|
UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 375-ii House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE trade and industry committee
coal health compensation schemes
Tuesday 1 March 2005 MS SUE GIBSON, DR COLIN WIGLEY and MR SIMON CHIPPERFIELD MR JEFF WILSON, MS KATE ROY, MR JOHN TIZARD and MR MARTIN TRAINER MR NIGEL GRIFFITHS MP, MS ANN TAYLOR, MR NIGEL FRENCH and MS CHRISTINE CHAMBERLAINE Evidence heard in Public Questions 61 -
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Trade and Industry Committee on Tuesday 1 March 2005 Members present Mr Martin O'Neill, in the Chair Mr Roger Berry Mr Michael Clapham Judy Mallaber Linda Perham Sir Robert Smith ________________ Witnesses: Ms Sue Gibson, General Manager and Accounts Director, Occupational Health, Counselling and Screening Services, Dr Colin Wigley, Head of Service Delivery Screening Services and Mr Simon Chipperfield, Vice President, Atos Origin Medical Services, examined. Q61 Chairman: Good afternoon. Ms Gibson, can you introduce your colleagues please. Ms Gibson: On my right is Simon Chipperfield, who is the Vice President of the Medical Services Division within Atos Origin. I am the Accounts Director and General Manager for Occupational Health and Screening Services, which includes the work we do for the Department of Trade and Industry. On my left is Dr Colin Wigley, who is the Service Delivery Manager for both the Vibration White Finger and the Chronic Obstructive Pulmonary Disease contracts. Q62 Chairman: Thank you. Maybe we can start with you giving us a sort of overview of the scale of your operations in connection with the Coal Health Schemes? Mr Chipperfield: We have been involved since the inception of Vibration White Finger in 1999. We carried out all of the medical assessments for the Vibration White Finger medical assessment process and that is over 100,000 since 1999. For the Chronic Obstructive Pulmonary Disease contract, we became involved in November 2002 when it was re-tendered and since then we have carried out over 100,000 assessments for Chronic Obstructive Pulmonary Disease and more than 100,000 Spirometry assessments. Q63 Mr Berry: Does your contract with the DTI require you to perform the assessments within a particular timescale? I assume they do, so what would those timescales be? Ms Gibson: The contract includes the requirement that we deliver a medical report back to IRISC within 20 days of the assessment taking place, but it does not specify timescales for assessments taking place. Currently, in both schemes, because our head of work is very low, we turn around assessments very, very quickly. Q64 Mr Berry: You meet the timescale comfortably? Ms Gibson: Yes. Q65 Mr Berry: In all cases? Ms Gibson: The contractual timescale is to deliver the report back to IRISC within 20 days and yes, we meet that. Q66 Linda Perham: That sounds very good, but is it set out that there are financial incentives or penalties attached to performance targets? Ms Gibson: There are no financial penalties in either contract. In the Chronic Obstructive Pulmonary Disease there is an incentive linked to quality where, in fact, we do not realise the full value of the revenue in the contract unless we deliver a fit for purpose report in at least 95 per cent of cases. Q67 Linda Perham: Sorry, did you say there were no penalties attached? Ms Gibson: There are no financial penalties, that is correct. Q68 Linda Perham: Is that unusual? Ms Gibson: We deliver medical assessments to a number of Government departments and some contracts do include financial penalties and some do not, it is probably about 50-50. Q69 Sir Robert Smith: Last week we heard about delays in the process, on the whole, of handling of claims, and we heard about various concerns from the Solicitors' Groups. From what you are saying, does the medical assessment in any way play a part in the delays in handling claimants? Ms Gibson: I will let Colin answer that as our contract manager. Dr Wigley: It is a very complicated process and for a claim to make its way from the start of the claim through to a completed assessment, it goes through several stages. Initially, the case is referred through to us for a Spirometry assessment. Those cases tend to be put in a large volume at the beginning of the scheme, so it is a matter of working through that head of work, again we will finish that by probably June/July of this year. In terms of clearing cases quickly, we have a very small head of work. What we do have an issue with is cases which become stuck in the system and that is usually where we are either waiting for information because we have not got contact details - we are trying to contact the claimant but we cannot get hold of them - or where a case is on hold because for one reason or another the claimant cannot attend, they may be ill or awaiting an operation. Currently the situation is we have cases on hold because the offer scheme, which is in place now, will prevent cases going through to examination. Q70 Sir Robert Smith: The actual medical bit is quite quick, but the trigger is when you have got everything you need? Dr Wigley: The case is referred through for Spirometry and then we refer it back to the claims handlers. When the additional information from the claimants' representative is there and all the mandates are there for the record collection, it is then referred back to us. It then takes probably about three months for us to obtain the medical records; we have a subcontractor who provides that service for us. There are a lot of processes in place to ensure cases do not get stuck in that process. There is a process of prioritisation of cases according to the age of the claimant and how long they have been within the scheme to ensure the more urgent cases are dealt with quickly. Again, that prioritisation works also once the case gets referred for medical assessment. On the whole, the head of work people waiting for assessments is fairly low. Providing we have all the contact details of the claimant, we would expect the case to proceed through a three month period for record collection, then probably two months waiting for an appointment and then another couple of weeks whilst we do our quality checks before it is returned to