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Mr. Hutton: I am grateful to the hon. Gentleman for giving way again; I appreciate his courtesy. I am sure that he understands that the legislation has nothing to do with self-insurance: it is do with third party compulsory insurance.

Dr. Harris: That is a reassuring comment. I hope that the Minister will confirm that the Government will not move any further towards those sorts of schemes. However, the principle will be breached if the Government seek to raise additional funds for the health service--they make no bones about it; that is what they are doing--by increasing motor insurance when that money could be raised more fairly, transparently and less regressively through general taxation.

There has been debate, some of which I have not followed--particularly the contribution by the hon. Member for West Dorset (Mr. Letwin)--about the nature of compulsory insurance. It has been claimed that because it is compulsory insurance, the charge is okay. That implies that people with optional insurance should not be asked to fund the health service. One can understand the moral pressure that could be brought to bear on people who were asked to contribute voluntarily to the NHS. That could cause philosophical and political problems for the Government.

However, I feel strongly about the way in which the Government have attached national lottery funds to improvements in cancer treatment. One could argue that that is not funding NHS core services--although the Government would have difficulty claiming that improved cancer care is not core to the NHS. The policy is a move away from the position adopted by my party and the Labour party in opposition that lottery funding should not be used to support NHS core services. Cancer is a particularly evocative subject for patients. Because the Government have chosen to fund cancer treatment through that indirect charge--it is the type to which we refer in our reasoned amendment--patients feel that they are somehow doing the NHS the world of good by spending money, which in many cases they do not have, on that form of gambling. Commentators have said that funding the NHS through the national lottery is another example of the rich finding ways to make the poor pay more for the services that everyone uses.

Miss Begg: The hon. Gentleman is straying from the Bill's remit. Surely the Bill's aim is to deal with the anomalies in the existing legislation which I described and to simplify the bureaucracy so that the collection of charges is fairer and easier.

Dr. Harris: I understand the hon. Lady's point and I shall listen carefully for a ruling from you, Mr. Deputy Speaker, rather than from the hon. Lady, if my remarks are not in order. My point is that the principle of co-payment of charges can extend much further than this matter and our objection on Second Reading is based on the fact that if we concede the point and support the Bill, as Government Back Benchers will, we do not know where that extension will end. I know that the Minister has been listening carefully to my remarks, and I seek

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clarification on that point. In Committee, I shall take a constructive approach on my specific concerns, which I shall address later.

Mr. Gareth R. Thomas: Should not the hon. Gentleman view the Bill in the same way as the Government's attempt to tackle prescription fraud? The Bill aims to make an existing system work more effectively and fairly and no great new principles are being advocated, as he is suggesting.

Dr. Harris: Liberal Democrat Members are prepared to accept that the Bill will achieve greater efficiency and, by abolishing the emergency treatment charge, more fairness in the existing system. However, the point that I have already made twice--once in response to one of the hon. Gentleman's colleagues--is that by introducing the Bill the Government are re-establishing a principle that can be challenged. They could use this legislative opportunity to say that they will not fund the NHS through flat-rate increases on compulsory insurance. We have a genuine disagreement with the terms of the Bill, and it is valid to oppose it on Second Reading because of the missed opportunity to revoke that principle.

Car parking charges have also been mentioned. One can accept, as I have at my local hospital, the use of car parking charges to encourage people to use public transport and to avoid providing a free parking facility on hospital grounds for people who may have no business to park there. That is a legitimate way to level the playing field and ensure that there is no financial incentive for people to use their cars, particularly in congested areas. That is why the Liberal Democrats support a tax on employers' car parking perks, including those that apply to hon. Members.

When hospital authorities justify high charges by saying that any money raised will go to patient care, they breach the principle that patient care should be funded according to means. I see that the hon. Member for Wakefield is back in his place. He will not have heard me say that I agreed with much of what he said about the principle of sticking to general taxation for raising the bulk of NHS funding. When patient care directly benefits from people paying high car parking charges over and above those needed to control transport congestion, users of the service are being made to pay more than the average taxpayer, which I oppose. After all, on that basis one could argue that there should be a hike in canteen charges over and above what is necessary to break even so that hospitals can make a profit.

Those arguments are of relevance if this legislative opportunity to re-establish a principle is then used to open the floodgates.

