Diffuse Mesothelioma Payment Scheme

Kate Green Excerpts

Wednesday 11th February 2015 Westminster Hall

[Kate Green (Stretford and Urmston) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Owen. I congratulate my hon. Friend the Member for Liverpool, Walton (Steve Rotheram) on securing the debate. I am delighted that we are joined by parliamentary colleagues from all parties who have long been doughty campaigners on this issue. I join colleagues in paying tribute to the asbestos victim support groups, which have kept us so well informed about the issues in relation to this matter. I also join colleagues in remembering the late Paul Goggins, my good friend and former parliamentary next-door neighbour. We miss Paul very much, but I think he would have been pleased to see that there has been further progress in the light of yesterday’s written ministerial statement.

It is just over a year since the Mesothelioma Act 2014 completed its parliamentary passage, and I warmly welcome the opportunity to debate what has happened since then. Although everyone recognises that it is early days still to assess the effectiveness of the Diffuse Mesothelioma Payment Scheme, even in its short life so far there have been a number of developments, some of which were welcome and some less so. I know that hon. Members who take a close interest in the matter appreciate the opportunity to raise issues of concern with the Minister today.

The Diffuse Mesothelioma Payment Scheme is an important and welcome development in offering a measure of justice to sufferers of that terrible disease. It serves to ensure that those who contracted the illness as a result of exposure to asbestos at work, but who cannot now trace an employer or an employer’s liability insurer, can receive payment in recognition of their suffering. Initially, as we have heard, the Government set the proposed payment at 70% of average civil damages, but an increase was made to 80% when regulations to implement the scheme were introduced last year, as a result of savings that had been found in legal and administrative costs. Yesterday, we learned from the written ministerial statement that payouts are to be increased to 100% of average compensation. Of course, that is very welcome, although I echo my hon. Friends the Members for Liverpool, Walton and for Wansbeck (Ian Lavery) in asking the Minister why the increase cannot be backdated to those who have already received 80% payouts under the scheme or who have already been diagnosed. The Department’s press release painted a rather rosy picture of the impact of the increase, suggesting that victims would receive an additional £54,000. In fact, that amount would be paid only to those aged under 40, and so far no victims as young as that have been compensated under the scheme. The average increase will be more like £21,000, which is welcome but not quite as good.

I am also concerned that the reason for increased payments is because the take-up of the scheme has been lower than expected. My hon. Friend the Member for Liverpool, Walton was right to express some scepticism about the assumptions that were made when the scheme was first proposed. Take-up has been substantially below expectation. It was originally envisaged, if memory serves me correctly, that in the first year of the scheme there would be some 900 applications, but I understand that the expectation now is that there will be only 300 claims in the first year. What analysis has the Minister made of the much lower than expected take-up and the reasons for it? What discussions has he had with the oversight committee on the matter? Is he confident that the application process is working smoothly and speedily for applicants? Is he confident that the scheme has been adequately promoted? What steps are the Government taking to ensure that potential claimants are made aware of it? What evaluation of the application process is he undertaking, and, in particular, what measures is he taking to ensure that he obtains feedback from the asbestos victim support groups?

Have any claimants yet resorted to arbitration when they have been unhappy with the outcome of their claim? Is the Minister confident that the much lower figure for expected claims represents a true picture of those who could make a claim under the scheme? What profile, over time, and what volume of future claims does the Department now expect? As has been mentioned, yesterday’s written statement referred to administrative changes being made as a result of discussions with the insurance industry to ensure that the scheme remains one of last resort. Will the Minister tell us exactly what those administrative changes are, and what impact they will have on victims and their ability to access the scheme?

As my hon. Friend the Member for Liverpool, Walton has explained, the scheme is funded by a levy on current employers’ liability insurers. When the legislation proceeded through Parliament, we were told that the levy would be set at 3% of gross written premiums, because the industry could accommodate a levy at that level without having to pass the cost on to its customers via increased premiums. In addition, because it was expected that claims would peak in the first few years of the scheme, which would mean that the cost of meeting payouts could exceed the levy, we were told that the Government would make a £30 million loan and £17 million gift to the industry to smooth the cost of the scheme in the early years. Although the expectation was that 3% would prove insufficient fully to meet claims in the early years of the scheme, there were always fears that the industry might try to get away with a lower payment. That is why I tabled amendments to the legislation, in Committee and on Report, to enshrine the 3% levy rate in law. The then Minister, the right hon. Member for Hemel Hempstead (Mike Penning), gave assurances to the Public Bill Committee on 12 December 2013 that there was no need for such amendments, because:

“Three per cent. is 3% and we have no intention of moving away from it”.––[Official Report, Mesothelioma Public Bill Committee, 12 December 2013; c. 117.]

In a written statement on 28 November 2014, however, the Government announced that in the first year the levy would raise £32 million, so it was in fact set at 2.2%.

