Select Committee on Defence Fifth Special Report

JOINT COMPENSATION REVIEW

1. The compensation proposals sought to maintain the longstanding policy of successive Governments that those injured during their service in the Armed Forces should receive appropriate compensation. The new compensation proposals do not seek to deviate in any way from that position. When it was introduced, the War Pension Scheme (WPS) was innovative and far ahead of then thinking in the provisions it made in this respect. But there have been major changes since in the understanding of disablement, in medical and wider social provision. The Department believes that for the 21^st century the Armed Forces deserve a scheme more reflective of present circumstances and better focused on those most severely disabled.
2. The new proposals are introduced in the context of a highly trained professional volunteer work-force. The Armed Forces today have high standards of leadership and people management. There is better recognition of Health and Safety obligations and occupational health. There is better provision for personal and professional development. And there is better emphasis on injury and illness prevention. In the wider UK community there is universal social welfare, in medicine therapeutic possibilities have been transformed, the approach to people with disabilities, now enshrined in law, is one of empowerment and capability enhancement. Any modern compensation scheme must be designed taking account all of these factors and this was the Department's objective.
3. Crucially, the new proposals will maintain access to compensation for anyone whose disablement can reasonably be shown to be causally linked to service.

We welcome these developments. (paragraph 84).

4. The Department is pleased to note the Committee's supportive comment on our plans to include injuries attributable to service arising out of terrorism and warlike activities in the proposed compensation scheme.

We welcome the assurance that the MoD is willing to look again at restrictive time limits for compensation claims. It is, however, regrettable that the issue of time limits, like many other aspects of the compensation proposals, were not sufficiently developed before the consultation document was published. While we would regard three years as an acceptable period in which to claim for a straightforward injury, it is too short a period for more complicated conditions or those, which develop slowly, particularly given that 70 per cent of claims currently fall outside a three-year timescale. We recommend that any time limit, which the MoD imposes, should relate to the date of the injury or the date of diagnosis of the condition. This practice would reflect limitation rules in civil cases. (paragraph 92).

5. The Department will further consider time limits for claims, but believes that insufficient account may have been taken of the proposed exceptions list. This is an intrinsic part of the proposals and will allow consideration of disablements which may be causally linked to service but with longer time intervals between service exposure and clinical onset. While the change to time limits represents a narrower gateway to claim than that currently applying under the WPS, it is less restrictive than that applying under the AFPS where attributable benefits are only paid for conditions giving rise to medical discharge. The new approach was considered to be a reasonable balance between the two. Until the oral evidence session it was not apparent that the Royal British Legion (RBL) had concerns about the proposed time limits. The Department has already had a meeting with the RBL to discuss their concerns and further discussions will take place in the course of our consideration of this issue.
6. The limitation rules for civil personal injury claims have not been adopted outright as the new compensation scheme is a no fault, not proven negligence, scheme. It was always recognised that while a three-year normal time limit was reasonable for physical injuries, which research confirms are likely to form the bulk of claims, some disorders potentially attributable to service would take longer to manifest. These would be the subject of an exceptions list, which would be regularly reviewed in light of developments in medical understanding.
7. The Scheme will be able to waive time limits where a person is unable to claim appropriately owing to continuous physical or mental ill-health. This need not be due to service-related disorders. The scheme administrators would also have discretion to make exceptions where otherwise there would be a breach of natural justice.
8. The Department has noted Table 3, but does not accept that a high number of first claims for a War Pension made at or beyond 27 years from service release makes the case for an open-ended scheme with respect to all conditions. Investigation of the type of disablement claimed indicates that these are not generally late onset disorders which could reasonably be regarded as attributable to service. There is also a behavioural effect reflecting a scheme which permits claims at any time after service termination. The need for effective communications to promote awareness of the new scheme is acknowledged.

We find it impossible to accept that the MoD has carried out a proper review of the current compensation arrangements when they have no reliable data to show the scale of problems, which they have identified as reasons for change. (paragraph 94).

