Criminal Injuries Compensation Scheme 2012

Lord McNally Excerpts

Wednesday 25th July 2012 Lords Chamber

Moved by

[Lord McNally]

That the draft scheme laid before the House on 2 July be approved.

Relevant documents: 6th Report from the Joint Committee on Statutory Instruments, 8th Report from the Secondary Legislation Scrutiny Committee.

[The Minister of State, Ministry of Justice (Lord McNally)]

I shall speak also to the draft Victims of Overseas Terrorism Compensation Scheme 2012.

Our vision for the criminal justice system is that it is able to respond in a flexible way to the needs of victims and the communities it serves. This must include proper protection and support for victims to help them recover and to overcome the effects of crime. In some instances, financial assistance will play a part in this recovery process. Successive Administrations have grappled with these schemes. Our system of criminal injuries compensation goes as far back as 1964 when awards were made on the basis of common law damages. When the then Home Secretary, Michael Howard, broke the link with common law damages some 30 years later by introducing the first statutory scheme, based on a tariff of injuries, it cost the Government £179 million a year, or more than £250 million at today’s prices. The previous Administration sought to reform the tariff scheme in 2005 by refocusing payments on the most seriously injured and removing less serious injuries. In the end these proposals were never implemented.

We are still resolving claims from before 1996 that were made under the pre-tariff system. When this Government came into office there were estimated liabilities of nearly £400 million. This Administration are now tackling this and are allocating funding to cases so that awards are paid as these remaining cases come to an end. Last year about £237 million was paid in such cases. A total of £449 million was paid in compensation last year—the largest ever in a single year—after the Criminal Injuries Compensation Authority was provided with additional funding. This includes payments to cases under the current scheme and also to pre-tariff cases.

However, despite this cash injection, total liabilities currently stand at around £532 million. This includes an estimate of the cases that are likely to fall due in the future but have not yet been lodged with the Criminal Injuries Compensation Authority. It also includes the remaining rump of pre-tariff cases. Nevertheless, with new liabilities arising at around £200 million each year under the 2008 scheme, this simply is not sustainable in the current economic climate. The revised domestic scheme will focus, as the Government were considering focusing in 2005, scarce resources on those victims most seriously affected by the injuries they suffer as a result of deliberate, violent crime committed in England, Wales and Scotland. This is part of a long-term aim to put this scheme on a more sustainable footing.

We envisage that the cumulative effect of these changes should help deliver savings of an estimated £50 million a year to the taxpayer. This does not mean we are reducing the overall spend on victims. The Government are committed to substantially increasing the amount offenders contribute to victims’ services. In England and Wales, we intend to raise up to an additional £50 million a year through the victim surcharge and other financial impositions, investing this money in support services for victims.

The noble Baroness, Lady Royall of Blaisdon, will speak to her amendment shortly but I would like to make it clear that our proposals will protect injury payments to victims with the most serious injuries. In addition we are protecting payments to the bereaved, to all rape victims, to victims of any other sexual assault and to those, including victims of domestic violence and children, who are subjected to a repeated pattern of abuse. We are removing payments from those with less serious injuries.

The additional money that we will raise from offenders will be used to pay for new services for victims. We believe that it is much better to use this money quickly to support victims who are trying to cope with the impact of crime than to give people small amounts of money for minor injuries some time after the event.

Noble Lords will have seen a number of briefings about the reforms to the scheme including on behalf of postal workers and shop workers. I want to acknowledge the valuable job that these people do, often in very difficult circumstances. However, as with any other applicant to the scheme, if their injuries are sufficiently serious they will still be eligible and I hope that the additional services funded by offenders will better support those with minor injuries.

We have listened to those who responded to our consultation and have made changes to some of our proposals as a result, as set out in the Government’s response. Notably we have changed our original proposals relating to payment for those with criminal convictions and to establishing a connection to the UK.

Let me make the House aware of the changes that we are making—first, on eligibility. Eligibility is tightly defined in the draft scheme so that only those direct and blameless victims of crime who fully co-operate with the criminal justice process may obtain compensation under the scheme. We will continue to pay secondary victims under the scheme in certain circumstances. Applicants will need to be able to demonstrate a connection to the UK through one of a number of factors, though as a result of consultation responses, we have removed the original requirement that an applicant be resident in the UK for six months prior to the incident that led to their injury. Bereaved relatives of victims who die as a result of their injuries will also continue to be able to apply as long as they meet the revised eligibility criteria. Those with unspent convictions will not be able to claim if they have been sentenced to a community order or have been imprisoned. Those with other unspent convictions will be able to receive an award only in exceptional circumstances. This is a change from the options put forward at consultation, following comments made by respondents. These changes to eligibility are in line with the core purpose of the scheme of compensating blameless victims of violent crime.

