Diffuse Mesothelioma Payment Scheme Regulations 2014

Lord Howarth of Newport Excerpts

Monday 17th March 2014 Grand Committee

[Lord Wigley]

I apologise to the noble Lord, Lord Alton, for intervening when I did. It clearly shows that we have not been comparing notes, because he was coming on to the very point to which I referred.

Perhaps the Committee will indulge me for a moment if I refer to the debate that we had in this Room on 16 January when I referred to a good friend of mine, Peter Wolfe of Cork in Ireland. Within a matter of days of that debate, he died. He had learnt of his mesothelioma only a few weeks before Christmas. That underlines how quickly this insidious disease kills people. I was at his funeral in Cork on 27 January. That casts a shadow over my contribution to debates on these matters.

The fact that the scheme under consideration today has been set up is a very positive development for victims of diffuse mesothelioma who cannot trace their employer’s insurance. I, too, pay tribute to the Minister for his perseverance in responding to the points raised during the passage of the legislation. I was especially glad to discover earlier this month, and to hear the Minister reiterate today, that claimants under this scheme will be able to gain 80% of the value of compensation claims, up from the 75% threshold which the Government seemed determined to stick to during debates at earlier states. I understand that claimants can now expect to receive an average payment of £123,000 before benefits are recovered, together with £7,000 towards their legal fees.

However, in my usual Oliver Twist fashion, I remain to be convinced about why claimants under this scheme should expect any less than 100% of the average compensation award for this type of disease. Those suffering from diffuse mesothelioma will be in debilitating pain, yet the Government insist that they are limiting the amount of compensation that can be claimed in order to ensure that claimants exhaust all other avenues before coming to the scheme. Surely this is grossly unfair. In effect, it penalises victims of the disease for the negligence of their employers. For the purpose of comparison, it is worth noting that the Pneumoconiosis etc. (Workers’ Compensation) Act 1979 scheme was designed to award 100% of the value of compensation claims to claimants and, as we debated a few moments ago, it is reviewed annually. Why victims of diffuse mesothelioma should not have the same recourse available to them is beyond me, but perhaps that is another battle to be won at some stage.

It is also astounding that claimants under this scheme will have 100% of their benefits recouped from the compensation that is awarded, even though they receive only 80% of the damages. Claimants will thus lose out financially even more, and the Government surely must look again at that aspect.

There were other problems aside from the amount of compensation to be awarded, which were likewise highlighted during the debates on the Mesothelioma Act—problems that have yet to be erased. Principally, it is at best short-sighted that the Government have decided to place an arbitrary cut-off date for eligibility under the scheme. A draft of this compensation scheme was published, as we all know, by the previous Government shortly before the 2010 election, and consultation closed in May of that year. The present Government made no announcement on taking the scheme forward until 25 July 2012, which is the date that they have set as the earliest time when a patient can have been diagnosed with diffuse mesothelioma for these purposes. Individuals who had the misfortune of being diagnosed between February 2010 and July 2012 thus fall between two stools through no fault of their own—a matter that we on all sides of this Committee have emphasised, as well as in previous Committees and in the Chamber during the passage of the legislation. Surely the Government must look at this again.

Furthermore, it is disappointing that the scheme is open only to individuals suffering from diffuse mesothelioma, which is only one of a number of asbestos-related conditions that can come about as a result of exposure to this deadly substance. I would welcome any clarity that the Government can give as to the steps that will be taken to protect the interests of those suffering from asbestosis and other asbestos-related lung cancers.

Finally, I know that many individuals will be grateful if the Government can confirm when people will be able to start making applications under this scheme. I am not sure whether the Minister mentioned that in his comments—I did not catch it if he did—but that would be useful.

[Lord Howarth of Newport (Lab)]

My Lords, I add my thanks to the Minister and congratulate him on achieving this legislation and bringing in these regulations. I thank him for his compassion, for the collaborative way in which he worked with noble Lords on all sides of the House, and for his strong determination to get to where we have now reached. It is a very significant achievement and he deserves our admiration and gratitude. Like other noble Lords, I am grateful to him for raising the level of compensation to 80% of average compensation awards. That is a significant improvement that will make a lot of difference to families when they find themselves in such dire need.