9. The Department rejects the assertion that a proper review of the current compensation arrangements was not undertaken. Proposals on new arrangements were developed jointly by the Department and the then DSS and included careful analysis of War Pensions invaliding awards and in-service episodes of illness and injury for the period 1995-1999. This study showed that, under present War Pensions legislation, lawful awards can be made with onset in or around Service release for disorders which lack clear, medically recognised causal links to service. This is because an award is appropriate unless there is evidence beyond reasonable doubt denying Service cause.

We would regard any reduction in the number of successful claims for injuries and illness, which was caused by additional administrative obstacles, as undesirable. There are criteria in place at present, which ensure that war pensions are not given away lightly. To impose increased restrictions on claims, in the form of time limits and additional requirements for evidence, without any evidence of current abuse, would be a disservice to the Armed Forces and a very poor reflection of the value which the country places on them. (paragraph 97).

10. Awards for disablement where there is a true causal link to service will not be compromised by the proposed adjudication changes. The Department as an employer understands the importance of providing compensation for Service related injury and ill-health in recognition of the demands which are place upon Service personnel. It considers the new proposals take full account of these responsibilities. The adoption of balance of probabilities standard of proof and a time limit (with built in flexibilities) will not be obstacles to those entitled to compensation. The majority of conditions leading to medical discharge are physical injuries or disorders. Since the new scheme is for injuries/illnesses whose cause dates from the introduction of the new scheme, when new routine systems of medical record documentation will be in place, this type of claim, if service-related, will succeed regardless of burden and standard of proof. The proposals aim to meet the majority of disablements through a simplified administrative process, but will also cope with more complex disablement and late onset disorders. There will be discretion to permit late admission of claims where not to do so would breach natural justice. The proposed time limits and limited provision for review represent significantly more generous eligibility criteria than currently applied under the AFPS.
11. The Department has not suggested any lack of integrity or abuse in the present WPS. The underlying principle of the WPS is that accepted disablement should be causally linked to service, but does not reflect contemporary medical understanding of the causes of disorders or legal understanding of attributability. The Department considers that the WPS eligibility criteria can no longer be justified either in relation to wider best practice or in relation to the particular demands placed upon Service personnel and how these would be dealt with elsewhere in society.
12. The report (paragraph 95) notes the RBL observation that War Pensions are not given away lightly, and that this is borne out by statistics. The Department does not consider that this is borne out by wider comparisons. Against a success rate for first claims of 87% under the WPS, the success for the Industrial Injuries Disablement is 30% and those for incapacity benefit and Criminal Injuries Compensation are both around 50%. However, the specific statistical comparisons are less significant than the issue of ensuring a standard of proof that is consistent with modern best practice elsewhere in society.

It is unacceptable that the MoD did not think through the full implications of the tariff proposals at an earlier stage. It is worse that, even at this stage, it cannot decide whether its proposals will include a review mechanism for subsequent deterioration or not. We recommend that the way in which deterioration will be treated under the new proposals should be properly examined and a fully worked-through scheme formulated, before the review decisions are published. (paragraph 102).

13. The Department is clear about the purpose of adopting a tariff-based compensation scheme. It is designed to:

• ensure that individuals with the same disablement will receive the same level of compensation for pain and suffering;
• be simple and transparent;
• and allow for quick decision-making for straightforward claims at a reasonable administrative cost.

War Pension assessment is not an exact science. Assessments are expressed in percentages rounded to the nearest centile and so share some features with the proposed tariff bands. The tariff scheme produced for the consultative document was clearly thought through but the specific levels were exemplary and, prior to introduction, further work would be undertaken on the disorders included and their descriptors, relative positions and tariff values. This work will be informed by further discussions with medical experts and the revised Judicial Studies Board Guidelines.