It is seen to be an advantage of the Bill that the money to pay for patient care will go directly to hospitals and that the charges have been worked out on a notional basis, such that if all the money was reclaimed it would pay the hospital costs of all road traffic accidents. However, it is worrying that through direct hypothecation, an entire area of the NHS will effectively be paid for by indirect patient charges. Although that may not be the Government's intention, it sets a precedent for future Governments or, perhaps, for this Government in another Session. The costs of road traffic accidents will be paid entirely by co-payment by insurance companies, albeit directly

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to hospitals. That is a grave concern, however much the Government assure us that the principle will not be extended.

We must consider the principle mentioned by the hon. Member for South Swindon--I am glad that she made the point for me--who said that it seems illogical to stop at hospital costs. I might support her in Committee if she tables an amendment, because without one, there will be a perverse incentive for hospitals not to discharge patients for community nursing because they will be able to retain the £435 a day that they are able to charge for in-patients.

Another incentive is created by the flat-rate out-patient charge. It may be that it already exists but because hospitals do not collect the charge, it is not at the forefront of administrators' minds. It would be much more cost effective for hospitals to see people once in out-patients, rather than recurrently, because no matter how often people are seen in out-patients, the revenue to the hospital is the same. I question whether purchasers will take note of the Secretary of State's words that the charges are deemed to pay for the entire cost of road traffic accidents and will not be willing to fund such accidents as a part of their contracts with hospitals.

For all those reasons, Liberal Democrat Members cannot support the Second Reading of the Bill. We will work constructively in Committee to improve the Bill, but we seek reassurances from Ministers on the points of principle that I have raised.

6.57 pm

Mr. Andrew Dismore (Hendon): I first took an interest in this subject in the late 1980s, during my work as a solicitor specialising in personal injury litigation. In 20 years of practice as a PI lawyer, I have found it increasingly unfair that, under private health insurance policies, I could be forced by the likes of BUPA to claim back their expenditure on the private treatment of accident victims who were their members, while the NHS could not effectively make similar claims. As a passionate believer in the NHS, I found it particularly galling to send cheques for thousands of pounds to private health insurers, but not to the NHS.

I first flagged up that problem in a pamphlet that I wrote for the Association of Personal Injury Lawyers in 1990. I should say that I have a non-pecuniary interest as a member of APIL's executive committee. I again raised the issue in 1996, in a book published by the Society of Labour Lawyers entitled "Law Reform for All", when I wrote:


Of course, as hon. Members have said, there is nothing new in what the Bill proposes. Recovery of medical expenses was first introduced in Herbert Morrison's Road Traffic Act 1930, which also introduced compulsory insurance for motor vehicles.

Equally, there is nothing new about the tort principles of common law, which have provided restitutory rights going back centuries. In its response to the Law Commission in April 1997, APIL said:


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What is new is that people have been waking up to the unfairness of the system for the NHS, and, more importantly, its patients. In Personal Injury magazine in 1996, the general editor, Frederick Holding, said:


    "the medical and legal communities should wake up to the fact that the insurance industry is having a parasitic effect on the taxpayer, the welfare state and NHS emergency services in particular. It is little wonder that the NHS is in crisis when victims of serious accidents, who have the legal right to have their treatment paid for by the insurers of the tortfeasor, are still draining the resources of an NHS system".

That, of course, was the position under the previous Government, and there have been great improvements in the health service since then, but the basic principle still applies.

I was pleased that the Law Commission took an interest in the subject in its full and well-argued consultation paper No. 144, which was published in December 1996 and in which it flagged up the issues involved. My only regret at the time was the Tory Government's complete failure to take on board the possibilities raised by the Law Commission. I am extremely pleased that my right hon. Friends the Secretary of State and the Chancellor have reacted so quickly by introducing this Bill.

This is not a tax on accidents, as the Tories have claimed. The Bill allows the NHS to get back what it is rightly owed. A great deal of debate has focused on motorists, but half the road accident victims are pedestrians, cyclists and passengers, and are not responsible for insurance; they just need to be treated.

The hon. Member for Poole (Mr. Syms) mentioned uninsured drivers. There is a general problem in people failing to take out insurance, and the amount involved in this Bill is a fleabite compared to the total bill of the Motor Insurers Bureau. One way forward could be through the introduction of insurance discs for motor vehicles in a similar way to tax discs, so that we can catch those without insurance.

