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Mr. Simon Hughes (Southwark, North and Bermondsey): During the debate on the Queen's Speech, the Secretary of State said that it had been estimated that the charge might raise anything between £30 million and £500 million. Can he be more specific today, and if not, why not? Given that he previously led the House to believe that the Government did not favour the introduction of any new charges--presumably he will say that these charges are old charges that are merely being collected--can he confirm that the Government are happy about, and supportive of, all the other charges currently placed on people who use the NHS?
Mr. Dobson: The Bill is about one charge that hospitals have lawfully collected since 1930, and another that has been lawfully collected by hospitals since 1933. I understand that both were introduced with the support of the Liberal party. All we are doing is getting rid of one of them, and making the other one work. There is nothing new about either of them.
We propose that the compensation recovery unit of the Benefits Agency should take on the job of getting the money in and distributing it to hospitals. The compensation recovery unit was set up in 1990 by the previous Government to recover state benefits where both benefits and compensation had been paid out in respect of the same accident, injury or illness. Insurers are required to notify the recovery unit of claims for compensation, so the unit is well placed to take on the additional task of collecting NHS charges.
There are many advantages to our proposal: the recovery unit has a good track record; the unit has good relations with the insurance industry and proven procedures; insurers will need to deal with only one central unit instead of several hundred individual hospitals; the work will be done at minimum administrative cost to all concerned; hospitals will be relieved of an onerous task; the process will require minimal involvement of motorists; and the proposal will secure around 50 jobs on Tyneside, where the recovery unit is situated. The insurance industry supports the proposal.
In a further effort to simplify and reduce administrative costs, we propose to introduce a tariff of charges so that every hospital, every insurer and the recovery unit will know how much the charge is likely to be in every case. In most cases, the only patient information that will need to be transmitted is whether motorists were treated in an NHS hospital as out-patients, and how many days they spent in hospital if they were treated as in-patients. The insurance industry supports that proposal, too.
The charges will be set out in regulations, and will be made up of two items. The first will be a flat rate fee for those who do not need to stay in hospital. Initially, the flat rate fee will be set at £354, no matter how many out-patient attendances are involved. The second item will be a daily rate charge for those who need to stay in hospital, and that will be set at £435 per day initially.
The new tariff has been calculated to reflect the current cost of treating road accident victims. It is expected to bring in a total amount that broadly reflects the costs of treating those who make a successful claim against another driver. As part of the arrangement, I have concluded that it would not be in the spirit of the proposed new system to impose open-ended liabilities on insurers, so there will be a ceiling of £10,000 on a single charge. Both the tariff and the ceiling will be set by regulations, and uprated as necessary.
Following our consultations with the motor insurance industry, we propose that the new charges should apply to treatment given in respect of accidents that happened on or after 2 July 1997, when the Chancellor first announced our intention to collect the full cost of treatment. Treatment for accidents that happened before that date will be charged at the new tariff, but subject to a ceiling of £3,000.
Mr. Robert Syms (Poole):
Does the £10,000 limit relate to an individual or to an accident? For example, in the case of a coach, 30 or 40 individuals might be involved. Would the liability be multiplied by the number of people in the coach?
Mr. Dobson:
It would be per person, as would all compensation claims of that sort. There is nothing different about the claim in question.
As the House knows, the Motor Insurers Bureau, financed by the insurance industry, pays compensation to victims of road accidents caused by drivers who are either uninsured or have disappeared. Under the Bill, the NHS will be able for the first time to collect charges from the Motor Insurers Bureau. By regulations, we will make it clear that payments will be sought from the bureau only in respect of accidents that happen after the Bill is enacted.
The new charging process will be straightforward. It involves adding just one question to the existing standard form, which insurers are already required to send to the recovery unit. It will report which NHS hospital, if any, treated a motor accident claimant. The recovery unit will then get from the hospital concerned confirmation that the claimant was an out-patient, and, if an in-patient, how many days he or she spent in the hospital.
The unit will then be able to collect the charge from the insurer as soon as the overall claim is settled, and pass it on to the hospital. Unless there is some dispute,
each motorist's involvement should amount to nothing more than telling his or her insurer if he or she received treatment in an NHS hospital.
Mr. Michael Jack (Fylde):
Will the Secretary of State clarify one point? If, as a result of a subsequent court case, a motorist were found to be entirely innocent of any blame in an accident that led him or her to receive hospital treatment, would the other party, who was blameworthy, have to accept the entire bill for all the parties involved in the treatment?
Mr. Dobson:
The whole question rests on there being a successful compensation claim in the first place. If there is such a claim, it will include the NHS costs. If there is not--possibly, in the circumstances to which the right hon. Gentleman referred--the NHS would not get any money.