1. The Department has given careful consideration to deterioration for the new scheme. This has included an examination of the civil approach and of War Pensions deterioration claims. It was concluded that, for most cases, no such routine provision is now appropriate. A number of factors were taken into account when taking this decision. An assessment of where the majority of awards would fall under the proposed tariff was provided as Ev 137, and this showed the majority would lie at the lower end of the tariff involving conditions where deterioration is unlikely to be an issue, rather there will be rapid improvement to cure. The technical advances in medicine since the introduction of the WPS in 1917 are also important in considering deterioration provision and, whereas in 1917 an illness or disability might be expected to result in inevitable and inexorable decline, this is not the case today where there is a clear prospect of at least improvement to a steady state (if not cure) in a fairly short timescale. Awards in civil cases are almost always full and final. It is recognised that the Supreme Court Act 1981 allows for review of awards. In practice this provision is not much used and it does not apply to gradual deterioration. While the new scheme will not permit routine review on the grounds of deterioration it will allow for review where there has been such a material change in an individual's medical condition that injustice would occur if the original assessment were allowed to stand. It will also include review provision where, from the outset, there is a clear cut risk of development of a consequential disorder. These review proposals will be developed further in consultation with RBL.

We expect to see the details of mechanisms to prevent abuse of minor injury claims set out in the MoD's final proposals. Until then we remain to be convinced that this proposals should be part of the new arrangements. (paragraph 104).

2. The Department considers that it is appropriate to compensate individuals for injuries in-service. In-service claimants may have suffered only minor injury and have fully recovered, but there would in many cases have been a significant element of pain, suffering and loss of amenity for which compensation is appropriate. An in-service claim will require clear medical evidence, will be judged on a balance of probabilities burden of proof and will require confirmation from the individual's commanding officer in the same way as is currently required for the Criminal Injuries Overseas Scheme which is run by the Department. Furthermore, while individuals remain in service, they will be under Service scrutiny and rules, and thus subject to Service discipline. The Department notes the Committee's concern about abuse, but believes the mechanisms already in place adequately meet this concern. Nonetheless, once the scheme has been approved, detailed scheme rules will be put in place to ensure in-service claims are handled in such a way as to minimise the risk of abuse.

The MoD accepts that there are problems for claimants in managing large lump sums. We are pleased that this has been recognised in the proposals for dealing with loss of earnings through a guaranteed income stream rather than a one-off payment. (paragraph 105).

We are not convinced that the proposed new arrangements for paying compensation for loss of earnings through a guaranteed income stream offer any advantage to injured or sick Service personnel, compared to the present War Pensions Scheme. (paragraph 109).

3. The Department notes the Committee's acceptance that loss of earning should be compensated through an income stream. The fundamental difference between War Pension's approach to loss of earnings and the Guaranteed Income Stream (GIS) is that the former is paid at a standard rate while the latter directly relates to the individual's circumstances and takes account of their lost earnings in calculating the income.

We agree that streamlining should not be at the expense of fairness and justness. There are bound to be a great many variables, even in cases which superficially appear to be similar and individuals should not be penalised by a system which is not sufficiently sophisticated to address the specific circumstances of their claim. (paragraph 114).

4. An intrinsic feature of a tariff scheme is speedy delivery of consistent reasonable awards. As compensation for pain, suffering and loss of amenity tariff awards properly focus on the injury or impairment itself and not the particular effects on the individual. The tariff award, by definition therefore, is not individually tailored. However, where relevant, the GIS of the new proposals allows personalisation by reflecting the loss of the individual's earning capacity.
5. As well as differences, there are also important similarities between the proposed Tariff and present War Pensions arrangements where legislation provides that assessment must not take account of individual circumstances.[2] Both the WPS and the new tariff proposals aim to provide consistent equitable awards. To support this, War Pensions awards for disablement are based on statutory scheduled assessments. This is a list or tariff of defined disablements and the mandatory assessments which act as signposts for all other assessment in the scheme. The Department considers that its proposals overall provide sufficient flexibility for awards to address the different circumstances of the cases that can be expected to arise under the scheme.

We do not believe a new system will function properly unless proper medical advice is available as an integral part of the claims process rather than as an add-on used at the discretion of medically unqualified officials. We recommend that the MoD make full use of the extensive expertise, which the War Pensions (now Veterans') Agency has, to administer any new compensation arrangements which it introduces. It should also look at the way the private sector deals with industrial injuries compensation, to assess whether there are lessons to be drawn from best practice there. (paragraph 115).

