Mesothelioma Lump Sum Payments (Conditions and Amounts) (Amendment) Regulations 2019

Baroness Buscombe Excerpts

Thursday 14th February 2019 Lords Chamber

Moved by

[Baroness Buscombe]

That the draft Regulations laid before the House on 15 January be approved.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

My Lords, I will speak also to the Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) (Amendment) Regulations 2019. I am required to confirm to noble Lords that these provisions are compatible with the European Convention on Human Rights and I am happy so to do.

These statutory instruments will increase the value of lump-sum awards payable under the Pneumoconiosis etc. (Workers’ Compensation) Act 1979 and the diffuse mesothelioma scheme, which was set up by the Child Maintenance and Other Payments Act 2008. These two schemes stand apart from the main social security benefits uprating procedure. However, through these statutory instruments we will increase the amounts payable by the September 2018 consumer prices index rate of 2.4%. This is the same rate that is being applied to industrial injuries disablement benefit and certain other disability benefits, and under the main social security uprating provisions. These new amounts will be paid to those who satisfy all the conditions of entitlement, for the first time, on or after 1 April 2019.

Turning to the purpose of the lump-sum schemes, the Government recognise the great suffering of individuals and their families as a result of exposure to asbestos or certain other forms of dust. They may be unable to bring a successful claim for civil damages, due mainly to the long latency period of their condition, but can still claim compensation through these schemes. Although improved health and safety procedures have restricted the use of asbestos and provided a safer environment for its handling, the legacy of its common use is still with us. That is why we are ensuring that financial compensation from these schemes is available to those affected.

I will briefly summarise the specific purpose of the two compensation schemes. The Pneumoconiosis etc. (Workers’ Compensation) Act 1979—which for simplicity I shall refer to as the 1979 Act scheme—provides a lump-sum compensation payment to individuals who have one of five dust-related respiratory diseases covered by the scheme, and who are unable to claim damages from employers which have gone out of business and have not brought any action against another party for damages. The five diseases covered by the 1979 Act scheme 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, which I will refer to as the 2008 scheme, was introduced to provide compensation to people who contracted diffuse mesothelioma but were unable to claim compensation under the 1979 Act because, for example, they were self-employed or their exposure to asbestos was not due to their work. But the 2008 scheme, as many noble Lords know, allows payments to be made quickly to people with diffuse mesothelioma at their time of greatest need. Under both schemes, a claim can be made by a dependant if the person with the disease has died before being able to make a claim.

Payments under the 1979 Act scheme are based on the age of the person with the disease and their level of disablement at the time they are diagnosed. The highest amounts are paid to those diagnosed at an early age and with the highest level of disablement. All payments for diffuse mesothelioma under the 1979 Act scheme are automatically made at the 100% disablement rate, the highest rate of payment, reflecting the seriousness of the disease. Similarly, all payments under the 2008 scheme are made at the 100% disablement rate and based on age, with the highest payments going to the youngest people with the disease. In the last full year, April 2017 to March 2018, 3,680 people received payments under both schemes, totalling just under £50 million.

I know that in previous debates on increasing the value of these lump sums, noble Lords have raised the subject of equalising the payments made to dependants who claim after the death of someone who had the disease with those made to people who have the disease and claim in their lifetime. However, I must tell noble Lords that we do not intend to equalise payments. The Government’s view remains that it is most important that the available funding is given to the people with the condition who would most benefit from it. Of course, I fully understand that whole families can be devastated by this disease, but there is still the recognition that they are able to get compensation, even if it is not at the same level. When we have to make such decisions about how we use our limited resources—the taxpayers’ money that is available—we believe it is only right that we target that money by giving it to the people to whom it can make the most difference.

I am aware that the incidence of diffuse mesothelioma is a particular concern of noble Lords. The number of deaths in Great Britain remains at a historically high level. Diffuse mesothelioma has a strong association with exposure to asbestos, and current evidence suggests that around 85% of all mesotheliomas diagnosed in men are attributable to asbestos exposures that occurred through work. Those diagnosed with diffuse mesothelioma usually have a short life expectancy, with many people dying within 12 months of diagnosis. The number of cases currently occurring reflects the long latency period of the disease, which means that 30 years or more can pass from the time of exposure to the disease becoming apparent. The latest available information suggests that there will continue to be around 2,500 diffuse mesothelioma deaths per year before the number of cases begins to fall during the next decade, reflecting a reduction in asbestos exposure after 1980.

