Diffuse Mesothelioma Payment Scheme

Steve Rotheram Excerpts

Wednesday 11th February 2015 Westminster Hall

[Steve Rotheram (Liverpool, Walton) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Owen. At the outset, may I welcome yesterday’s written statement from the Minister on behalf of Lord Freud? It goes some way towards addressing one of the central points that I wished to raise, but it also raises a host of points that require clarification. I hope that the Minister will be able to address those. I am certain that my hon. Friend the Member for Stretford and Urmston (Kate Green), who has led the campaign for fair compensation for sufferers, will also have a number of questions for the Minister, as will other Members.

As the honorary president of the Merseyside Asbestos Victim Support Group, I place on the record my thanks to the mesothelioma victim support groups up and down the country for their continued championing of victims and for the dignified and diligent manner in which they fight their cause. I should also make special mention of the late Paul Goggins, who did so much in this place to advance the cause of mesothelioma sufferers and without whom we would not have reached this advanced point.

To give credit where it is due, and so that I cannot be accused of being partisan, let me also say that the work of the hon. Member for Chatham and Aylesford (Tracey Crouch) should also be recognised. The Government’s U-turn should vindicate her steadfast support for victims of this dreadful disease. By the way, I suspect she might still be smarting from the result of last night’s match, when Liverpool secured a deserved victory over her beloved Spurs.

It is now eight months since the Mesothelioma Bill—now the Mesothelioma Act 2014—passed through Parliament. Given that Parliament will dissolve at the end of next month, I thought this would be an appropriate juncture for MPs to convene to discuss the status of the Diffuse Mesothelioma Payment Scheme. That, of course, was before yesterday’s announcement, but the issues before us are no less relevant for that.

Throughout my contribution, I wish to focus on two key points: the 3% levy and research funding. First, however, I would like to highlight the issues that remain outstanding after the Minister’s statement. The 2014 Act delivers the legislative framework for the Diffuse Mesothelioma Payment Scheme, which is a source of compensation for mesothelioma sufferers who could prove they were negligently exposed to asbestos at work, but who could not trace a relevant employer or that employer’s insurer. In addition, the scheme makes payments to eligible dependants of mesothelioma victims who have, sadly, passed away.

Originally, payments of 80% of the level of average civil claims were to be made in respect of people first diagnosed on or after 25 July 2012. The new guidance means that the uprating to 100% will include all those diagnosed from yesterday onwards but exclude those who have already lodged claims.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

I congratulate the hon. Gentleman on holding this important debate, which is very much needed. I also welcome the change that the Government announced yesterday. He mentions the 2014 Act and those who were diagnosed on or after 25 July 2012, but some were, of course, diagnosed before then. A constituent’s husband died in November 2012, but she cannot get compensation because they fell outwith the claim period of a year. Does the hon. Gentleman think that that should be remedied, given yesterday’s changes and the Government’s more enlightened understanding of the issue?

[Steve Rotheram]

The case the hon. Gentleman highlights is similar to cases Members raised in Committee and on the Floor of the House when the issue was debated. It is for the Minister to respond to the question of what will happen to those diagnosed before the 2012 threshold.

The arbitrary nature of yesterday’s ruling caused great distress to a small group of about 250 claimants who already receive payments from the scheme. Will the Minister comment on the unjust nature of the anomaly created by Lord Freud? Instead of sticking to yesterday’s written statement, the Minister should stand up today and announce that he will backdate the increase to include victims who have successfully claimed at the lower, 80% rate during the scheme’s first eight months.

It is obvious that Lord Freud has had to take the action he has, because, as the Opposition predicted, the number of claimants has not reached the inflated figure the insurance companies came up with to make the compensatory package look punitive—the number is far smaller. Lord Freud admits:

“The number of claimants has proven to be below the level anticipated.”—[Official Report, 10 February 2015; Vol. 592, c. 42WS.]

Yes—a whopping 70% lower. He might put this down to the fact that insurers are only now tracing an increasing number of policies, but if we start with an overestimate of the number of claimants, we cannot simply put any decrease down to the fact that the industry has only belatedly got its act together and started tracing compensators for remedy.