6. Medical advice is an integral part of the proposed new scheme, without which no sound decisions can be taken. The role of doctors in the new scheme is not to take decisions, but to provide advice, as required, to lay decision-makers. This approach closely reflects the present situation in social security disability benefits, personal injury schemes, the insurance industry and the Courts.
7. The Department notes the Committee's comments on the Veterans Agency's expertise and it will in due course consider which organisation should administer the scheme. However, the Department will be taking full advantage of the Agency's experience when considering the type of medical advice and the mode of its delivery for the new scheme. The Department will also take due account of the Woolf reforms on expert evidence and relevant conclusions on appropriate medical input to ill-health retirement and attributable injury determinations, arising from the HM Treasury chaired, interdepartmental reviews of public sector ill-health and injury retirement.

We believe it is irresponsible of the MoD to propose a change of this scale (that ex-

Service personnel should in future claim supplements and allowances from the Department of Work and Pensions), without itself knowing the full implications. We would be against any attempt by MoD to distance itself from responsibility for the health and welfare of former Service personnel who have been injured or made ill as a result of their service or to shift that responsibility on to other government departments as soon as personnel leave the forces. (paragraph 118).

8. The Department takes seriously its responsibility to its Service personnel, as set out in its Armed Forces Overarching Personnel Strategy. The introduction of the Veterans Initiative and the appointment of the Veterans Minister shows our clear commitment to provide a coherent response to their needs across Government.
9. The Department considers it important to offer proper compensation for injury and ill-health due to service. The new scheme is designed to ensure appropriate compensation is available to all those entitled in the future. However, where there is already provision made by the State, the Department considers it should not seek to duplicate these arrangements. The health of former Service personnel rightly rests with the National Health Service. The Priority Treatment preference for disablements accepted as attributable to service is available currently and the Department plans that this should be continued under the new scheme. The same argument applies in respect to the provision of supplementary allowances. War Pensions specific supplementary allowances exist only because the scheme was established before the welfare state. The allowances for mobility, care and employment difficulties now have equivalents for the general UK population and in recent years and these are largely in line with those currently enjoyed by War Pensioners (and recipients of industrial benefits).
10. The criteria for the WPS supplementary allowances and the civilian equivalent are rather different. In the WPS there is a threshold level of disablement which must be met before entitlement to the allowances can be considered and the difficulty must arise from accepted disablement. These constraints do not apply to civilian allowances and the Department considers that disabled Service personnel should not be disadvantaged in this way. Furthermore, WPS supplementary allowances can only be considered once the disablement award has been determined and so may be slower for the ex-Service claimant than for the civilian equivalent, particularly given the legislative requirement for social security claims to be disposed within 14 days as far as practicable.
11. The Department will be giving consideration to how the Welfare Support service for the new scheme might provide appropriate advice on such questions as State benefits, and tax credits.

Those covered by any new compensation arrangements will require the same welfare support as current War Pensioners. It would be a waste of a valuable resource not to make the services of the War Pensioners' Welfare Service available to claimants under the new scheme and we recommend that the MoD ensure that access to the WPWS is provided as part of any new arrangements. (paragraph 119).

12. The Department is well aware of the ex-Service communities high regard for the War Pensioners' Welfare Service (WPWS). This service will continue for current War Pensioners and Widows. The Department notes the Committee's recommendation that the WPWS should also support the new compensation scheme and this will be considered. As work progresses, the Department will also consult ex-Service organisations.

We agree that it is reasonable to compensate individuals for injuries sustained as part of required fitness or sporting activities, including representative sport. (paragraph 120).

13. The Department notes the Committee's acceptance that sporting injuries arising out of the fitness requirement of the Armed Forces and representative sport should be covered by our compensation arrangements. It is recognised that it will be important to develop clear, unambiguous scheme rules for such injuries so that it is clearly understood which sporting activities are included and which are not (and may, therefore, require personal injury insurance).

We recommend that Service personnel should continue to receive compensation for injuries sustained during home to duty travel, following the current practice of evaluating each case on its merits. (paragraph 121).

14. The Department recognises that there may be circumstances where home to duty travel should be covered in compensation arrangements and it will be developing clear, unambiguous scheme rules to assist in assessing eligibility.

We welcome the MoD's full compliance with the new arrangements for handling civil negligence cases and the improvements this has brought to the process, for both claimant and defendant. (paragraph 126).