I turn to wider improvements in lung health. Although we expect the number of people diagnosed with mesothelioma to begin to fall in the coming years, the Government are well aware that many people will still develop this and other respiratory diseases in the coming years. That is why we are committed to working with our agencies and arm’s-length bodies to improve the lives of people with respiratory diseases.

In the recently published NHS Long Term Plan, the Government have identified respiratory diseases as a clinical priority. The long-term plan sets out how the NHS will take action in a number of areas, including expanding programmes that support earlier diagnosis of respiratory diseases, such as pioneering lung health checks, trialled in the north-west of England; and increasing access to proven treatments such as pulmonary rehabilitation. Furthermore, an NHS England respiratory oversight group has been created, which includes membership from the British Lung Foundation. Additionally, the NHS has been working closely with the Taskforce for Lung Health, which recently published its own lung health five-year plan.

Specifically on mesothelioma, the Government have committed to driving research activity forward. The National Institute for Health Research has led work which resulted in the funding of five studies, the first of which was completed last year. The Department of Health and Social Care is also a key stakeholder in the British Lung Foundation’s mesothelioma research network, which aims to improve outcomes for people affected by mesothelioma. Funding continues to be available from a variety of sources, including the National Institute for Health Research, the Medical Research Council and medical research charities.

Returning to these important regulations, I am sure we would all agree that while no amount of money can ever compensate individuals and families for the suffering and loss caused by diffuse mesothelioma and the other dust-related diseases covered by the 1979 Act scheme, those who have them deserve the monetary compensation that these schemes can offer. I commend the increase of the payment scales for these schemes and respectfully ask noble Lords’ approval to implement them.

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[Baroness Buscombe]

Can the noble Lord repeat the question?

[Lord McKenzie of Luton]

Yes, I should speak up. What are the current levels of recovery under the 1979 Act? Also, what drives the quantum of lump sum payments under that Act, which created the schedule in the first place? We know what the uprating is about.

The annual question posed is about bringing payments for dependants up to the level payable to sufferers. I join those who say it is time that we should do this. Debate in the other place on the regulations was in part conflated with arrangements in the 2012 Act, which I think was introduced only in 2019. Historically, as we know, there were concerns about low levels of compensation made available for these long-latency diseases. Focus for a long while was on the traceability of employer liability policies and, although progress was made, it was considered that in too many cases employers and their insurers were avoiding liability. I understand that this led to the diffuse mesothelioma payment scheme, introduced in 2014 and led by the noble Lord, Lord Freud, who deserves credit for his difficult negotiation with the insurance sector.

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[Baroness Buscombe]

My Lords, I begin by thanking all noble Lords who have contributed to this really important debate. I go straight to the first point raised: why do we not uprate automatically every year or put this on the statute book? I absolutely understand where that question is coming from. It was asked by several noble Lords, most notably the noble Baroness, Lady Thomas. I think it is important to have a debate such as this to remind not only noble Lords but those many people beyond who may not appreciate that this is not something that will end in the short term. Noble Lords have so passionately highlighted the perverse ease with which people can contract these deadly diseases. We still have to be incredibly careful and cautious about the future for those people.

The noble Lord, Lord Freyberg, mentioned new products such as carbon nanotubes, which I confess I know little about. The issue of threats from these new products should be raised through opportunities to help awareness, such as this really good debate. In that way, points can be made and we can raise both awareness and ongoing concerns.

I want to be very clear that, during last week’s debate in the other place, there were calls to put the uprating of the lump sum schemes on a statutory footing with a legal requirement to uprate annually in line with inflation, and my honourable friend the Minister for Disabled People, Sarah Newton MP, agreed to consider the proposal and work with her officials to explore the options. I want to set the record straight because, with great respect to the noble Lord, Lord Freyberg, I think I am right in saying that, although he said that my honourable friend said that she would make this change, she in fact just agreed to consider it.

I will do my absolute best to respond to the number of questions asked by noble Lords as fully as I can. Several references were made to the Health and Safety Executive, with which we have a brilliant working relationship and whose work is instrumental in looking at threats from new products. The question was asked what we and the Health and Safety Executive are doing to raise awareness of asbestos. The HSE health priority plans set out three strategic priorities for our work on occupational health going forward, the core focus of which concerns work-related stress, musculoskeletal disorders and occupational lung disease—including the risks associated with asbestos. Delivery of the OLD strategy includes holding a,

“National Summit to raise the profile of occupational lung disease”,

and,

“establishing and facilitating a new Healthy Lung Partnership … to provide direction and coordinate stakeholder activity on occupational lung disease”.

