to him for letting me off the hook on a debate about CPI and RPI.

He also asked about progress on the employers’ liability insurance bureau. We understand the urgency of the situation. After all avenues have been exhausted, injured people are still unable to find an insurer to claim against. We are continuing to work hard to see what can be done for them, but I am not in a position to go further than that today.

The noble Lord, Lord McKenzie, asked about compensation recoveries forecast over the CSR period. We estimate compensation recoveries for 2012-13 as being in the region of £21.8 million. That is for both schemes. I will write with further information if I can find it.

[Lord McKenzie of Luton]

Can the noble Lord tell me what the total estimated projected cost for the 2008 compensation scheme is for the same year? I am just trying to identify the gap between recoveries and the amount.

[Lord De Mauley]

I may be able to come to that in a moment. The noble Lord asked about the HSE charging regime. Unfortunately, I am not able to answer him now but I will write with that information. He asked about our plans for Workers’ Memorial Day. Ministers are considering what official action would be appropriate for 2012. However, the focus of the day, as I understand has always been the case, should be on local events organised by individuals and organisations to commemorate those who have died, been injured or made ill through their work.

[Lord McFall of Alcluith]

If the Minister could make a positive statement that the memorial day is a good day, that would help enormously. When I was the Member of Parliament for West Dunbartonshire, we had that event for four or five years. It is important that a message on that goes out from the Government. Also, given the Scottish experience, will the Minister consider what has happened in the Scottish Parliament regarding relatives so that the sufferers do not have the iniquitous choice of having to take their case through court or die before their relatives can get compensation? Further, can the Minister ensure that the court cases are speeded up? There was a huge problem in Scotland until the Lord President acceded to the request to have a designated judge for these cases who would become familiar with the procedures and speed them through the courts, thereby having a more humane way of compensating for this terrible disease.

[Lord De Mauley]

I thank the noble Lord for that intervention. I agree with him and I should like it to go on the record that I think it is a good thing that such a day is marked in an appropriate way. As regards his comments about what is going on in Scotland, perhaps I may take them back to the department. That is a helpful suggestion and I thank him for it.

The noble Lords, Lord McKenzie and Lord Wigley, referred to the legal aid Bill and a perceived conflict between the two situations. General damages for things such as pain, suffering and loss of amenity will be increased by 10 per cent. The success fee that the lawyer can charge will be capped at 25 per cent of the claimant’s damages, excluding any damages referable to future care or future losses. This will help to protect the claimant’s damages, as well as any recoveries that the Government might make. Further to that, abolishing the recoverability of success fees and “after the event” insurance premium is the most important element of the reform package for civil litigation and represents a fundamental change to conditional fee agreements. This change will mean that claimants have an interest in the costs being incurred on their behalf, and it will introduce proportion and fairness to the current conditional fee arrangement regime. I appreciate that this is a sensitive area and we will be considering its effect.

[Lord McKenzie of Luton]

I am sorry to press the noble Lord but this is something which is quite current given that there is going to be a debate tomorrow on the Bill. Have I correctly understood what the noble Lord has said? Do the Government recognise that these proposals mean that the compensation of recoveries is going to be reduced by the effect of these fees, or are the fees otherwise going to have to be met out of the 2008 compensation?

[Lord De Mauley]

I shall have to get back to the noble Lord on that. I appreciate that we are on a rather tight timetable and will do what I can. He asked about the cost of both schemes for next year and I can give him a figure of £53.1 million.

[Lord McKenzie of Luton]

Perhaps the noble Lord will split that for me between the two schemes.

[Lord De Mauley]

It is distinctly possible but I am not sure that I can do it now. The noble Baroness, Lady Donaghy, asked what can be done to improve the public profile of these diseases and she made an important point. Building on the success of the hidden killer campaign, which targeted trades people who are the group of workers most at risk from exposure to asbestos, the HSE continues to warn against the dangers of all types of asbestos, working in partnership with unions, industry, suppliers, training providers and victim support groups. A recent example is the training pledge whereby organisations providing asbestos awareness training volunteered to supply more than 13,500 hours of free training for trades people who may come across asbestos in their day-to-day work. The noble Baroness is right. We are still discovering asbestos today.

The HSE is currently considering options for a further campaign along the lines of hidden killer. However, that will depend on the availability of funding, and decisions on what such a campaign might entail have yet to be made. I thank the noble Lord, Lord Jones, for his contribution, which brought the whole matter to life for me and helped us to see how terrible these diseases are.

As regards splitting the figure as required by the noble Lord, Lord McKenzie, under the 2008 scheme the figure is £9.2 million, and under the 1979 scheme the figure is £43.9 million.

[Lord McKenzie of Luton]

Does that mean that the recovery levels are double the 2008 compensation payment allowance?

[Lord De Mauley]

I shall have to write but will do so as quickly as I can. As regards any other questions raised by noble Lords, I will write what is becoming an expanding letter. I thank all noble Lords who have participated. As I hope I have emphasised, the Government recognise that these two schemes perform an important role. I commend the uprating of the payment scales and ask for the approval of noble Lords to implement them.

Motion agreed.