15. The Department notes the Committee's supportive comment on the handling of civil negligence cases. The Department considers settlement by means of Alternative Dispute Resolution in all appropriate cases, in addition to settling cases through Counsel-to-Counsel discussion. This might involve mediation, a route strongly favoured by the Lord Chancellor for civil cases in the UK, where there is evidence to support a claim. However, in cases where there is currently no evidence to support a claim, mediation would not be appropriate.

We would be concerned by any potential for vexatious civil negligence claims against the MoD, but we believe that there can be positive aspects of civil negligence cases for both parties. Every effort should be made to make the process as stress-free and swift as possible, including providing full access to medical records. Comprehensive and accurate information should be provided about all the options available to Service personnel in seeking compensation, including their recourse to the civil courts. (paragraph 128).

16. As the Department set out in its original memorandum, it takes due account of the Woolf Reforms and fully complies with the civil procedures rules. Less than 3% of the Department's cases now go to Court. Wherever liability is not an issue, the Department tries to settle claims in Counsel-to-Counsel discussions to avoid the cost and personal stress of extended court cases. Since the introduction of the Civil Procedure Rules, litigation has been less adversarial and a more co-operative process.
17. The Department has issued guidance in a Defence Council Instruction setting out in broad terms the procedure to be followed when submitting a claim for compensation. In addition, several firms of specialist solicitors regularly advertise in the Forces magazines and journals offering a "no win, no fee service". Ex-service organisations, notably the Royal British Legion, are also able to assist a potential claimant.

The net result of the proposed new compensation arrangements would appear to be a significant overall reduction in the MoD's liabilities for ex-Service personnel. This may have been inadvertent, but we do not regard it as desirable. The MoD should be seeking to provide levels of compensation which are appropriate to the commitment which Service personnel make and which reflect the MoD's duty to be a responsible employer. A reduction in expenditure on compensation fulfils neither of these criteria. (paragraph 131).

18. The Department's proposals make clear that compensation will be provided where, by generally accepted standards of proof, it can be shown that a condition was caused by service. Where the state of medical knowledge does not allow confidence in the early emergence of a condition or its subsequent prognosis, exceptional arrangements will be allowed for later initial consideration and review. This approach is considered to be a reasonable reflection of the MOD's proper responsibilities given the current state of medical science and of wider thinking on compensation issues. Where a condition is accepted as attributable to service, the proposals have sought to provide proper compensation for pain and suffering (reflecting wider legal standards) and, where appropriate, for the loss of earnings capacity. This will provide improved support to those most seriously disabled. The approach has been to model the new scheme from first principles on modern best practice, taking account of wider Government social provision and the special commitments made by Service personnel. Overall, no reduction in expenditure on compensation is expected. Indeed, additional costs are expected in the early years.
19. Nor can the cost of the new compensation proposals be considered in isolation. They are part of a wider strategy. In line with the Armed Forces Overarching Personnel Strategy and the Veterans Initiative, the Department has effectively recognised a greater responsibility for ex-service personnel that includes but goes beyond payment of compensation. The Department recognises that there also needs to be emphasis on injury prevention, through training, through high standards of leadership and management, through commitment to Health and Safety, through occupational health, and through health education. Where injury/illness does occur there must be appropriate and timely treatment with rehabilitation and support designed to return the person to his family, work and community. In addition, fair and appropriate compensation must be available to a reasonable timescale, delivered through a system which is transparent and simple to understand.
20. Achieving this package will require substantial financial investment and the Department considers that the overall provision is fully appropriate to the commitment made by its personnel and better focused on the most severely disabled where existing shortcomings will be remedied.

We agree that members of the Reserve Forces should continue to benefit from compensation arrangements, which mirror those available to the Regular Forces. (paragraph 132).

21. The Department is pleased to note the Committee accepts the proposal to include provision for Reserve Forces in our compensation arrangements.