I want to ask the Minister just one question. Will he clarify that it is his intention that the overall value of the scheme should continue to be set at 3% of gross written premiums after the peak year for claims? He has told us that we are to anticipate perhaps 2,500 claims in 2018, after which the numbers may reduce—although the noble Lord, Lord Alton, told the Committee that it is projected that there will be another 60,000 cases over the next 30 years. There will continue to be a significant volume, and I put it to the Minister that it is important that that 3% of gross written premiums is not reduced in the years after 2018. We all hope that after a long period of Labour Government, starting in 2015, the Minister may still have an opportunity to play some part in these affairs. I appreciate that it is difficult for him to bind his successors but it would be helpful if he would say on the record that he, as the architect of this scheme, envisages that the employers’ liability insurers should continue for the whole future life of the diffuse mesothelioma scheme to have to provide 3% of gross written premiums. If that was the case while the numbers of claimants or beneficiaries of the scheme were falling, it would make it possible to move the level of compensation up from 80% towards, or perhaps to reach, 100%. That would be one very important possibility.

There are other good things that it would be possible to do were funds to remain available while the total number of claims fell. It would become possible to backdate the eligibility for the scheme beyond July 2012 to February 2010 or even further. It would also be possible—I tabled an amendment to this effect in Committee on the Bill—provided that the legislation allows it, which of course is questionable, to adapt the regulations to cover family members who themselves contract mesothelioma even if the person who was exposed to asbestos in the workplace did not personally contract the disease. We talked about the case of a member of the family—most likely the wife—who washes the overalls of the person who has been exposed to asbestos fibre in the work-wear and she contracts the disease. As I understand it, the Minister has still not been able to bring those people into eligibility. However, if we had a slightly less tight financial envelope, then, through keeping the 3% of gross written premiums to fund the scheme, it would be possible to help those people.

Of course, it would also be possible to mitigate benefits recovery. I know that the Minister’s department, for theological reasons, will set its face against that, but, as the noble Lord, Lord Wigley, said, it seems very hard and unreasonable to claw back 100% of benefits from people who are receiving only 80% of average compensation. So there would be further latitude there. There would of course be further latitude to provide additional funding for research, the case for which has been so consistently and eloquently made by the noble Lord, Lord Alton. Among the range of options, it would also be possible to extend the benefits of the scheme, or perhaps a newly created parallel scheme, to victims of other long-latency industrial diseases whom we want to help.

I do not know what sorts of permutations might be possible but one could envisage this range of possibilities, and I hope very much that this afternoon the Minister will at least be able to tell us that there will not be a tapering of the overall value of the fund. The industry having treated mesothelioma sufferers so very badly over many decades, it seems to me that it should not be let off the hook. I appreciate that the current generation of employers’ liability insurers are not the worst culprits, and perhaps not the culprits at all in individual cases, of the failure to honour the policies that were written. However, I think that the industry as a whole has to continue to bear its share of responsibility and—I know that this is the spirit in which the Minister has always approached this whole issue—we should do the very best that we can for people who at the moment the scheme is not intended to help but who it would become possible to help if we maintained the value of the fund past 2018.

[Lord James of Blackheath (Con)]

My Lords, I apologise for not having been present at the beginning of this debate but I should like to make two points, the first arising directly from what the noble Lord, Lord Howarth, has just said. Three per cent of premiums seems to be the wrong way to come to this issue. Three per cent of the total reinsurance value backing asbestosis would be a nice round sum. It is about £6 billion of my money that I put in from Lloyd’s of London, and it is much nicer to get 3% on that. That coming in each year would give a lot of leg-room.

My other point is that I have been keeping in close contact with the Royal British Legion on this. At present, it has 42 cases—although, rather ominously, it has said that it expects that number to fall very quickly to 38—where it is providing care at its own expense and at considerable cost. Will the Minister explain what the crossover would be between this scheme coming in and either taking out or supporting the British Legion? I am concerned that when this comes in, it does not result in a hiatus, out of which the poor sufferers get nothing at all, whereas now they get support from the Royal British Legion. We need to know with some clarity what will happen in that respect. Those are the only two points I would like to make on what I have heard so far.

[Lord McKenzie of Luton (Lab)]

My Lords, like other noble Lords, I join in praising the Minister for all his efforts on this Bill. Without his leadership, we simply would not have this legislation on which we can debate these regulations.

[Lord Howarth of Newport]

When I was praising the Minister, I wanted to say that, of course, he built on the foundations created by my noble friend. I hope that he will also accept the gratitude and praise of the Committee and everybody in a much wider community who have been concerned about the predicament of mesothelioma sufferers.

[Lord McKenzie of Luton]

My noble friend is too kind, but I am conscious of the fact that this Bill has been forged in very difficult economic circumstances, and it is a splendid result that we are where we are. Like others, I also welcome the increase in the level of payout. As I remember it, when we were discussing this during the passage of the Bill, there were two versions of the gross tariff: one from the ABI and one from the DWP. I think the difference between them was based on the projections of the age profile of those who contract mesothelioma. We focused on the higher, DWP, one. Will the Minister confirm that this is still the gross tariff that we are working to and that it will be 80% of that?