Secondly, on the tariff, we want to strike the right balance between protecting the most seriously injured and making reductions to the overall cost of the scheme. So tariff payments will be available only to those most seriously affected by their injuries and for those who have been the victim of the most distressing crimes. What this means in practice is that bands 1 to 5 of the current scheme have been removed; bands 6 to 12 have been reduced; and bands 13 and upwards—to band 25—are protected in their entirety at their current levels. Tariff awards for fatal cases, sexual offences, patterns of physical abuse and loss of a foetus are also being protected at their current levels—no matter where they currently appear in the tariff. As a result of a consultation response from the First-tier Tribunal we have also broken down some of the payments made for degrees of paralysis with the aim of ensuring that we avoid both over and undercompensation in these very difficult cases.

Thirdly, let me turn to loss of earnings. These payments do not currently reflect actual loss for all applicants, being capped at a salary of one and a half times the median gross weekly earnings but already making up a significant proportion of the costs of the scheme. The new calculation will be a flat rate based on statutory sick pay which should be simpler to administer. Payments will no longer be subject to deductions for benefits. These payments will be available only to those who can no longer work or who have very limited capacity to do so, in line with the focus on those most seriously affected by their injuries.

Fourthly, there are no major changes to these special expenses payments. They will continue to be available for the same categories as under the current scheme, with the exception of private healthcare. We chose to retain these payments because they are generally awarded to those who suffer the most serious injury. However, we have made it clear that the scheme should be one of last resort in relation to special expenses, and that payments will be made only if the claim is reasonable. Fifthly, with regard to payments in fatal cases, we are protecting the awards for bereavement and parental services payments. In the interests of consistency and fairness, dependency payments in fatal cases will be made in line with the revised plans for loss of earnings. The scheme can never compensate someone fully for the death of a loved one but we believe that some financial compensation is appropriate in these cases. Reasonable funeral payments will be made up to a maximum of £5,000.

Finally, I turn to the process. One of the aims of this reform is to make the scheme easier for applicants to understand. For the first time the evidence required to make a claim is being put on the face of the scheme. We are tightening the circumstances in which the authority will meet the costs of obtaining medical evidence and reducing the timescales for submission of review and appeal applications.

--- Later in debate ---

[Lord Christopher]

My Lords, I am anxious not to repeat what has been said, but there is little doubt that we have, day by day in recent months—indeed for a year or two—heard nothing but sad news for those who are represented by the people that this order will affect. There is a callousness about so much legislation at the moment that is very hard to believe. Perhaps there has been a little hope raised by the noble and learned Lord, Lord Howe, that the heart of the party is not wholly stone. Having heartily enjoyed a number of years negotiating with him across a table, usually, I think, to mutual benefit, my feelings are, come back, Geoffrey, all is forgiven.

What is the benefit that has been received by the country for all these cuts? The news at one o’clock was that we are now in the third quarter of recession. There is no sign at all that what is being done by the Chancellor is having any material helpful effect. It is extremely sad that we are now dealing with what, in money terms, is a minority issue to the Treasury, but is a very significant issue to those affected by these cuts. We have a useful audience in the Gallery, but I think it is important for the record that we have some indication of what we are talking about, because there is no precision, as things stand.

There have been two broad groups affected by attacks. I was surprised that the number is as high as it is in the USDAW field. We certainly had them in the days when I was responsible for the staff in the Revenue. They could be serious and every attempt was made by the department to ensure that these were kept to a minimum. What sort of injuries are we talking about for those who are receiving the higher award? We are talking about significant facial scarring; permanent brain injury resulting in impaired balance and headaches; penetrating injury to both eyes; fractured joints including elbows, both knees and vertebra, resulting in continual significant disability; and a punctured or collapsed lung. This is the nature of the injuries for which there is now to be significantly reduced compensation.