Following the asbestos awareness campaign between October 2014 and March 2015, the Health and Safety Executive continues to make a wide range of information freely available through its website. Further specific awareness-raising activities may be considered in future, and helping at-risk workers to recognise that asbestos is relevant to them and their work, encouraging them to seek reliable information about how they can protect themselves, and encouraging and enabling safer work with asbestos through behavioural change is always at the front of our mind.

Like other noble Lords, I pay tribute to the brilliant ongoing work of the British Lung Foundation in research, clinical trials, supporting research into lung health and recognising some of the difficult cases raised today.

The noble Baroness, Lady Thomas, asked specifically what the Government are doing to remove remaining asbestos in schools, which I believe noble Lords will have thought about on a personal level. The Department for Education takes this issue seriously and is committed to supporting schools, local authorities and academy trusts in fulfilling their duty to manage asbestos safely. It is the Government’s aim to remove all asbestos from schools as more school buildings are replaced and refurbished over time. We have taken significant steps in recent years to strengthen schools’ approaches to managing asbestos, including publishing refreshed guidance for schools in 2017 and launching an assurance process earlier this year to understand the issue better. Expert advice, again from the Health and Safety Executive, is clear that as long as asbestos-containing materials are undamaged and not in locations where they are vulnerable to damage, they should be managed in situ.

However, we are clear that asbestos cannot be managed effectively in situ. It should be removed; we have provided significant funding for that purpose. Indeed, the department has invested £5.6 billion in maintaining and improving the schools estate since 2015, enabling local authorities, academy trusts and voluntary-aided schools to maintain their school buildings. This is all part of the Priority School Building Programme, with its additional investment of £4.4 billion. Asbestos is being removed or encapsulated where appropriate as part of these investment programmes.

The noble Baroness, Lady Thomas of Winchester, and the noble Lord, Lord McKenzie, asked about universal credit. Broadly, the same rules will apply to universal credit as under current working-age income-related benefits. For someone with a disease who receives a lump-sum payment under either of these schemes and also receives an income-related benefit, the payment is treated as capital, not income, and is disregarded for a 52-week period. After that time, if the money has been placed in a trust fund, the capital will be disregarded, as will any income from the fund. If the payment is made to a working-age dependant, the normal capital rules apply, meaning that if the dependant’s total capital is more than £6,000, their income-related benefit may be reduced. If they have capital of £16,000 or more, their benefit entitlement will end.

A question was also asked about why dependants who claim payments under either of these lump-sum schemes are paid less than if the person with the disease had made a claim in life. As I said in my opening speech, the main intention of these schemes is to provide financial support for people living with certain diseases and help them to deal with the issues that illness brings. As around 90% of payments made under both schemes are paid to people with a disease covered by them, we believe that resources are rightly targeted. For example, in 2017-18, 3,420 payments were made to people with those diseases and 260 to dependants.

The calculations for dependants are complex and depend on a number of factors, such as the age of the person with the disease, the length of time between diagnosis and death and whether the person died from the disease or from some other cause. In 2017-18, across both schemes, 3,420 awards were made to people with a disease, averaging £13,783 each. For the dependants, as I said, 260 awards were made, but they averaged £8,462. However, this comparison is broad and does not really reflect the complexity involved in these calculations.

Noble Lords asked why the Government do not equalise dependant payments with those made to people with a disease. We estimate that the additional cost of equalisation would be in excess £3 million per year. We must prioritise resources where they are needed most: with people living with a disease. Equalising awards between people with a disease and their dependants would require legislative changes. That would be a complex task, as awards to dependants under the 1979 Act include payments made in two parts: first, a payment for the effects of the illness before death, based on the assessed level of disability and the length of time the person had the illness; and, secondly, a payment made in cases where the death was actually caused by the relevant disease. Taking forward such changes is not a current legislative priority, but we will continue to keep this issue under review.

The noble Baroness, Lady Donaghy, suggested meeting to discuss the issue of equalisation. I do not want to commit my honourable friend in the other place, the Minister for Disabled People, but she is renowned for welcoming meetings. I shall suggest to her that this meeting could take place because it is very important for noble Lords to have the opportunity to share things with her—she takes these matters incredibly seriously—and discuss this point further. I heard with care and I want to share with my honourable friend in another place the details of the different suggestions that the noble Lord, Lord Alton, has made today of schemes that could support such a move. I suspect my honourable friend is already aware of them; she is always so on top of her brief. However, I think it would be helpful if I share with her the entire debate that has taken place today to see what could be done. I will be in touch with all noble Lords on that proposal for a meeting, and all will be welcome.