It should not be forgotten that, over the life of this Parliament, pressure from mesothelioma campaigners has pushed the Government to increase compensation rates from the initial derisory offer of 70%, to 75%, then to 80% and now to 100% of the level of civil claims. I pay tribute to those resolute campaigners. The Labour party consistently called for an increase during the passage of the Bill, so I am delighted to see that increase come to fruition.

The scheme is funded by a levy on insurers that provide employers’ liability insurance. Throughout the passage of the Bill, the Government gave assurances that the levy would be set at a rate equal to 3% of the gross written premiums on employers’ liability insurance policies. Ministers told us that the insurance industry could afford to fund the scheme through a levy of 3% of GWP without having to pass on the costs to its customers through additional premiums. The expectation in the original impact assessment was that the levy on the industry would raise £338.7 million over 10 years.

In a ministerial statement on 28 November 2014, the Government announced that the levy would raise £32 million in the first year. That in fact represents a levy equivalent of just 2.2%, not the 3% originally agreed to and promised. That was due to the fact that the employers’ liability market accounted for GWP of £1,418 million in 2013—an increase of 4.8% on the previous year. From that figure, it is clear that a 3% levy would net £43.6 million, not the £32 million cited in the ministerial statement. The Department for Work and Pensions does not contest those figures, and it verified them at a meeting involving Lord Freud and the hon. Member for Chatham and Aylesford. I guarantee that, if the converse had happened and the take from the insurance pot at 3% had been lower than anticipated, the Government would not have argued to increase that percentage. Why, then, are they letting the insurance industry get away with a lower yield because the market has increased?

The issue is a cause of major concern, because the Government explicitly promised that the 3% target would be met in year 1. The importance of the additional 0.8% differential cannot be understated. If the Government chose to act, the additional £11.6 million difference could enable payments to be made to sufferers of other asbestos-related diseases, who are currently not covered by the scheme, or in respect of those diagnosed before the scheme was in place, such as the constituent of the hon. Member for Na h-Eileanan an Iar (Mr MacNeil). The additional £11.6 million could provide much-needed investment in medical research—something I will say more about shortly.

The Minister was not in his current post during the passage of the Bill; his predecessor, the right hon. Member for Hemel Hempstead (Mike Penning), was. The right hon. Gentleman declined, in Committee, to enact Labour’s proposal for the 3% levy to be enshrined in law. Instead, he gave Members a cast iron guarantee:

“I say to the shadow Minister, the hon. Member for Stretford and Urmston, that I met Lord Freud, my fellow Minister in the Department for Work and Pensions, this morning. 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.]

He was unequivocal. What do they say about actions speaking louder than words? If the Government do not commit to ensuring that the insurance industry will meet the 3% levy target, they will leave themselves open to legitimate criticism from mesothelioma campaigners that they are on the side of the insurers, not the victims, and are letting insurers walk away from that cast iron guarantee. That is why we pushed for the 3% to be enshrined in law.

I should be grateful for answers to some questions. Why are the Government set to renege on the promise that they made to mesothelioma victims and Members of this House about the 3% levy? Given the present understandable uncertainty about whether the 3% levy figure will be met, will the Minister confirm whether the Government intend to amend the 2014 Act to enshrine it in law? If applications to the scheme increase steadily, as more people become aware of it, and claims exceed 3% of gross written premiums, will the industry pay out from the windfall that it gets from the underpayment it currently presides over? What work is the Minister doing with hospitals, colleges, surgeries and GPs to make those diagnosed with mesothelioma aware of the scheme, to encourage increased take-up? How much is his Department spending on promoting the scheme to sufferers?

I will remind the House—as if this were needed—of what a terrible disease mesothelioma is. Thankfully, it is not a common cancer, but according to Cancer Research UK it is responsible for 2% of all cancer deaths in the country. The latest statistics showed that there were 2,570 known cases, which was a rise on the previous 12 months, with 2,429 subsequent mesothelioma deaths in the same year. A victim is likely to live less than a year after contracting mesothelioma. The disease is commonly associated with men who have worked in heavy industry, such as the construction industry, which is why I am proud of the lead that my union, the Union of Construction, Allied Trades and Technicians, has taken on the issue.

[Andrew Bingham (High Peak) (Con)]

The hon. Gentleman is making a good case. As he says, mesothelioma is an asbestos-related condition usually associated with heavy industry, but the incidence in my very rural constituency is higher than the national average. I just wanted to point out that it does not necessarily occur only in big cities and industrial centres.

