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Clause 11 - Recovery of benefits etc from payments and recovery of payments

Mesothelioma Bill [Lords] – in a Public Bill Committee at 12:45 pm on 12th December 2013.

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Photo of Stephen Phillips Stephen Phillips Conservative, Sleaford and North Hykeham 12:45 pm, 12th December 2013

I beg to move amendment 32, in clause 11, page 6, line 40, at end add—

‘But nothing in Schedule 1 shall be construed—

(a) as permitting the recovery of any benefits, other sums or scheme payments unless and until an eligible person or an eligible dependant has been made whole;

(b) as permitting the recovery of any benefits, other sums or scheme payments such that an eligible person or an eligible dependant would not be made whole.’.

For the purposes of this section, an eligible person or an eligible dependant has been made whole when, by means of benefits, other sums, scheme payments or compensation, that person or dependant has received an amount equivalent to the average damages which a person diagnosed with diffuse mesothelioma would recover against a relevant employer who had negligently or in breach of statutory duty caused or permitted that person to be exposed to asbestos (or, in the case of more than one eligible dependant, the relevant proportion thereof determined in accordance with the scheme).’.

This amendment matters, at least as I understand the way in which the Bill is to work. Clause 11 gives effect to schedule 1 to the Bill. We will come to that in due course, but broadly, as the clause says, part 1 of schedule 1

“allows benefits and other sums to be recovered from scheme payments, Part 2 allows scheme payments to be recovered from compensation, and Part 3”— that is not relevant for my purposes today—

“contains related amendments to do with information sharing.”

My understanding of schedule 1—I think that the Minister confirmed this on Second Reading and, indeed, when we opened the proceedings in Committee—is that where a scheme payment is made to an applicant, the applicant will lose 100% of their benefits, notwithstanding the fact that because we are enjoined to keep within the 3% of gross written premium so that the industry can swallow the costs of the scheme without passing those on to British business, applicants are to be denied a part of the compensation to which they would otherwise be entitled. My understanding, therefore, is that an applicant who is diagnosed with diffuse mesothelioma and who has no recourse against an employer or against that employer’s insurers will come to this scheme and receive, in terms of compensation, something less than is necessary and would be awarded in the courts to make that person whole, notwithstanding which all the benefits that they receive as a result of the diagnosis of diffuse mesothelioma will then be removed—100% of them. Even though they will get 75% of the damages, 100% of the relevant benefits will disappear. I cannot be the only one to perceive an injustice in that situation, although I think that I am the only one to have moved any amendment before this Committee in relation to it.

What amendment 32 seeks to do, albeit in somewhat convoluted terms, which is the way in which it has to be done for the purposes of debate, is to make clear two things: first, that people do not lose any of their benefits or anything else until such time as they have had 100% of the damages that they would achieve if there were an insurer or employer against whom they could proceed, and secondly, that nothing can be recovered by way of benefits or other sums to reduce them below that 100%, so that they receive full compensation—they are made whole in the same way as they would be if they were not driven to a scheme of last resort but were before the courts.

That seems to me to be eminently desirable, but, much more importantly, it seems to be fair to those who are diagnosed with a disease that will, without doubt, kill them in an unpleasant way and leave many of them with surviving dependents who will not only be faced with the loss of a loved one, but the loss of the income that the loved one might have produced.

It is wholly unfair and wholly wrong that anyone in those circumstances should lose 100% of their benefits or other payments to which they are entitled when they are not being fully compensated for a disease that will kill them and which they have contracted purely because—  I said this when I opened the debate on the first amendment to the Bill—they have gone out to work and sought to do that which we all seek to do every day.

Although I probably will not test the Committee’s will on the amendment, I hope that the Minister listened to that. I hope he will go away, reflect and ensure that the Government move amendments on Report to make it absolutely clear that no one who is entitled to a payment under the scheme will lose more of their benefits than they will recover in terms of the percentage of the average damages that would be payable if they were not driven to a scheme of last resort.

Photo of Ian Lavery Ian Lavery Labour, Wansbeck

I tend to agree fully with the hon. and learned Member for Sleaford and North Hykeham. Again, it looks very much as if the poor old victim is being pushed into the background and little consideration is being given either to them or their family. The Department for Work and Pensions will have 100% clawback under the regulations, but at the same time, for the reasons that we discussed at great length on Tuesday, people will receive only 75% of any potential award. That is perverse and I cannot come to terms with that in any way, shape or form.