I conclude with one of three examples provided by USDAW of the kinds of practical changes which will take place. I shall read about Simon, aged 33, the manager of a convenience store in Stoke on Trent who risked his own safety when he disarmed an axe-wielding man during an attempted robbery. He says:

“I saw a man at the till waving an axe and shouting at the checkout assistant. As I went to grab the handle of the axe there was a bit of a tussle and it fell to the floor. I managed to kick it out of the way. Two customers came to my aid and we held him down until the police arrived. He became more aggressive and started lashing out, then he bit my leg”.

Simon received £1,250 compensation for his injuries and the mental trauma he suffered, which, I suspect, was considerable. He received a public bravery award from the local police. Under the new proposals, he would receive nothing. I regard this as utterly outrageous, as I am sure does the Gallery, and it is high time that there was a rethink and that these sorts of changes were removed from your Lordships’ agenda.

[Lord McNally]

My Lords, first, I say to the noble Lord, Lord Christopher, that the reality, which apparently still takes time to sink in across the House, is that we are all a lot poorer than we thought we were four years ago. Whichever Government had come in would have carried out drastic cuts in public expenditure. That has been acknowledged by the Opposition in their moments of candour. Therefore, every time that the Government come before the House with some saving in public expenditure, the Opposition say, “These are not the kind of cuts that we would have made”. The Liberal Democrats have neither the resources nor the inclination to do this, but I know of parties who keep a running total of cuts in expenditure which the Opposition would not have undertaken, and it adds up to something that questions their economic competence.

As for my noble and learned friend, Lord Howe, I hear his story. I have been in a few small parties myself, but the Aberavon Conservatives, which he led, must have been almost of Liberal Party size in its gatherings. The scheme that he pioneered in the 1960s cost £6 million. We are debating a scheme that costs more than £200 million. Also included in his long and distinguished career was a period as Chancellor when, like me, he must have stood at Dispatch Boxes listening to the impact of cuts that were necessary at the time. That is one of the responsibilities of government.

[Lord Stoddart of Swindon]

I have a simple question. What would £6 million be in today's money?

[Lord McNally]

That is in current prices. The actual scheme cost less than half a million pounds when first introduced, so I was not trying to belittle it. We have all known schemes which have been introduced with the best of intentions but have had long-term consequences. As the noble Baroness acknowledged, the previous Government took a hard look at this in 2005 and then backed off from making similar decisions.

[Noble Lords]

Oh!

[Lord McNally]

I suggest that some of the roots of the economic problems that we later faced was that they backed off too many difficult decisions—something that we are not doing.

The noble Baroness asked me how the ex gratia schemes compare. People who are victims of terrorist attacks which took place between 1 January 2002 and 16 October 2012 will, in general, have until 16 October 2012 to claim. The scheme is based on equivalence to those in tariffs under the existing domestic scheme. Eligibility is restricted to those with an ongoing disability as a direct result of an injury sustained in a designated act. Only injury payments are available, in accordance with the tariff of injuries; bereaved relatives are not eligible for an award. Tariff payments are in line with those in Criminal Injuries Compensation Scheme 2008. The maximum payment for a single injury on the tariff of injuries which forms part of the scheme is £250,000.

The noble Lord, Lord Davies, raised the issue of the impact on shop workers, as did other noble Lords. Shop workers, and all trade unionists who have been named, are still covered by the scheme, but not for small payments for minor injuries. I heard the example given by the noble Lord, Lord Christopher. Perhaps those in the Gallery also ask whether £1,250 for a very noble, brave act is not enough. Should we build into a scheme which is supposed to address real victims of crime pay-outs of significant sums—not life-changing but, for low-paid workers, significant sums—for injuries that also are not life-changing? We are removing the lower end.

[Lord Christopher]

The examples, which the noble Lord says that he has read, are life-changing.

[Lord McNally]

My Lords, those are examined by CICA under the scheme and some of them, frankly, I cannot believe would be outside the scheme, but that is something that the authorities take account of.

The reforms that we have discussed today not only put the criminal injuries compensation scheme on a more sustainable financial footing but will achieve our aim of focusing compensation on those most seriously injured as a direct result of deliberate violent crime.

I touch on a couple of other points made. The noble Baroness, Lady Royall, asked what happens with multiple injuries. The situation will remain as now: 100% for the most serious injury; 30% for a second-rated injury; 15% for the third most serious injury. The noble Lord, Lord Davies, and others mentioned shop workers. They are treated as other victims are, but where they suffer long-term mental injury lasting for more than six weeks, they will still be able to claim. The noble Lord, Lord Davies, heard the cost of running CICA. The time to process claims is seven to eight months for a first decision and about five months to review a decision.