A number of noble Lords have raised the 3% of gross written premiums. I am not sure that I heard the Minister actually say that this is where the levy is going to start, and it will be helpful if he could confirm the position. I thought his expression was “within that 3%”, but it would be good to know when we will see the levy regulations and whether the expectation is that it will be fixed, initially, and thereafter, as my noble friend Lord Howarth said, at 3% of gross written premiums. Obviously, this is to the extent to which they did not produce more than a 100% payout.

The Minister confirmed that the legal fees at £7,000 per case would be paid on top of that. I am not quite sure that I followed the reasoning of how that will be dealt with in alternative regulations. I would appreciate it if the Minister reiterated what he said. The noble Lord, Lord Alton, has been steadfast on the issue of research. Will the Minister take the opportunity to tell us where he thinks the insurance industry now stands, and what the prospects are of getting extra funding from it one way or another?

I have a couple of technical questions. Can we have an update on the oversight arrangements? I do not think there is a specific reference in these regulations to the oversight committee and whether there should be any obligation on the administrator. I should say that the Minister has been true to his word in terms of the process of appointing the administrator of the scheme, but I do not think there is anything in these regulations which requires co-operation and engagement with the oversight committee. Perhaps the Minister will say how he sees that working.

There was an issue over Schedule 3 to these arrangements, which deals with the application. This sets out all the information that needs to be provided and includes the names of all the person’s employers and the description of the arrangements under which the person was engaged by each employer. One of the issues that cropped up just at the tail end of the Bill’s consideration in the other place was HMRC policy on work histories and the extent to which a court order is now necessary for HMRC to provide them. I hope that this issue has gone away, but I would appreciate an update from the Minister on that point.

On a smaller point, will the Minister clarify where the administrator can impose conditions on a claimant? I think we understand why that would be but, as I understand it, there seems to be some differentiation. Conditions can be imposed where a dependant is an applicant, but where the applicant is deceased and the payment goes to the personal representative I am not sure that the constraints or conditions on that payment would apply. Maybe that is not necessary because it would be the role of the personal representative to make sure that that was effectively dealt with. Can the Minister confirm that?

Finally, I just ask about the Ministry of Justice procedure for reforming mesothelioma claims. In a sense, the Government backed up what was originally proposed but paragraph 39 of their response to the consultation on these proposals states:

“The stated purpose of the Secure Mesothelioma Claims Gateway was to support the proposed Mesothelioma Pre-Action Protocol. As the Government has declined to take forward the MPAP supported by a fixed recoverable costs regime, the ABI will no doubt want to consider whether and how it would wish to take forward its proposal for funding and hosting a SMCG and how claimants and defendants might voluntarily make use of it”.

Could the Minister give us an update on that and what it means in the current situation?

--- Later in debate ---

[Lord Howarth of Newport]

Allow me to emphasise once again that it is imperative that the Minister, his department and successors maintain the pressure on the industry. We have just heard the noble Lord, Lord Alton, describe how there is no assurance that there will be continuing funding from the industry for research. We have seen the whole history of the neglect of the legitimate interests of mesothelioma sufferers by the employers’ liability insurance industry. Sadly, we cannot take it on trust. I am sorry that the Minister has not written that requirement of 3% of gross written premiums into these regulations—though I can perhaps understand why not. It would be very helpful and really the least that the Minister could do if he expressed this afternoon very strongly on behalf of the Government and mesothelioma sufferers his expectation that we will continue to have the substantial contribution from industry to fund this scheme and that he expects industry to continue to provide not less than 3% of gross written premiums after the moment of peak claims passes in 2018, for all the reasons that noble Lords indicated earlier in this debate.

[Lord Freud]

My Lords, I am not in a position to bind a future Government over what happens in four years’ time. However, as the noble Lord appreciates, there is now a context for that Government to take a view at the right time on what should happen beyond then. The figure we have at the moment, which is publicly on record, is 3%. In response to the question asked by the noble Lord, Lord McKenzie, that is based on DWP forecasts. Clearly, to that extent, we are committed to a tariff level. If those forecasts are wrong for one reason or another, there could be variation round that 3%. That is the best we can do to set the level today. However, when that process has gone through—we thought the right point for that was after four years because we will have done the smoothing and seen how it actually works and if people change behaviour as a result of the scheme—we will clearly know exactly what is happening. We can then have a much more specific forecast of expectations, once the scheme is in and has been rolling for some time.