[Steve Rotheram]

I absolutely agree, and was not painting a picture in which only males or people working in heavy industry are affected. Women who never worked and who were housewives have contracted mesothelioma, because they washed clothing with asbestos dust and particles on it, which they breathed in. I was not trying at all to underestimate the impact on the rest of the country.

There cannot be a debate on mesothelioma without talking about research. When the 2014 Act was being considered, the late Paul Goggins tabled amendments on that very matter, which I moved. The Government contended in the House of Lords on 9 December 2014, at column 1710, that funding for mesothelioma research is available, but no good research proposals have been forthcoming.

There are two points to make. First, it is estimated that at present £1.4 million is spent on mesothelioma research. That can be compared with research spending of £22 million for bowel cancer, £41 million for breast cancer, £11.5 million for lung cancer and £32 million for leukaemia; we can quickly see that mesothelioma is at the bottom of the research pile. Lord Alton of Liverpool previously made it clear that there are 17 other forms of cancer for which far more research resources are reserved than for mesothelioma.

Secondly, the Government’s position on the quality of forthcoming research proposals is contradicted by the recent announcement that Aviva and Zurich have commissioned the British Lung Foundation to undertake £1 million of mesothelioma research. That is of course welcome, but is not a statutory requirement. It is voluntary, and future moneys may not be guaranteed, but it shows that the industry believes that quality research proposals exist and that it is only the Government who are not willing to back the scientific community to lead on the matter.

I come back to the point about excess moneys raised from the full 3% levy being utilised for the benefit of the victims. Should an additional £11.6 million be available in the pot, even if claimants were paid out at 100% of their claim, as they now will be, there would still be about £5 million left, which could be devoted to research. Why is that not happening? Under section 13(2)(b) of the Mesothelioma Act 2014 the Government can use the amount recovered from scheme payments under the recovery of benefits legislation to help pay for the costs of the scheme. Now that the costs of the scheme can be covered completely by a 3% levy, there is no need for the subsidy. It is currently estimated that nearly £5 million will be recovered from payments. That money should be used to fund medical research, not to subsidise the insurers unnecessarily.

I have several questions for the Minister. I would appreciate it if he replied today, but if he cannot answer them all, perhaps he would write to me and the shadow Minister on each point. The written statement released by the Department yesterday says:

“Following discussion with the insurance industry, I have agreed to introduce some additional administrative safeguards to ensure that we can all be confident that the scheme continues to act as we intended and remains a scheme of last resort.”—[Official Report, 10 February 2015; Vol. 592, c. 42WS.]

What assurances can the Minister give sufferers and their families that that will not lead to increased restrictions and a higher threshold for proof of employer negligence? Why did he meet only with the insurance industry and not with victims to discuss possible amendments needed in the scheme? Why was the need for additional safeguards not picked up during the passage of the Bill through both Houses? Are the Government still lending the insurance industry a full £17 million, even though the take-up of the scheme is lower than expected?

Lord Faulks told peers,

“The Government fully recognise the need to stimulate an increase in the level of research activity and continue actively to pursue measures to achieve this.”

What measures are the Government taking to increase the amount of research? In the same House of Lords debate, Lord Faulks went on to say:

“It is absolutely not the case that there is insufficient funding for research. As I have said more than once, the case is that, at the moment, there is not a suitable number of applications for research.”—[Official Report, House of Lords, 9 December 2014; Vol. 757, c. 1710-1712.]

What specific number would constitute a “suitable number” of research applications? Has that figure been met?

Finally, there has also been a question of whether insurers have made a profit out of the system because the levy target of 3% has not been met. Lord Faulks agreed to look into that. Can the Minister update Members?

For the public and the mesothelioma victims support community to have confidence in the scheme, it is vital that in the first instance the commitments that this House made to the victims should be met without any hiccups or backtracking. Failure to enforce the 3% levy and to commission the necessary research, with adequate and proportionate funding, would be a dereliction of duty and undermine the entire scheme. We owe it to the victims of this cruel disease to get things right.