Despite the provisions of the Road Traffic Act 1930 and the various amendments now consolidated in the Road Traffic Act 1988, the insurance industry has been getting away with ripping off the NHS for years. Of course, the NHS did not pursue its rights effectively, and has let the insurance industry off the hook. However, the fact remains that insurers have not been paying out what they should. They have made windfall profits at the expense of NHS patients for decades.

We are told that premiums may have to go up. The best estimate so far is that they may go up by £6 to £9. I believe that the competitive market for insurers could well absorb that expenditure. That figure overlooks a number of key advantages introduced by this scheme. First, there are advantages for road safety. Car insurance is worked out according to risk, and bad drivers pay more. If part of the impact of the scheme is that bad drivers have to pay more for their insurance, they may improve their driving standards. One third of a million people are injured on our roads each year, and we need to look at the advantages for road safety.

A further advantage is the care of the victims. In the personal injury world, there is a new and growing concern for the victim's wider interests, going beyond compensation alone. Increasingly, we are seeing moves to

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look much more at issues such as the need for rehabilitation care, intensive physiotherapy and so on, so that we can do all that can be done to improve a victim's recovery. Regrettably, such services are somewhat patchily available in the NHS, and some places are better than others.

There are discussions in principle and on individual cases between those who represent victims and the insurers, trying to persuade the insurers that it is in their interests as well as those of the victims to fund such care packages. In the long run, it is cheaper to compensate a fully or better recovered victim than someone with on-going disabilities. If the on-going cost of NHS treatment is to be met by insurers, it will be a real incentive for them to look to the better and quicker recovery of the injured person

In APIL's submission to the Law Commission, we said:


That could also relieve some pressure on NHS services.

The measure will also generate additional funds for the NHS, as the money recovered will be ploughed back into the hospitals concerned, allowing more patients to be treated more quickly.

According to the reply that I received to a parliamentary question last year, currently only £13 million comes back to the NHS. The Wellhouse Trust, which is the acute service provider in my area, clawed back only £45,000 in 1996-97, despite treating almost 89,000 patients in the accident and emergency department, let alone any follow-up in-patient care or elective surgery that might have been needed. That works out at just 50p per casualty. Of course not all those patients were road accident victims, but that shows the scale of the problem.

In 1990, the total cost to the NHS of all accidents was estimated at £1 billion. According to a 1984 study, road accidents account for 18.5 per cent. of all accidents, and result in 34 per cent. of victims bringing claims. Allowing for a proportion of those not succeeding, the estimate of about £50 million or £60 million seems fairly accurate--four times what is currently being recovered, but significantly less than some of the scare stories being put around by some in the insurance industry. I wish that it was higher, but we have to be realistic.

I hope that we will look at a substantial capping of the ceiling. A total of £10,000 is all well and good, but I recall in the past having to send cheques to BUPA for tens of thousands of pounds in response to its incredibly itemised bills. The NHS should be on the same level playing field. I believe that a tariff-based approach is correct, but as we get into better benchmarking of NHS treatment costs, I hope that we can produce a more sophisticated tariff based on the benchmark costs of various procedures. That would result in rewarding efficient hospitals, and encouraging the less efficient to improve towards the average.

I do not believe that the Bill deals well with the length of the recoupment period. The Department of Social Security has a sensible rule, limiting recovery to the date of settlement or five years from the accident. That provides an added incentive to insurers to deal with claims promptly, which I am sure we all wish to see.

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I believe that the Government are correct to put the administration of the scheme into the hands of the compensation recovery unit. When that was first set up by the Tories in 1989 for DSS recoupment, it was a real disaster. It worked unfairly against the interests of victims, and led to many calls for its reform, not least from the Association of Personal Injury Lawyers, the Trades Union Congress, the Law Society and others, and ultimately the Select Committee on Social Security.

Having done some work on this, I found myself in the rather peculiar position of advising the then Tory Government, Labour Front Benchers and Liberal Democrat Front Benchers at the same time on reforms to the legislation. That emerged as the Social Security (Recovery of Benefits) Act 1997, which dealt with many of the problems we were experiencing. The CRU is now a major success story.

