Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) (Amendment) Regulations 2013

Lord Wigley Excerpts

Thursday 7th March 2013 Grand Committee

[The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)]

My Lords, I beg to move that the Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) (Amendment) Regulations 2013 be considered. I shall speak also to the Mesothelioma Lump Sum Payments (Conditions and Amounts) (Amendment) Regulations 2013. I am required to confirm to the Committee that these provisions are compatible with the European Convention on Human Rights, and I am happy to so confirm.

These two regulations increase by 2.2% the lump sum amounts payable under the Pneumoconiosis etc. (Workers’ Compensation) Act 1979 and the mesothelioma scheme set up by the Child Maintenance and Other Payments Act 2008. These increased payments will be paid to those who first satisfy all the conditions of entitlement on or after 1 April 2013.

There is no legislative requirement to review the level of payments in these two schemes as they are separate from the main social security benefits uprating provisions. However, the Government have agreed to increase the amounts payable for 2013 using the same 2.2% rate that is being applied to industrial injuries disablement benefit and other disability benefits under the main uprating provisions.

The draft pneumoconiosis regulations also remove references within the Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) Regulations 1988 that are no longer relevant. The references related to the two schemes that covered those whose industrial accident or disease was as a result of work before July 1948 and who did not qualify under the main industrial injuries disablement benefit scheme. These pre-July 1948 schemes—the so-called “old schemes”—were abolished under the Welfare Reform Act 2012, with all existing cases and new claims transferred to the industrial injuries disablement benefit scheme. No one lost out as a result of this change and, in fact, the majority of people received an increase of up to £5 per week.

The two schemes before us today are important in compensating those people who unfortunately suffer from diseases as a direct result of being exposed to asbestos or to one of the other listed causes of the diseases covered by these schemes. Because of the very long latency period—in some cases stretching back decades—between the time a person was exposed to asbestos and when the symptoms of the disease become apparent, a successful civil damages claim may be difficult to achieve.

These two compensation schemes provide payments on a no-fault basis and therefore aim to ensure that sufferers can be compensated while they are still able to benefit from it. In some cases, civil litigation may still be pursued, but these payments allow a payment to be made irrespective of the outcome of the case. I will briefly summarise the specific purpose of each of these lump-sum compensation schemes.

The Pneumoconiosis etc. (Workers’ Compensation) Act 1979—referred to as the 1979 Act—applies to those who have contracted one of the five dust-related respiratory diseases covered by the scheme through their occupation, who are unable to claim damages from employers after they have gone out of business and who have not brought any action for damages. It can be paid only if someone would have been entitled to industrial injuries disablement benefit for the disease in question. The five diseases are diffuse mesothelioma, bilateral diffuse pleural thickening, pneumoconiosis, byssinosis and primary carcinoma of the lung if accompanied by asbestosis or bilateral diffuse pleural thickening.

The 2008 mesothelioma lump-sum payments scheme was introduced to compensate those who contracted mesothelioma but were unable to claim compensation for that disease under the 1979 Act. It covers those whose exposure may have been due to environmental causes, instead of being a result of their work, and it means that sufferers can get a payment quickly to meet their needs. Under both schemes, dependants can make a claim when the sufferer died before being able to do so.

The rates of payment under the 1979 Act are based on the percentage level of the disablement assessment and the age of the sufferer at the time the disease is diagnosed for a claim to industrial injuries disablement benefit. The earlier the age of the sufferer at diagnosis and the higher the level of disability, the higher the level of payment that is made. All payments as a result of contracting mesothelioma are made at the 100% rate of disablement—the highest rate available. The 2008 mesothelioma scheme mirrors this as all payments under that scheme are made at the 100% rate of disablement, variable only by the age of the sufferer at the time of diagnosis.

Noble Lords may like to know how many claims we received and the amounts paid out under these schemes. In the last full year from April 2011 to March 2012, 2,750 people received payments under the 1979 Act at a cost of £37.7 million, and 480 people received payments under the 2008 scheme at a cost of £9.3 million. The total amount of compensation paid out under both schemes during this period amounted to £47 million.