I heard what the noble Baroness, Lady Royall, said: that somehow the backlog is not real. What is real is that we paid £480 million—the largest sum ever—in compensation this year in part to deal with claims that go back beyond 1996.

[Lord Brookman]

I say to the noble Lord, Lord McNally, that it is quite evident to me and, I am sure, to the whole Chamber and the Gallery, that you have not had one voice from the coalition government Benches in support of what you are saying. It is obvious that in this Chamber there is strong resentment about the changes proposed, even from your Benches.

[Lord McNally]

You may make that assumption. We will see what happens when we come to a vote. I am fully aware, as has been readily acknowledged, that the trade unions, which have been readily represented on the opposition Benches—and rightly so—today have argued against the changes. I understand that. I understand less the willingness of those on the government Benches—sorry, the opposition Front Bench—to leap on this passing bandwagon.

It is no use pretending. We are dealing with relatively small payments from the scheme for temporary injuries. In return for that change—I notice that the noble Baroness did not mention this—we are substantially reforming the amount of money that will go into victim support. I think that I will have support in this House for this concept that rather than paying small amounts here and there—small penny-packet amounts to various minor injury claims; some maybe justified, some very much less so—it is better to devote that money to real victim support and to dealing with the trauma of crime at the sharp end, when it happens, in a way that is effective. That is the basis of these reforms.

I understand where the trade union members are coming from, but I do not know where the noble Lord, Lord Stoddart, is coming from when he throws in overseas aid. One of the things I am very proud of is the way that this Government have sustained overseas aid.

[Lord Stoddart of Swindon]

I gave that example because I had just received an Answer that we are going to spend a further £178 million in Afghanistan—that is, after billions and billions of pounds for our military presence there. I raised this amount because we have people who need to be looked after in this country. We are talking about some of them now. If we can afford to spend £178 million to help people in Afghanistan, which is fine, surely we can find an extra few million to help unfortunate people in our own country.

[Lord McNally]

We are finding it for unfortunate people in our country, but Afghanistan remains one of the poorest countries in the world. I am proud of our aid programme there. If the noble Lord rereads what he said he will probably find echoes of that great conservative sentiment of “hang ’em and flog ’em” and “don’t give it to foreigners”.

[Noble Lords]

Oh!

[Lord McNally]

Noble Lords know exactly what I am talking about. In the past, in some of the battles over civil liberties, human rights and the way that we treat people in overseas aid I would have relied on the Labour Party. The Labour Party has gone a long way from the one that I remember in many of these areas.

[Noble Lords]

Oh!

[Lord McNally]

That is why—

[Lord Bach]

My Lords—

[Lord McNally]

No. Well, if you want.

[Lord Bach]

I will intervene just briefly. We would have relied on the Liberal Democrats as far as legal aid was concerned. What went wrong there?

[Lord McNally]

We have had the whole gamut today of the Labour Party never supporting a cut and never facing up to a responsibility. I listened to what the party opposite has said, and we have taken the tough decisions. Not only have we done that; in this case we have also made the sensible decision to move victim support to where it is needed, at the sharp end. We are finding the resources by these reforms and I commend them to the House.

[Baroness Royall of Blaisdon]

My Lords, I answer this debate as the Leader of Her Majesty’s Opposition, a very responsible Opposition. I am also a proud trade unionist. I am not leaping on a bandwagon that was put together with a bunch of trade unionists. I am doing what I believe to be right and I am proud that the trade unions have sought to support the workers whom they represent. However, I have to say that many of the representations that I received prior to today’s debate were from lawyers who are also concerned about victims.

Today we are talking about victims. Yes, we are living through a financial crisis; we are living through a double-dip recession which one might say was made in Downing Street. However, as noble Lords will know, my party is rightly being extremely careful in relation to financial commitments, precisely because we are entirely realistic about the financial situation that this country faces.

The Minister says that we are against all cuts. That is not true. We simply believe that some of them are too far and too fast. When making financial decisions one is also always faced by a choice. We believe that the choice that the Government have made in relation to victims is the wrong one. Victims do not choose to be victims. They have suffered through no fault of their own. In proposing the Draft Criminal Injuries Compensation Scheme 2012, the Government seem to be putting deficit reduction before victims. I wish to test the opinion of the House.