Terrorism Act 2000 Compensation Scheme
39. The Terrorism Act 2000, which came into operation
in February 2001, is the latest in a series of emergency provisions
measures. It provides a right to claim compensation for loss or
damage suffered as a result of action taken under these provisions.
Compensation is payable for property damaged, requisitioned or
removed and this generally means damage caused by the security
forces in the course of their operations, for example, to fences,
agricultural produce, machinery, or buildings.
40. The Agency told us that "despite the greatly
reduced operational deployment of the Army in Northern Ireland,
the incidence of claims made under the scheme did not show a corresponding
reduction; indeed an upward trend was seen."[37]
We were concerned to learn that in fact the number of claims under
the Act, which had increased from under 3,500 in 1998-99 to around
4,500 in 2000-01, jumped dramatically following the introduction
of the 2000 Act to nearly 8,000 by 2002-03.
41. When asked about the reasons for this dramatic
increase the Agency indicated that the change in legislation itself
was a factor. The Chief Executive said:
"Prior to that the governing legislation had
been the Emergency Provisions Legislation, which required that
claims had to be submitted to the Agency within six months of
damage being caused. When the Terrorism Act came in in 2001, it
required that notification of a claim had to be made to us within
28 days. Typically what happened was that someone who was putting
in a claim once every six months then started putting in a claim
once every 28 days instead. That is a significant factor in the
recent claims."[38]
42. The Agency became concerned about the pattern
of claims and the possibility of fraud and carried out a review
of its procedures for handling claims. A number of claims were
also passed to the police who are currently undertaking a fraud
investigation. Following the review new procedures, introduced
by the Agency in May 2003, had an equally dramatic impact in reducing
the number of claims. The average number of claims dropped from
633 per month to 67 per month with an estimated saving to the
public purse of about £2.8 million in the financial year
2003-04.[39] The new
procedures "involved the introduction of a new, more detailed,
claim form; more focussed reports and inspection by the Agency's
loss adjusters and closer liaison with the army".[40]
43. It seems clear to us that blatant exploitation
and abuse of the Terrorism Act compensation schemes occurred on
a large scale, particularly over the two-year period following
the introduction of the Terrorism Act 2000. The Minister described
this as a "tendency towards something between fraud and opportunism".[41]
That the abuse should have continued unchecked for a considerable
period is a very great cause for concern, but we are pleased to
note that it was eventually confronted head on and we congratulate
the Compensation Agency on tackling the issue in a vigorous and
effective manner. The introduction of a new robust claims procedure,
and closer liaison with the army aided by an improving security
situation on the ground, has had a dramatic impact.
44. We wanted to know the total actual loss to
public funds over this period but the Minister, while acknowledging
that "it must be quite considerable",[42]
was unable to provide an estimate. Based on the estimated saving
in the current year as a result of the introduction of the revised
procedures, we calculate that the overall loss was probably in
excess of £5 million over the two year period.
45. The priority must remain to pay compensation
to those entitled to it but we recognise that schemes of this
kind can and will continue to be susceptible to fraud and abuse.
We urge the Minister to continue to review these schemes to ensure
that funding goes to those who deserve it and that any irregularities
are detected and dealt with at an early stage.
37 Ev 17 para 9.1 Back
38
QQ35-36 Back
39
Q37 Back
40
Ev 17 para 9.3 Back
41
Q70 Back
42
QQ71-73 Back
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