Following yesterday’s written ministerial statement, the position on the levy is somewhat opaque. I hope the Minister will clarify the situation today. First, can he confirm whether the uplift in payments to 100% is met from a levy of 2.2%, a levy of 3% or some other figure? How much is the levy now raising in cash terms? Is it still £32 million, or is it another amount? How much in cash terms are the additional and total costs of meeting payments at 100%? In a briefing to MPs in December, the Asbestos Victims Support Groups Forum UK estimated that increasing payments to 100% would cost an additional £5.5 million and that increasing the levy from 2.2% to 3% would raise an additional £11 million. With lower than expected payouts, there would be plenty of surplus cash if the levy were set at 3%, even with payments at 100%.

[Andy McDonald (Middlesbrough) (Lab)]

Does my hon. Friend agree that, at whatever level the levy is set, it is perfectly clear that there is more than enough funding available to do the right thing by those victims and families who received under-settlements at 80%? We could do the right thing by those victims and give them the full compensation at 100%.

[Kate Green]

Absolutely. Given the relatively small number of claims and the relatively small amounts involved, it is a matter of justice, and I hope the Minister will address the mood of the House this morning by giving us some assurances.

Even if 100% payouts could be afforded from a lower levy, the 3% figure is important because, in addition to funding more generous payouts, surplus cash could be put to other uses, as we have heard. My hon. Friend the Member for Liverpool, Walton and the hon. Members for Chatham and Aylesford (Tracey Crouch) and for Strangford (Jim Shannon) all asked about funding for research. Mesothelioma is always fatal. It is a truly terrible disease that is massively cruel to sufferers and their loved ones, who have to watch them die in the most horrific manner. There is a crying need for research into treatment of the disease, yet today research is woefully underfunded. Although the recently announced voluntary contribution to the British Lung Foundation by the insurers Aviva and Zurich over the next two years is welcome, the abundance of good research proposals, as evidenced by the written answer I received from the Under-Secretary of State for Health, the hon. Member for Mid Norfolk (George Freeman), on 7 January 2015, suggests that mesothelioma research could benefit from more funding, which would benefit the insurance industry, the public purse and, of course, victims. What steps are the Government taking to place research funding on a sustainable footing?

With claims lower than expected, and with a 3% levy, another possibility is to backdate payments under the scheme to an earlier date. Under the legislation, the cut-off date for claims is for those diagnosed after 25 July 2012 but, as my hon. Friend the Member for Wansbeck pointed out, we have known about the lethal effects of asbestos for many years—indeed, since the early decades of the last century—and for many years, the industry did all it could to evade its responsibilities to victims. There will now be very few, if any, survivors who received a diagnosis before 2012, given the speed and ferocity of the disease after diagnosis. The usual prognosis is less than 12 months, and personal representatives cannot make a claim where the sufferer died before the commencement of the scheme. None the less, in a few cases there may be an opportunity for greater generosity in relation to the cut-off date, or the Government might like to rethink their position on personal representatives. Has the Minister considered the scope for earlier eligibility? What will happen if claims increase over the next few years to the extent that the levy is insufficient to meet them after all? Will payments remain at 100%?

Can the Minister confirm that the cost to the industry will never fall below 3% in any given year? Or is it his intention that the levy will not average less than 3% over the whole life of the scheme? What is happening to the Government’s £30 million loan and £17 million payment to the industry to help it meet the costs of the scheme? Given the lower than expected number of claims, will that generous Government support now be reduced or removed? We know that the industry expected the scheme to run for 30 to 40 years because of the long latency of the disease. What discussions have the Minister or his colleague, Lord Freud, who has been leading discussions with industry representatives, had about the industry’s forecasts of future costs?

As my hon. Friend the Member for Wansbeck said, we would like the Minister to say something about the figure for benefits recovered by the compensation recovery unit. Under the legislation, social security benefits that have been paid to sufferers are clawed back if the sufferer makes a successful claim under the scheme. My understanding is that recoveries amounted to £8 million in the scheme’s first seven months. Does the Minister think that clawing back benefits at 100% is fair to sufferers who received less than 100% of average damages? Will he consider reducing recoveries from their benefits, at the very least, in line with the proportion of average damages that they actually received?

On other matters, what progress has there been on addressing the difficulty we ran into with the approach of Her Majesty’s Revenue and Customs to releasing employment records, which are essential to making a claim under the scheme or, indeed, to pursuing a claim in the courts? I am pleased that a Government amendment to the Deregulation Bill has ensured that, in future, HMRC will be able to release those records without fear of breaching data protection law, but the Bill has not yet completed its parliamentary passage. Is the Minister aware of any cases in the meantime in which HMRC has been asked for records? What approach is HMRC currently taking? There has, of course, been a recent helpful legal judgment in a case brought by my own union, Unite, but I understand that the limitations of the judgment mean that the matter will not be fully resolved in all cases until the Bill becomes law.