The hon. Member for Uxbridge (Mr. Randall) mentioned the cost of the CRU. I took that up at the time, and was told that the unit cost of a recoupment claim for the DSS was less than £10. The system that we are introducing with this Bill will be cheaper, because it is simpler. In response to the question raised by the hon. Member for West Dorset (Mr. Letwin), the CRU recovers £180 million a year, one third of which is from road accidents. It has done so efficiently, and by respecting the necessary confidences of all parties involved.

My right hon. Friend the Secretary of State is right to ensure that victims are excluded from the operation of the scheme. That problem was always one of the failings of the DSS scheme, and it remains a problem, although it is dealt with in a much better way now. By keeping the victims out, we reinforce the message that there is no question of the victim having to pay for medical treatment. That must remain free at the point of delivery.

However, in that way, we can also enlist the help of victims in recovering what is due to the NHS. If victims are given copies of the certificates, they can say whether they are accurate or whether there is an under-estimate. Victims are much more likely to co-operate with the Department's CRU than with some of the private companies that have sprung up. I am sure that the Government have had many approaches from such companies saying that they could do a better job. Compared to the present system, that is undoubtedly so, but we should resist their blandishments, because the CRU will knock spots off them when the new scheme is set up.

The confidentiality of the CRU will help to reduce the growing abuse of claims assessors, putting pressure on victims to bring claims via their dubious services. That often results in victims recovering less compensation overall at a higher price to them through the contingency fee arrangement. Many of the companies involved in road traffic accident recoupment so far on behalf of trusts have a "claims assessor" arm. I believe that there is some evidence that they have abused the information given them by the trusts to drum up trade, putting pressure on victims. Victims must be properly informed of their rights, but they must not be pressured into bringing claims that they would not otherwise bring.

If I have one concern about the Bill, it is that perhaps it does not go far enough. I hope that, when the Law Commission report is published, it will be carefully considered by the Government. I believe that that report

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is promised for February 1999. It is proper for us to await the outcome of that report before looking further at these proposals, but there are some extensions that we should look at.

First, there is the NHS drugs bill. For donkey's years, accident victims have recovered the amount they spend on prescription charges and proprietary medicines. Of course, the total cost to the NHS of the medicines involved is far greater, and we should look to the insurers for the difference between the amount paid by the patient and the cost to the NHS. That may be an administrative problem at the moment, but, with better computerisation, it can be overcome. For example, I once recovered over £500 in prescription charges for a victim. Just think what the total cost to the NHS must have been for the medication received by that victim. The topping up to the full cost requires further examination.

Secondly, we have heard a great deal in the debate about how the scheme could be extended to other areas. I believe that we should look at other areas of compulsory insurance, particularly accidents at work and employers' liability. Such accidents account for half as many injuries again as road accidents--27 per cent. compared with 18.5 per cent of all personal injury accidents. With the help of trade unions' well-developed legal assistance schemes, 24 per cent. of victims claim. Such an extension of the scheme would probably double the amount recoverable.

I can see no philosophical difference between those two areas of compulsory insurance, and believe that both could be made subject to NHS recoupment. In fact, there are positive advantages. In the same way as these proposals could impact on road safety and better care of road accident victims, they could have an impact on health and safety in the workplace, by strengthening the drive for better working conditions through insurers being tougher with bad and unsafe employers, and through better rehabilitation, helping injured employees to get back to work more quickly.

My third suggestion concerns the cost of long-term care, which is sometimes borne by the NHS but more often by local authorities. The legal position on recoupment of these costs is very unclear. Some local authorities expect accident victims or their representatives to sign subrogation agreements, and either expect the victims' lawyers to get the moneys from the insurer, or, even worse, try to claw it back after the event from victims' compensation.

This uncertain area of the law means that disputes are often long drawn out, making cases harder to settle. Sometimes it results in satellite litigation, such as the case of Avon v. Hooper in December 1997, in which Avon county council tried to get the money out of the deceased victim's family, adding to that family's distress. It would be far better if the legal position were clarified through legislation such as this. I should certainly like to see local authorities in a similar position to the NHS in being able to recover their costs.

I very much welcome the Bill, which is long overdue. It will bring in additional and badly-needed resources to the NHS. It will ensure that those responsible for road accidents meet the full costs, through their insurers, of their negligence. I hope that we shall continue this reform process along the lines that I have described.

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7.11 pm


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