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[Lord Wigley]

I was referring to those under the pneumoconiosis compensation scheme, whereby dust has accumulated, perhaps in a quarryman working in Wales for a number of years then working abroad, and the disability only becomes apparent after he has worked abroad.

[Baroness Buscombe]

Yes. As I said, it has to be demonstrated that the disease was as a result of working in the United Kingdom. If somebody worked for a number of years in the UK and then continued that occupation abroad, I assume that it would be for those who assess an individual’s case to make a reasonable assessment in the circumstances.

A number of noble Lords, including my noble friend Lady McIntosh of Pickering and the noble Lord, Lord Wigley, spoke about the MoD scheme. With a son in the Fleet Air Arm, I have a personal interest in this. It is an extremely good question. Are we being careful to ensure that we are doing all we can to protect our Armed Forces—particularly those in the Navy, on ships? I would welcome a reply from the Ministry of Defence, so I say here and now that I will ask that question with all speed and reply to all noble Lords and place a copy in the Library.

My noble friend Lady McIntosh also asked how long it takes to deal with claims under the 1979 Act scheme and the 2008 Act scheme. Claims lodged under both schemes are dealt with as quickly as possible. For the 1979 Act scheme, which includes diseases other than diffuse mesothelioma, it can take a number of weeks as investigations may be required into the existence of a relevant employer against which civil action may be taken. However, that is still very quick in comparison with civil litigation cases, which of course can take years. Under the 2008 scheme, where there is no need to ascertain the existence of a relevant employer to sue, cases are dealt with very quickly. Dependant claims under both schemes can take longer, as the department may have to await the death certificate or other official confirmation that establishes the cause of death. We are not aware of any general delays or issues with processing claims.

A number of noble Lords touched on what we do to promote awareness of the schemes. The Department for Work and Pensions highlights the availability of the 1979 Act scheme to industrial injuries disablement benefit claimants in official letters. A leaflet is included with the award notice for any of the five diseases covered by the lump-sum scheme, encouraging people to make a claim. All government schemes are publicised on GOV.UK. The department also maintains regular telephone contact with a range of asbestos support groups, and meets their representatives face to face at the annual asbestos forum to discuss the lump-sum schemes.

The noble Lord, Lord McKenzie, asked about the amounts recovered each year by the Compensation Recovery Unit of the Department for Work and Pensions. It recovers around £27 million per year from civil compensation awards. If a mesothelioma claimant subsequently recovers compensation in civil proceedings, the process for clawback of any lump-sum payments is as follows. Once a claim is settled or determined against a compensator, a certificate is requested from the Compensation Recovery Unit that details an amount equivalent to the value of benefits paid in respect of the condition for which the claimant has successfully pursued civil action. The compensator makes a payment of the value of the certificate to the CRU.

The 2008 Act scheme was set up on the basis that it would be funded by compensation recoveries from civil claims. The 1979 Act scheme is funded partly by civil compensation recoveries and partly by the department. It is a long-standing principle that people should not be compensated twice and, in most cases, where social security benefits are paid, they are recovered from compensation where people have been successful in a subsequent civil claim for damages. The net cost to the department of making payments under both schemes in the last financial year, 2017-18, was £22.2 million. Payments totalled £49.2 million and £27 million was recovered.

The noble Lord also asked how many people had benefited from the diffuse mesothelioma payment scheme, how much had been paid out and what was the average award. In the fourth year of operation, 2017-18, the scheme paid out £36 million in compensation to 200 successful claimants, with the average mean award being around £145,000—up from £141,000 the previous year. Since the scheme was launched in April 2014, it has helped just under 1,000 sufferers from mesothelioma, with £133.8 million awarded in compensation.

The noble Lord referred to tax credits and universal credit. Payments made under both schemes are paid by a lump sum and regarded as compensation. Therefore, they are not included as income for the purpose of income tax or tax credits. However, interest arising from the lump sum is subject to income tax and included in the income calculation for tax credits. For universal credit, payments are treated as personal injury compensation and, as I said, disregarded for one year. If they are then placed in a trust, they are disregarded indefinitely.

I hope that I have managed to answer noble Lords’ questions to the best of my ability. I thank all noble Lords for their many and helpful contributions to this debate. The Government recognise that the two schemes form a hugely important part of the support available to people with mesothelioma and certain other dust-related diseases. The regulations will ensure that the value of that support is maintained. I thank all noble Lords who have been supportive of the uprating of the payment scales for these schemes and ask approval to implement it.

Motion agreed.