In the current financial year from April 2012 to September 2012, 1,610 people received payments under the 1979 Act, amounting to £21.9 million, and 250 people received payments under the 2008 scheme, amounting to £4.9 million. The total compensation paid in the first six months of this year amounts to £26.8 million.

The forecast for next year is that 3,100 people will be paid under the 1979 Act, and 500 people will be paid under the 2008 scheme. The estimated amount of compensation likely to be paid is £53.7 million.

Over 60% of 1979 Act payments made are as a result of contracting mesothelioma—a terrible and fatal disease caused almost exclusively by asbestos exposure. People diagnosed with mesothelioma will usually have a short life expectancy of around nine to 13 months, and it is likely that they will become severely disabled shortly after diagnosis.

I can advise noble Lords that the number of deaths from mesothelioma in Great Britain continues to rise. In 1968, there were 153 deaths from mesothelioma. The disease has a long latency, taking decades for symptoms to become apparent. Today, more than 2,300 men and women each year are dying from the disease. The information currently available suggests that mesothelioma deaths in men will plateau at around 2,100 by 2016. Accepting that accurate predictions are difficult, the current thought is that deaths in women will peak at a later period than they do in men, but the number of deaths will be lower. The total number of deaths will likely be around 4,500 each year if we include other asbestos-related deaths such as asbestosis and lung cancer.

It is clear that the government schemes we are debating today provide valuable help for people suffering from mesothelioma. However, the Government are planning to do more to help those unfortunate people who have contracted the disease. I am able to tell the Committee that the Government are working with the Association of British Insurers and other stakeholders to develop a scheme to help mesothelioma suffers who cannot trace an employer or insurer against whom they can make a claim for damages.

My noble friend Lord Freud announced in July last year that the Government would introduce legislation when parliamentary time allowed. Until such time as the Government can introduce legislation, we are unable to provide noble Lords with specific details of the scheme. However, the Government’s intention remains that anyone diagnosed on or after 25 July 2012 who meets the eligibility requirements will be able to bring a claim against the mesothelioma support scheme.

These regulations increase the level of help provided by the Government through these compensation schemes to support those people unfortunate enough to have contracted these diseases, as well as their dependants. Of course, we are all aware that no amount of money will ever compensate individuals and families for their suffering and loss caused by these diseases, but those who are suffering rightly deserve some form of monetary compensation, and it is only right that they receive it before it is too late.

I commend to noble Lords the increase of the payment scales and ask for approval to implement them.

[Lord Wigley]

My Lords, I am grateful to the Minister for outlining in some considerable detail the statistics relating to these two schemes. I will come back to a question that I would have put to him had I been able to intervene earlier. The regulations under consideration today make provision, as has been outlined, for the uprating of the amount payable to sufferers of pneumoconiosis and mesothelioma in line with inflation. As the Minister reminded us, there is in fact no statutory obligation to do this. However, the previous Government did so and I am very glad that the present Government are doing likewise, so that the value at least comes somewhere close to keeping up with inflation.

A lump sum is payable under the Pneumoconiosis etc. (Workers’ Compensation) Act 1979 for sufferers of lung diseases including, as the Minister said, byssinosis, pneumoconiosis—including asbestosis—diffuse pleural thickening, asbestos-related lung cancer and mesothelioma. When the Minister quoted figures relating to the past year, I was wondering in that context whether, under the 1979 Act payments, he can differentiate between those relating to mesothelioma and those related to the other sources of lung disease which qualify under that Act.

The 1979 Act was one in which I and my party, Plaid Cymru, had some considerable involvement, as some colleagues may recall. That was because the legislation had considerable significance for the slate-quarrying industry, as well as for some aspects of coal mining. I was also involved in issues relating to mesothelioma associated with working with asbestos, as a number of cases in the old Ferodo factory in Caernarvon were arising then. There is still a tale that leads out of that period. More recently, I have become quite alarmed by the potential number of mesothelioma sufferers from a range of industries, particularly construction industries. Even among those who have been working in schools, including teachers, some of the answers received indicate the worry that may arise in that context.

None the less, the payment is made to claimants who are awarded industrial injuries disablement benefit and is geared to the age of the claimant. If the claimant dies before submitting a claim, dependants of course receive a lower rate of payment. This can lead to increasing stress on the very individuals who are ill, who feel forced to rush through their claims to maximise the compensation available to their families. If these people are too sick to make a claim before their death, their families will be left with the lesser amount.