We welcome the improvements which the new compensation proposals undoubtedly offer in some areas, and the fact that, from the examples provided, it appears that a number of claimants will receive increased levels of compensation compared with the present system, particularly severely disabled claimants. However, we have to assess the new system in the context of how it will affect the Armed Forces generally, as well as in terms of improvements for individual Service personnel. The Minister told us that, as a result of the changes in time limits and burden of proof, there would be fewer successful claims for compensation in the future. The MoD has provided no evidence that the current provision is over-generous. Unless it can do so, the new proposals can only be regarded as an unacceptable diminution in the provision the Armed Forces makes for its employees. (paragraph 133).

22. As indicated in its response to the report, the Department supports the need for improvement to the present compensation provisions to meet the needs of the Armed Forces into the 21^st century.
23. At its introduction, the WPS was far ahead of its time. Since then, much has changed, both in society at large and in the Armed Forces. The Armed Forces compensation scheme should not seek to replicate or substitute for the system of health care or social welfare that is available to all citizens. Rather it should ensure that the Department meets its special obligations to its personnel and makes proper provision for need arising from disablement due to service. It is also vital that the new provisions encourage rehabilitation and return, so far as possible, to a full role in society without the unintended effect of enhancing disablement. The Department considers that its proposals achieve this balance.

UNMARRIED PARTNERS

The issue of unmarried partners is one, which the Armed Forces can no longer ignore and which should have been dealt with as part of the original reviews of pension and compensation arrangements. We expect to see appropriate provision included in the final pension and compensation proposals, which the MoD brings forward in the autumn. (paragraph 140).

24. The Department recognises that the issue of unmarried partners will need to be addressed in its final proposals for the new AFPS. Work on the wider issue of unmarried partners entitlements has been underway for some time, and a fact finding survey among 5,000 unmarried and separated personnel within the three Services looking at domestic trends is currently being conducted. In addition, specific focus groups have been conducted to explore the views of a representative cross-section of some 200 Service personnel on the provision of pension benefits for unmarried partners. It is too early to predict whether unmarried partner benefits will be part of the final package but it should be recognised that the consideration of the broader issue of unmarried partner entitlements will need to be part of that decision making process. Were pension benefits to be extended to unmarried partners, the Department understands the importance of defining clear, unambiguous entitlement criteria.

COMMUNICATIONS

We recommend that the MoD take the opportunity provided by introducing new computer systems to adopt best practice and set up user-friendly, interactive websites to help Service personnel understand what benefits they may be entitled to, and to assist them through the process of claiming. This should supplement the more traditional methods of providing information, in the form of accessible and readable leaflets, made available at an appropriate time, and which indicate where further, more detailed information can be obtained. (paragraph 147).

25. The Department recognises the importance of clear and effective communication on Armed Forces pension and compensation arrangements. The Department is already in the process of updating our literature on the current AFPS in consultation with the Services and ex-Service representatives; these will be published by September this year and the same material will be placed on the MOD internal website. These booklets have been trialled with Service personnel from a range of trades/expertise and ranks to ensure that they can be easily understood.
26. The issuing of these user-friendly booklets marks the start of the education process for currently serving members of the Armed Forces, prior to the introduction of a new pension scheme to which they would have the opportunity to transfer. The Department will be producing a multi-media package to support the new AFPS and it is anticipated that this will comprise letters, magazine articles, posters, factsheets, booklets, personal forecasts, workbooks, Forces television and radio publicity, intranet websites, presentations, roadshows and a members' helpline. The Department will also be developing along similar lines a communications package to explain the new compensation arrangements to serving personnel. Consideration will also be given to targeting effectively those who are leaving or have left the Services through the resettlement process and the work of the Veterans Agency.
27. The Department has taken a close interest in the work by the Cabinet Office on the new Principal Civil Service Pension Scheme (PCSPS) and expects to benefit from their experience in developing its communications packages. In addition, the Department has already started to consult the ex-Service community about the communication package and both the Forces Pension Society and the Royal British Legion will be invited to become part of the communications process.

 

 

 

 

 

 

---

2   The WPS approach to assessment was examined in 1965 by the McCorquodale Committee when the introduction of subjective factors was rejected on the basis that "Apart from being impossible, (it) would clearly have no place in the determination of equitable and consistent assessments". Back

---

Prepared 25 July 2002