We also propose to give insurance companies, for the first time, the right to ask for a review of charges in a particular case, and, where appropriate, to appeal to a tribunal.
There have been a number of scare stories about what we propose. Some people have claimed that we are introducing new charges. Others have claimed that what we are doing will lead to large increases in motor insurance premiums. Neither is true. Nothing is new in principle about what we propose. Insurers have been liable for such charges since 1930. We are merely ensuring that, in future, NHS hospitals will get the money to which they have been entitled for the past 68 years.
The present collection arrangements are such a shambles that no really firm data exist on which to base estimates of the likely sums that may be raised under the new scheme. The best estimates that I can come up with range from around £100 million to about £150 million in England--about £120-odd million to £165 million in Great Britain. The ABI estimates that, if the total impact of what we propose were to be passed on to motorists, premiums might rise by 2 to 3 per cent., or around £6 to £9 per policy holder. That is the ABI's estimate, not mine.
To put this in perspective, again according to the ABI, motor insurance premiums have risen by an average of 16 per cent. for comprehensive policies and 12 per cent. for non-comprehensive policies since 1996. The proposals will have no impact on the no claims bonus of the drivers making the claim for compensation.
In any case, there is good reason to believe that not all the costs will be passed on to motorists' premiums. It was in July last year that we first announced our intention to collect the actual cost of treatment, and we hope to introduce the new scheme from April next year. That means that, by the time the new scheme comes into operation, insurers will have had nearly two years to adjust. That was borne out the other day, when Direct Line was quoted as saying:
Miss Ann Widdecombe (Maidstone and The Weald):
I beg to move, To leave out from 'That' to the end of the Question, and to add instead thereof:
All Government measures must be considered in the context of overall policy. At the moment, it seems that the Government are determined to penalise motorists. I might have been sympathetic to a proposal to make more effort to collect charges from insurance companies, but I am bound to observe that the Bill will have a disproportionate effect on one group of people who use the NHS.
The Government have already raised fuel duty by 20 per cent., and vehicle excise duty by 3.4 per cent. They have taken powers for an entirely new registration tax on new vehicles. By the end of this Parliament, they will have charged motorists more than £9 billion in extra taxation. If we were to use the Secretary of State's quaint method of counting, that would probably come to £18 billion over three years. If so, one would be tempted to observe that motorists were being asked to fund all the increases that he has promised for the NHS. Perhaps he will not on this occasion insist on his favoured method of counting increases.
It has been estimated--the Secretary of State more or less confirmed it when he mentioned a figure of up to £9--that the proposals will add another £10 or so to motor car insurance premiums; I am happy to come down to £9. On its own, that might not have been too serious, whether the figure was £6, £7, £8, £9 or £10, but, in combination with all the other costs that the Government have inflicted on the motorist, it is of more significance than it otherwise would have been.
Can the Secretary of State explain the position of uninsured drivers? As I read his proposals--I am happy to be corrected--the NHS will not write off the cost if the driver is uninsured, and will not charge the driver directly. Rather, law-abiding motorists will effectively be
charged twice, in that their insurance premiums will have to reflect the costs of uninsured drivers' treatment, even though they have already paid taxes to cover such treatment. What guarantees are there that the income from this charge will not end up as a substitute for Treasury funding? What assurances, if any, will the Government give that they will not increase insurance premium tax?
"rises would be minimal as most insurers have already factored in potential NHS claims".
The Association of British Insurers was quoted as saying:
"most companies already take their liability under the existing law into account when assessing premiums."
The principal concern of the insurers has been the fear of retrospective action to recover the sums not collected over the years. In a meeting with me, the ABI said that it
would be prepared to accept 2 July 1997 as the operative date for the changes. It welcomes the simplified arrangements and the tariff system that we propose, so our proposals will not place a large burden on motorists or motor insurers.
'this House declines to give a Second Reading to the Road Traffic (NHS Charges) Bill because the Bill further adds to the burdens the Government has imposed on both commercial and private motorists in that insurance premiums will rise; notes that the proposal did not appear anywhere in the Labour Party's election manifesto, and conflicts with the Government's express opposition to extending charges in the NHS; further notes that these charges will apply only to motorists and not to victims of other insurable accidents; and calls on the Government to clarify its future intentions with regard to both the level and range of any future additional charges in the NHS, and to take into account the impact on the motorist when determining the amounts to be charged.'
It may reassure the Secretary of State to know that the Opposition have some sympathy with some of the aims in his Bill, but we will press our amendment, because certain aspects concern us, and I would welcome clarification of them when the Minister replies.
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