It is now widely accepted that the differential payments between the living claimants and the dependants of those who have died is, frankly, not fair. The annual uprating of these payments is debated each year in both Houses, and in 2010, Committees from both places agreed that this was especially pertinent to mesothelioma cases, where claimants often pass away shortly after diagnosis. I think the Minister acknowledged that in his opening speech. This means that their families will not have had sufficient time to submit a claim prior to their relative’s death. Both Houses thus decided in 2010 that the Government should reduce the difference between payments that year, with the eventual aim of eliminating the differential. Despite this commitment, since 2010 no ground has been made on ending this inconsistency, as I understand it. Bearing in mind that dependency claims represented only 8% of all claims in 2011, and only 5% of the total cost of all claims, surely the Government can see the expediency of ending this anomaly.

Ending the differential would also mean extending the upper age limit for dependency payments from 67 and over to 77 and over. This would bring payments in line with those for in-life claimants—yet another inconsistency that unfairly disadvantages the families of individuals who, for the most part, were too ill to make claims before their death. I urge the Government to commit to finally ending this anomaly. The same should apply to the scheme set up under the Child Maintenance and Other Payments Act 2008, which provides for a lump sum to be paid to mesothelioma sufferers who did not qualify for payment under the 1979 Act, due to being self-employed or having not had occupational exposure. With this scheme, too, dependants of those who died before submitting a claim are paid a lower rate.

Claimants will be at a further disadvantage due to a mistake which the Department for Work and Pensions made in 2010 in calculating the dependency payments for all ages at 50% plus disablement. As a result of this mistake, the department has overpaid since 2010 and, as I understand it, is now in the process of correcting that mistake. The result of all this is that payments have been cut from £7,915 in 2012 to £7,180 in 2013. So as well as failing to equalise the in-life and dependency payments, the Government have also reduced the amount available for dependants in mesothelioma cases because of this mistake. I understand that mistakes have to be corrected. None the less, it has that effect. Surely the Government accept that this position is not ideal.

Before concluding, I ask whether in mesothelioma cases the Government can make every effort to speed up decisions and payment, for the obvious reasons on which I do not need to expand. Perhaps I may also flag up that there is grave misgiving that using the portal process will prove to be wholly unsuitable for complex mesothelioma cases and is unlikely to speed up decisions in such cases. I would be very grateful for the Minister’s response on these important aspects of pneumoconiosis and mesothelioma issues covered by the two orders before us today.

--- Later in debate ---

[Earl Howe]

My Lords, I am grateful to all noble Lords who have spoken. In answer to the noble Lord, Lord McKenzie, as to why a Health Minister is responding, I am, at least for this afternoon and for the first time, proudly wearing my DWP hat in the absence of my noble friend Lord Freud, who is unavoidably on government business abroad. I should not say abroad: he is in Scotland.

I shall begin with the statistics, which have prompted questions from a number of noble Lords. The noble Lord, Lord Wigley, asked about payments made under the 1979 Act related to mesothelioma, as opposed to other diseases. I do not have the actual figures to hand, but I can say that over 60% of payments made under the 1979 Act are in relation to mesothelioma, and the rest to other conditions. My noble friend Lord Avebury asked whether I could supply an estimate of the net cost of payments over the next 10 years, including equalisation, if that were to occur. I shall gladly write to my noble friend; it would not be right for me to come out with a figure this afternoon, because it is likely to be incorrect.

My noble friend also asked me for a forecast of payments from 2013 to 2016. We have not formally forecasted figures for these schemes, but the split for the last financial year, 2011-12, is: under the 1979 Act, 2,480 sufferers and 270 dependents claimed; and under the 2008 scheme, 450 sufferers and 30 dependents claimed.