--- Later in debate ---

[Ian Lavery]

Again, there are all these anomalies. If we look at the other types of compensation deal with insurers, trade unions and law firms, we see that the vast majority would pay compensation dating back to what is classified as the date of guilty knowledge, not a date that has just been plucked out of the air. As I said, mesothelioma goes back for generations. We should be looking to compensate people—never mind the cut-off date of July 2012. There was even a document for a consultation that began on, I believe, 25 February 2010. Is that not a date of guilty knowledge in itself? Why can compensation not be paid to victims going back to at least 2010?

Everyone who has spoken has mentioned the real issue at the moment, which is medical research. My hon. Friend the Member for Liverpool, Walton mentioned Dr Moore-Gillon, who has said that mesothelioma is

“not an attractive area for researchers…If you’re a bright person with a PhD making a career in cancer research and you are told you can work on a mesothelioma project for a year, you’re looking for a new job in 12 months. Instead, you can hook into breast cancer research and be employed for 20 years.”

[Steve Rotheram]

On that point, my hon. Friend is absolutely right. A leading researcher has done some positive work using adult stem cells, which, once they are adapted and injected into a vein, target cancerous mesothelioma cells. Unless additional funding is put forward to develop that research to clinical trials, we will simply be paying compensation to people who have this terrible disease instead of doing what we should be doing—giving them a cure. I am sure that everybody who has mesothelioma would rather have a cure than the compensation.

[Ian Lavery]

I do not think I could have put it better myself. We debated medical research long and hard in the Mesothelioma Bill Committee, but we have not really made any progress. I urge the Minister to think about the fact that we really should put mesothelioma right up there with other cancer-related disease so that we can, as my hon. Friend has said, try to cure and prevent that horrible disease, rather than just thinking that it is right to pay compensation 30 or 40 years later.

Finally, I want to ask for clarification on a point that I am genuinely unsure about. When it was agreed that 80% of the compensation would be paid, the DWP stated that 100% of any benefits that had been paid with regard to mesothelioma would be clawed back. I am not sure whether that has changed, but I would welcome the Minister’s view on that. If it is still happening—the insurance companies and everybody else has come up with 100% compensation, and that is fine—for the period where people receive 80% compensation, compared with 100% clawback from the DWP, surely there is a case for them to have some form of claimant rebate.

All in all, I welcome the statement, but there are still lots of questions to be answered. The Mesothelioma Bill gave us a great opportunity to give 100% support to the victims, but we did not quite get there. Perhaps we are getting there step by step, but why do we not simply take the massive step that is needed and put things right as soon as we possibly can?

--- Later in debate ---

[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.

[Steve Rotheram]

The Minister has used the words “levy” and “cap” interchangeably on numerous occasions, which is confusing. During the passage of the Bill, it was clear that we talked about a levy. The right hon. Member for Hemel Hempstead (Mike Penning) was the Minister at the time, and he talked about a levy. When is a levy a cap?

[Mr Harper]

No, I do not think we are at cross purposes at all. It is a levy, but it is capped at 3%. The amount of the levy is set, based on the costs of the scheme. The costs are calculated and then the levy rate is calculated to recover the costs, and it was agreed that the cap would be 3%. That is the position that I made clear in my answer to the written question from the hon. Member for Stretford and Urmston. It is a levy that is capped at 3%. The deal was that the insurance industry would absorb the costs of the scheme and not pass them on to employers through employers’ liability premiums if they remained below 3%, which is why the 3% cap was set.

[Steve Rotheram]

The Minister is trying valiantly to justify what he has picked up. It is not what was intended for the scheme and it is not what was said during the passage of the Bill. I understand that the cap is a maximum, but it was calculated according to what the industry said it could afford. The industry said 3% of this huge figure—about £1.4 billion or £1.5 billion—was the levy it would draw down. That was the amount that the industry thought would be needed for claimants, and that is why we get the figure of 80%, by the way. It was 80% because the industry thought it would be swallowed up by the 3% levy. I am sorry, but the Minister cannot have it both ways.

[Mr Harper]

The commitment that the industry made was not in terms of what it could afford. It was about what the industry was going to absorb and not pass on to employers more generally. It was important that the costs of compensating sufferers of the disease did not fall on employers generally. We wanted the costs to fall on the insurance industry. It is worth reminding people that the insurance companies that pay the levy today are not necessarily the insurance companies that took the premiums for the policies in the first place. That is part of the problem, because of the long latency of the disease.