On Second Reading, I asked the Minister whether he could convince me that that measure was right, just and in the best interests of natural justice, but he did not convince me. I am up for a full and honest explanation from him. He has been forthcoming on every other issue that we have debated in Committee, and I hope that that will be the case with this issue.

Looking at the situation, why indeed should the state have a greater right of financial recovery than the victim? Why should we as politicians be saying that the state can claw back 100% of payments, but victims will get only 75% of any award? That is not natural justice. It just isn’t cricket, and it is not fair. I am desperate for a reasonable explanation of that. Quite frankly, there is not one and I look forward to the Minister’s response. By clawing back DWP benefits at 100% when compensation is paid at 75%, claimants are penalised financially on two occasions. That cannot be right. It is illogical, grossly unjust, wholly unfair and not acceptable.

Photo of Kate Green Kate Green Shadow Minister (Work and Pensions)

I share the position articulated by the Members who have spoken so far. It is a palpable injustice that victims should receive only a proportion of average civil compensation when 100% of benefits will be clawed back. However, I can offer some solutions to the Minister, which might help to deal with the injustice. We debated the first solution extensively on Tuesday, but sadly the Minister was not amendable to it. The pressure of the clawback of benefits would be easier to accept if the level of payment under the scheme was more generous. If the level of clawback was aligned with the percentage of the payout, the more generous the level of payment, the larger the clawback would be. I am sure that would be of great interest to Her Majesty’s Treasury.

The Government are willing to put £17 million of public money into the scheme. Rather than gifting that money to the insurance industry, it is eminently possible that they could use it to protect individuals from the clawback of their benefits. I will talk a little more about that. Although the £17 million is to be gifted to the  industry, the figures from the 10-year and 40-year periods show that there is plenty of room within the 3% levy of gross written premium for the industry to pay back that sum over time. That would ensure that the Treasury is not left out of pocket and the industry is able to meet the cost of the levy without needing to pass on the additional cost to its business customers.

I hope the Minister will reflect on the strong views expressed by the hon. and learned Member for Sleaford and North Hykeham and my hon. Friend the Member for Wansbeck on the moral argument for aligning the recovery of benefits with the proportion of civil compensation that claimants receive. I hope he will also consider the practical solution that I have suggested, which would make options such as a clawback at 75% of benefits, if civil compensation remained at 75%, affordable to Her Majesty’s Treasury.

Reducing the level of benefits clawback would mean that more money would be left in the pockets of mesothelioma sufferers. At 75% compensation levels, I estimate that sufferers would be £5,000 better off. The hon. and learned Gentleman will be interested in that, because it is equivalent to raising compensation levels to nearly 80%. Claimants would end up with £72,000, at 75% compensation levels with 75% clawback rates.

Photo of Stephen Phillips Stephen Phillips Conservative, Sleaford and North Hykeham

The hon. Lady keeps ascribing to me a desire to see the level set at 80%, but I have made it clear during the debate that I think it should be 100%. The point about the 80% is that if legal fees are £2,000, 80% can be accommodated within the 3% of gross written premium. I want to make it clear that I am not advocating 80% for any reason other than that. Mesothelioma sufferers should be made whole.

Photo of Kate Green Kate Green Shadow Minister (Work and Pensions)

I apologise to the hon. and learned Gentleman if I gave the impression that that is not his position. He was very clear on Tuesday about his position and that those are the constraints under which that amendment would be proposed.

If we could claw back 75% of benefits at 75% payment rates, claimants would end up with £72,000 rather than £73,214 at 80% with a 100% clawback. If no clawback were to take place, claimants would be £20,000 better off, equivalent to 92% average civil compensation.

Photo of Paul Goggins Paul Goggins Labour, Wythenshawe and Sale East

My hon. Friend is making an important point. Does she agree that there would be a greater incentive to the Department for Work and Pensions to try to get the industry to up their contribution to 80%, because if claims were at 80%, the clawback would be at 80%?

Photo of Kate Green Kate Green Shadow Minister (Work and Pensions)

My right hon. Friend is absolutely right. There is plenty of scope for manoeuvre with these figures, to the benefit of both the public purse and mesothelioma sufferers. I would suggest that the figures for what can be recouped by the levy over a 10-year period mean that there is plenty of room within affordability for the industry for such options to be explored.