Finally, and especially given the lower than expected take-up, has the Minister taken the opportunity to consider how the Diffuse Mesothelioma Payment Scheme might be widened to non-employment cases, to cases of collateral contamination—for example, where a family member contracts the illness as a result of exposure to the clothes or equipment of a relative who has worked with asbestos—to the self-employed or to Government employees, including veterans of the armed forces, who are not covered by the scheme? What steps are the Government taking to provide relief for sufferers of other asbestos-related diseases?

The legislation passed by Parliament last year and yesterday’s announcement have at last offered some justice to some victims but, as the hon. Member for Strangford pointed out, this country has the shameful record of having one of the highest incidences of asbestos-related illness in the world. We can, and we must, do much better for those who have suffered. I hope the Minister will indicate his willingness, indeed his determination, to look for ways to do so.

[Albert Owen (in the Chair)]

I am grateful to the hon. Lady and to all hon. Members for their thoughtful contributions. I ask the Minister to respond.

--- Later in debate ---

[Mr Harper]

I referred to the hon. Gentleman’s point first because I know that he has other pressing business on behalf of his constituents, and he had the courtesy to let me know, so I wanted to deal with his point while he was still in the Chamber. As he knows, I plan to meet the Northern Ireland Minister with responsibility for welfare to discuss other matters to do with welfare in the wake of the Stormont House agreement. I will ask my officials to place this issue on the agenda and we can have a conversation about that to make sure it is clear how it will be implemented in Northern Ireland.

One point flowed through the remarks of the hon. Members for Liverpool, Walton and for Stretford and Urmston (Kate Green) and my hon. Friend the Member for Chatham and Aylesford. I will set out my understanding of the position, which is clear. There was a lot of discussion about the levy on the industry. The scheme is effectively demand-led: people make applications to it and the costs of the scheme are then recovered through a levy on the industry. The 3% that has been talked about is a cap. The insurance industry agreed that if the cost remained below that level, it would absorb the cost of the scheme and would not pass it on to other employers who take out employers’ liability insurance through increased premiums. That was important. The Government did not want the cost of the scheme to fall on employers across Britain: we wanted it to be absorbed by the insurance industry.

So the 3% is a cap, not a target. The costs of the scheme are calculated and then the levy is calculated to recover the costs of the scheme. The hon. Members for Liverpool, Walton, for Strangford and for Stretford and Urmston referred to Lord Freud’s written statement on 28 November last year. He set out the costs of the scheme in the first period of the year, how much that encompassed and how much would therefore be recovered from the insurance industry. That position is clear. [Interruption.] Let me finish this thought and then I will take a question.

Hon. Members seem to have envisaged, although it was not envisaged by the Government, that there would be a 3% levy, some of the money from which would be used for settling claims and the rest would form a pot of money that could be distributed as Ministers or others saw fit. However, it is a cap on the costs that land on the industry. The industry agreed that if that remained the cap, it would absorb the costs of the scheme and not pass them on to employers more generally.

[Kate Green]

Unlike me, the Minister did not sit through all the Bill’s Committee sittings when we were passing the legislation. It really was not our understanding, when his predecessor said that 3% is 3% and not going anywhere, that that meant it was a cap. We took it as a figure that would be reached, and it was also what was understood by the victim support groups.

[Mr Harper]

I take the hon. Lady’s point that I was not the Minister at the time and was not present at those sittings. She asked me a written question following the written statement in November, and I made it clear in my answer that the 3% figure was the maximum percentage of the active employers’ liability insurance market to be levied on the insurance industry to recoup the costs of the scheme. I made it clear that the figure was a cap, rather than a set rate, and that the levy rate was based on the estimated costs of the scheme, extrapolated from the first seven months of the operation. The scheme is demand-led and calculations for the levy are done afresh each year. An upturn in applications to the scheme would result in a higher levy rate in future years, so the levy rate is kept under continual active review.

--- Later in debate ---

[Mr Harper]

There are two separate questions there. I do not agree with the hon. Gentleman’s characterisation—I suppose it depends where you start from. His understanding was that the 3% was an amount that was going to be levied to generate an amount of money, some of which would be used for the compensation and then, effectively, others could choose to spend it, but that is not my understanding and not the Government’s understanding of the scheme.

However, his general point—I am trying to answer his question about research funding—is that there is a clear view that there should be more research in this area. I will undertake to go away and look at the gap in the general debate between—

[Kate Green]

Will the Minister give way?

[Mr Harper]

Let me just answer the hon. Gentleman’s question; I hope the hon. Lady will forgive me for not giving way to her. As I was saying, I will look at the gap between the number of research proposals—my hon. Friend the Member for Chatham and Aylesford suggested there are not enough proposals, whereas the hon. Lady suggested there were quite a lot of proposals but not enough money. Let me look at what money is available from statutory funding sources; from the National Institute for Health Research and other funders in the area. It might be helpful if we can draw that funding information together, so that Members can see the overall picture of funding in this area. I would be interested to look at that and see how it is related to the need, based on the number of people who are sadly victims of this dreadful disease. That may be helpful to inform further developments—