Governments have created all the schemes—the 1979 scheme, the 2008 scheme and this one—because of the long period between when someone has exposure to asbestos and the diagnosis of the disease. The impact of the disease over a very long period of time led to all the issues with employers not being in business—that generated the 1979 scheme—and the inability to trace either employers or their insurers. All such issues relate to that long period of time, which is why it is important that the costs are borne by the insurance industry, although they are not necessarily the same companies that took the premiums in the first place. That is why it was important for the Government to work on this in an agreed and proportionate way, so that we could get the scheme in place to ensure the benefits go to the victims of the disease. If the matter had got bogged down in a big argument and legal disputes, there would not be a scheme and there would not be any compensation for people. Both Lord Freud and my predecessor as Minister wanted to make sure that the scheme came into force, so that it could start benefiting victims of this disease.

Let me respond to a couple of questions that the hon. Member for Liverpool, Walton specifically put about the written ministerial statement yesterday, which I think was generally welcomed by colleagues, including my hon. Friend the Member for Chatham and Aylesford. Lord Freud made it clear at the beginning of that statement that we are going to monitor the progress of the scheme and the extent to which the assumptions about claim rates are borne out.

During the first months of the scheme, the number of claims is much lower than at other times. However, partly because the Employers’ Liability Tracing Office has been doing an increasingly good job of tracing insurance policies—meaning that sufferers of this disease can more easily, and rightly, pursue compensation from those from whom compensation is due—the costs of the scheme are lower than had been thought. Therefore, we thought it was right to increase the tariff from 80% of average civil claims to 100% from the date of the announcement. The regulations to bring the scheme into effect will become law next month, but as is usual in government the uprating will apply from the date of the announcement, in the same way that the scheme in the first place applies from the date it was announced, which was 25 July 2012.

That is a general rule in government. I know that it is always difficult, because when a scheme is set up there always has to be a starting point and obviously some people will always be on the wrong side of that starting point. However, it is a general rule in government that we have to start things from when we announce them, and not backdate them. [Interruption.] I hear the shadow Minister, sighing, but if she ever has ministerial responsibility—for various reasons, I hope that she will not have such responsibility—I think she will very quickly understand the logic of not backdating things, and if she does not then the conversations she will have with others in her party will soon persuade her of the wisdom of that approach.

I want to be clear, although I think it was made clear in the written ministerial statement yesterday, that the announcement yesterday means that the scheme will start from yesterday for those already diagnosed, even though that is ahead of the legislation coming into force. Again, that is the same argument that the hon. Member for Na h-Eileanan an Iar (Mr MacNeil) made—I probably mispronounced the name of his constituency, although I always try to pronounce it correctly—when he referred to the starting point of the scheme. I know that he has tabled a number of written questions about this subject on behalf of his constituents, but I am afraid that that has to remain the position.

Both the hon. Members for Liverpool, Walton and for Stretford and Urmston, as well as my hon. Friend the Member for Chatham and Aylesford, talked about increasing the take-up of the scheme. We have been working with stakeholders, including the Asbestos Victim Support group, Macmillan nurses and other groups, to ensure they have information about the scheme, so that they can notify those victims who have been newly diagnosed. We will continue to consider what more we can do. For example, if someone searches for information about this subject on the internet, as is common now, we have made sure that the scheme will come high up on the search list, so that people can locate it. If anyone has any ideas about how better to communicate that information, I am very happy to listen to them. We think that we are doing a good job, but I guess that one can always do better at communicating.

--- Later in debate ---

[Mr Harper]

Given what the hon. Gentleman says, and it is obviously the reason why he has tabled written questions, his constituent is not eligible for this scheme. What I do not know without looking at the specific facts of the case—obviously, if he has not already done so, he can either write to myself or Lord Freud with those facts—is whether they will be eligible for one of the other existing statutory schemes. If the hon. Gentleman writes to us, we can then look into the case to see whether his constituent is eligible for the other schemes.

[Steve Rotheram]

Will the Minister give way?

[Mr Harper]

Of course—briefly.

[Steve Rotheram]

I will be very brief, before the Minister finishes his remarks. Given that the expectation, even from the industry, was that the cost of the scheme would equate to 3%—I do not think that is arguable; hence the levy—does he believe that some of the residual amount, or underspend, should be invested in research? It is really important that research is top of the agenda.

[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—