I strongly support the sentiments that have been expressed about this amendment. I very much hope that the Minister will indicate a willingness to be imaginative in improving the position of sufferers and look forward to his response.

Photo of Mike Penning Mike Penning The Minister of State, Department for Work and Pensions 1:00 pm, 12th December 2013

I have listened really carefully to the contributions. I must admit, we had gone over some of this territory already about percentages, the deal and the scheme, which is based on an agreement with the insurers. Recovery legislation is quite specific. The shadow Minister knows that and Ministers who have been in that position before know that one cannot cherry-pick back and forth and make a special scheme on benefit recovery for any individual scheme. I know that the hon. Member for Wansbeck will probably not go with me all the way on this—and I fully understand why—but although some people get 100% and we are on 70%, there are people in the civil courts who get less than they would get in the scheme and there is 100% recovery of the benefits for them.

If we take the 75% out of it, there will be people who get financially less than they would from this fund—that is if they came to the fund. They cannot come to the fund, because it has been settled in court because they found their insurer and their employer. These people will get 100% recovery of the benefits they claim. So there would be a two-tier system. That is why it would not be acceptable.

Photo of Kate Green Kate Green Shadow Minister (Work and Pensions)

I am not clear on which circumstances an individual would receive less. He might receive less in absolute financial terms, but that would be for a range of other factors. for example, his age and his dependence. I do not think that the objective basis of assessment would be less fair to people who make a claim through the civil route, even if the monetary sum that they were entitled to was lower because of their personal circumstances.

Photo of Mike Penning Mike Penning The Minister of State, Department for Work and Pensions

That was not the point I was making. My point is that in the civil courts, one would get a 100% deduction, no matter what amount of money one had. We have a 75% scheme within the recovery legislation. There are lots of schemes: we could look at the £17 million, the change in the 3% or, as my hon. and learned Friend the Member for Sleaford and North Hykeham has consistently argued for, 100%. As I said, we are in this position where we have the deal on the table. I have the legislation on recovery where it is, and that is why we are where we are. That is why I am afraid that I cannot accept the amendment.

Photo of Stephen Phillips Stephen Phillips Conservative, Sleaford and North Hykeham

Very kindly for the Committee, the Minister wrote to everyone who contributed at Second Reading on 6 December. In his letter, he indicated that the Government were minded—at least at that stage—not to accept any amendments in this regard. I have read that letter very carefully in so far as it deals with the recovery of benefits. I do not find within it anything that is particularly palatable as to why someone who will receive at the moment 75% of the compensation to which they are entitled as a result of a diagnosis of a disease which is going to kill them, should have 100% of their benefits clawed back. It seems to me that no benefits should be clawed back at all until such time as that person has been made whole. It also seems to me that in so far as benefits are going to be clawed back, they should be clawed back proportionately.

The Minister did not say during the course of his remarks—maybe he would like to intervene on me now—that he would reflect upon this between now and when the Bill is reported to the House. While I do not in any way want to be difficult, if he can give me the assurance that he will at least reflect upon it, this will enable me to say that I was not minded to press this to a vote. As matters stand at present, I have not been given the assurance that he will at least think about it and see if he can come up with a solution. I will be happy to give way now.

Photo of Mike Penning Mike Penning The Minister of State, Department for Work and Pensions

With regret, I have already reflected quite extensively on this. I am afraid that I cannot reflect any more. If my hon. and learned Friend wishes to push it to a vote I fully respect that position.

Photo of Stephen Phillips Stephen Phillips Conservative, Sleaford and North Hykeham

I am grateful. I do not want to cause the Minister difficulties but I am afraid I have not heard anything to persuade me to ask leave to withdraw the amendment. In those circumstances, I am minded to test the will of the Committee.

Question put, That the amendment be made.

The Committee divided: Ayes 6, Noes 7.

Division number 3 Decision Time — Clause 11 - Recovery of benefits etc from payments and recovery of payments

Aye: 6 MPs

No: 7 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

Question accordingly negatived.

Ordered, That further consideration be now adjourned. —(Claire Perry.)

Adjourned till this day at Two o’clock.