The noble Lords, Lord Wigley and Lord McKenzie, asked me to comment on the proposal that payments to dependents and sufferers should be equalised. First, I share the concerns about the plight of dependants. I understand the difficulties that families face when their loved ones suffer illness. That is why the department is always working to improve the processes to ensure that claims are dealt with as quickly as possible: as the noble Lord rightly said, sometimes sufferers and dependants struggle to make claims before the person dies. At the same time, we need to fulfil our obligation to ensure that all claims are appropriate and legitimate. Ministers have to balance competing priorities, and because of the current financial situation, it is our duty to ensure that all available resources are well targeted. As around 85% of payments made under these schemes are paid to those who are suffering from the disease, I believe that they are currently rightly targeted on the sufferer to help them and their families to cope while living with the stress that illness inevitably brings.

The noble Lord, Lord McKenzie, asked me about the disparity of payments and when an assessment was last made. I simply say to him that we keep these schemes under review. While in the current economic situation we have no plans to make changes to the scheme at present, naturally we will revisit this issue at regular intervals.

The noble Lords, Lord Wigley and Lord McKenzie, and my noble friend Lord Avebury referred to the error that caused some people to have been overpaid lump-sum payments and they asked what the situation was regarding that overpaid amount. Before last year’s debate, officials in the department identified an error in the rate tables for a specific subset of dependants resulting in a dependant receiving a higher award than a sufferer would have received. Even though this error would apply to only very few people, it did not reflect the policy intention that available resources should be focused on the sufferers of the disease rather than dependants. Consequently, the position was rectified and the amended regulations were debated and approved last year. However, an operational error was made to the effect that the revised figures were not input into operational systems and this resulted in a number of dependants being overpaid. The department is currently considering how to deal with these cases, and I am advised that no decision has yet been taken.

I understand the point made by the noble Lord, Lord McKenzie, concerning the amount of compensation recovery that the department receives in relation to payments made under the 1979 Act and the 2008 scheme, and the suggestion that this should be used to offset the cost of increasing the number of dependant payments. The total amount of compensation recovered from civil compensation claims in respect of payments made under both schemes exceeds the cost of making the payments under the 2008 scheme. However, these recoveries are also used to offset the cost of payments made under the 1979 Act, which still results in an overall cost to the department of making these valuable lump-sum payments. I have some figures in front of me on the amounts recovered in recent years. The noble Lord may like to note that in 2010-11 the amount was £18.4 million, and in 2011-12 it was £21.3 million, which is considerably less than the overall outlay made by the department.

The noble Lord, Lord Wigley, asked about the use of a portal. I am advised that the Ministry of Justice announced on 18 December last year that it would consult on the use of a portal and other related matters, and we expect this consultation to commence this spring.

The noble Lord, Lord McKenzie, asked me about clinical trials for mesothelioma. The British Lung Foundation has undertaken work looking at mapping the genome. We continue to engage with all research organisations on this. If I have any additional information to give him on this having consulted my officials in the Department of Health, I shall be happy to send it to him. He also asked me about the pre-1948 scheme and whether it is correct that no one will lose out as part of the transition from one scheme to another. That is correct. Where any existing pre-1948 payments were lower than the IIDB payments, they were brought up to a higher level at that time.

[Lord Wigley]

I am very grateful to the Minister for going through these matters in such great detail. Am I not right that the pre-1948 cases could also receive lump-sum payments? He referred to £5 a week, which of course is a Revenue payment. Is there any danger of people losing out on the entitlement to lump sums?

[Earl Howe]

I am advised from the highest authority that the answer to that question is no. If I can supply the noble Lord with any further information, I would be happy to do so. The noble Lord, Lord McKenzie, asked me whether I could give him any further information on the progress for the new meso scheme. The Department for Work and Pensions is actively working with stakeholders, including the Asbestos Victims Support Group to develop this scheme. Unfortunately, I am not in a position to say anything ahead of the gracious Speech—but we might or might not hear something to our advantage on that occasion.

However, I can say that we fully understand that people who develop diffuse mesothelioma as a result of their negligent exposure to asbestos at work and who are unable to trace a relevant employer or their employers’ liability insurance policy to claim against would be eligible to claim from this scheme. We appreciate the urgency of the situation. As I have mentioned, eligible claimants diagnosed with diffuse mesothelioma from 25 July 2012 onwards will be able to receive a payment once the scheme commences.

I am aware that there may be one or two questions I have not been able to answer, some of which I have already referred to. However, I hope that in the main I have covered the issues raised and I commend the regulations to the Committee.