the customer. Q71 Sir Robert Smith: Would there be any regional pattern to that? Is that an overall average for the country or are there areas where it is quick and areas where it is slow? Dr Wigley: There are certain parts of the country where we have much more resource than we have claimants, perhaps we are not fully utilising that. There are other areas, certainly in the Yorkshire area, where there are more claimants than we have had capacity. That was true in the past, currently, there is virtually no head of work anywhere in the country and as a result of cases being withdrawn from the Tariff Option scheme. Q72 Mr Clapham: Last week the Claimants' Group of Solicitors told us that they were generally satisfied with the medical aspects of your work, but there were other things which did cause them some concern. For example, they thought the relationship should be one in which you are working for both sides, but the way they saw it generally they were seen to be working for the DTI rather than being seen as working with both parties. Do you agree you should be working with both parties? Dr Wigley: Absolutely. Can I answer that by splitting it into two halves. The main objective is to produce a MAP report which is independent, objective and unbiased and that is produced equally for both parties. The rules and regulations which determine how that report is completed are contained in the Claims Handling Agreement. Obviously we apply that strictly and any changes to processes have to be agreed by both parties and, certainly, we do not give any instructions to the respiratory specialists without them being agreed by both parties. The relationship we have with the DTI is different, obviously we have a contract with them to deliver a certain number of cases to a certain standard and they have a role in monitoring our performance there. If there are any policy issues in relation to the completion of the MAP reports, then those issues are discussed at joint meetings. We have joint meetings with the Department and the Solicitors' Group on a regular basis, every month. We have regular meetings with large groups of solicitors to look at the problems with the process and where cases are being stored within the process to try and make things move through more quickly. On projects such as Electronic Form, we have recently introduced an electronic report form to try and improve quality and make the reports more legible. To develop that we had meetings with members of the CG on their own to identify issues they had with it so we were fully informed about their concerns. I think we do work closely with them, but the relationship is different between the DTI and the CG because the DTI have a contractual monitoring process which the CG do not have. In relation to medical issues, we will work jointly with them. Q73 Mr Clapham: Why do you think they might feel you are more biased to the DTI than working equally with them? Dr Wigley: Again, I am surprised to hear they feel that because I think we try and maintain an equal balance between both parties. I know concerns have been raised about the issuing of instructions, but I think those instructions have always been in relation to processes rather than medical assessments. We accept the medical assessment must be independent and jointly acceptable to both parties. Q74 Mr Clapham: Do you feel that when preparing documents for a proposal put by the DTI, for example, on changes to the scheme, any information you provide should be available also to the other side as well? Dr Wigley: Absolutely. I have no reservations about that at all. Q75 Mr Clapham: One of the things which came out last week was there was a feeling of grievance that the Claimants' Group of Solicitors found when they were in court on one session, there had been a report prepared about some of the changes which were being proposed and your role in those changes, but that document had not been disclosed to them until they got to the court. Ms Gibson: I would like to clarify that. Certainly that was not a document which we prepared, that was prepared independently by our subcontractor who does the record collection, and we had no part to play in the production of that. We were copied into it when the DTI was copied into it as well to ask for opinions, but, again, we felt it was inappropriate for us to comment on that. We were fully involved in the development of the offer schemes. We had numerous workshops with all parties and also the judge to look at ways in which the scheme should be brought forward. We had an opportunity to express our ideas and concerns about the scheme at that stage, therefore it seemed inappropriate for us to comment on that document prior to court. Certainly it was not an ATOS document. Q76 Judy Mallaber: Are there types of information, like progress reports, for example, that you are contractually required to reserve for the DTI because the point made by Michael Clapham about the complaint of reluctance to pass on information to the solicitors, which has gone to the DTI, is a complaint which was made? Are there certain reports which you are required to reserve just for the DTI? Ms Gibson: No. We are contractually obliged to produce a quarterly report which covers our performance against all of the contractual targets, both in terms of turnaround time and quality. That is made available to all parties and, in fact, is discussed at a joint meeting with the DTI, the Claimants' Solicitors Group and other parties. We feel there is very much visibility of our performance against our contracted targets. Q77 Judy Mallaber: So the claimants' representatives can obtain exactly the same level of information as the DTI? Ms Gibson: Yes. Q78 Judy Mallaber: Do they know what information you provide to the DTI so they know what information to ask you for? Ms Gibson: I would say I believe so, but I would be guessing. Q79 Judy Mallaber: Can I ask you on one particular aspect of assessments which has come up in relation to claims which have been dealt with in my area. How far do you monitor the work of the different doctors and specialists who are undertaking these claims to see whether they are operating consistent criteria across the claims they are dealing with? Dr Wigley: Obviously a uniform approach to this is crucial to the success of the scheme because we have got 200 doctors working and we need to make sure they are all applying the same rules in the private scheme in the same way. There is always a danger with experts that they can all have independent opinions. What we are trying to do in the scheme is to say, "The actual process has already been defined by another panel of experts and really you have got to adhere to those rules if you are doing this assessment". We have a quality monitoring system and we audit a statistically valid sample of cases each month against a set of standard criteria, there are a series of attributes which have to be present within each report. Those results are fed back to the individual doctor and they have a regional adviser to act as mentors to give feedback to their respiratory specialist. Sue mentioned that we produce a quarterly report also and with that we have diagnosis rates, so we can compare one centre against another to see if any doctors' outcomes from those reports appear to be different from the norm. We apply statistical analysis to those and highlight those doctors who appear to be possibly behaving differently. I think we have to accept there is a wide variation there. That is contained within the quarterly report which goes to both parties and if they identify doctors who they wish to look at in more detail, then we will do a more detailed targeted audit of their cases and report those findings back to the parties. Q80 Judy Mallaber: We had one doctor who was taken off the list who was dealing with one of my constituents, but it seemed to take a large number of complaints coming in from individual cases and letters to the Minister before that doctor was taken off the list, et cetera. How strict are you where you see a doctor who is refusing to accept any claims, for example? Dr Wigley: We will stop using doctors if the feedback we are giving does not appear to put the situation right. I believe the case I think you are talking about was before we took over this contract. Again, we have a very robust process for the feedback to the respiratory specialists and then we do a further audit to make sure the situation has improved or has been resolved to satisfaction. If it has not, we have a standard process for taking them through retraining and if retraining has not worked, we will stop using the doctor. Q81 Judy Mallaber: One of the earlier complaints certainly we had was about the discomfort of undertaking some of the lung tests. Has that now been resolved and are you happy with the way in which they are now handled? Dr Wigley: I think that is largely an issue of understanding the respiratory test, which to be undertaken correctly do take a lot of effort. I know from having tried to perform them myself, you are looking for a very forceful blow and that may be difficult for elderly people and people who are not well. We send a video out with the MAP appointment so they have an idea about what is expected of them when they come. Inevitably there will be complaints, but I think the complaint rate is something like 0.2 per cent for the MAPs which have been completed during the course, so it is a very, very small proportion. Again, it is something which we are aware of and it is something we cover in the training we give to the lung function biotechnicians. Q82 Mr Clapham: Finally, are the doctors under any instruction, for example, to record core morbidity, where we have got an additional disease, for example, and if not, can I ask why not? Dr Wigley: Yes, they are. It is something which has been within the MAP process and, again, it has been highlighted by changes in the MAP form in the most recent version because, certainly, doctors should be expected to take account of that. Q83 Mr Clapham: One of the discussions we had earlier with the second Minister of Energy was what we would do at the end of the process with the data? It was agreed in that period that it may all be passed on to the Industrial Injuries Advisory Council for further scrutiny because, clearly, this is perhaps the most comprehensive study of any working group which is available. In terms of the reporting of core morbidity, is there any particular second disease which is striking? Dr Wigley: I do not think I am in a position to answer that because whilst I am medical, I am not a respiratory specialist. I am not competent in that and it would be difficult for me to comment. The point you make is very valid though as it is probably the biggest pool of information that has ever been recorded on this type of condition and I am sure it could be put to good use. The difficulty with it will be that it is on paper-based form, so it will be difficult to evaluate. Chairman: Thank you very much, that is very helpful.
Witnesses: Mr Martin Trainer, CEO Claims Outsourcing, Mr Jeff Wilson, Technical Director, Ms Kate Roy, Operations Director and Mr John Tizrad, Director, Corporate Firms and, Capita-IRISC, examined. Q84 Chairman: Mr Trainer, would you like to introduce your colleagues? Mr Trainer: I am Martin Trainer and I am the Chief Operating Officer for our Claims Outsourcing Business. To my left I have John Tizrad, who is our Group Director of Corporate Affairs; to my right I have Kate Roy, who is the Operations Director for the IRISC Operations which run the Coal Health Scheme, Claims Handling and to my far right is Jeff Wilson, who is the Technical Director for the IRISC Operation. Q85 Chairman: I would like to start off much the same way as we did with the previous group of witnesses. Can you describe to us the basis and terms of your contractual relationship with the DTI? Mr Trainer: Certainly. Capita has been involved in the scheme now for just over 12 months. We acquired the IRISC business, which has been acting as claims handlers on the contract now for some time, for Aon in February 2004. Again, we acquired a business from Aon, at that time; called Aon Health Solutions, which handles the medical assessment in the VWF services element of the scheme. From February of last year, and then subsequently from April in the case of the Health Solutions Business, we have been working closely with the Department and other stakeholders on delivering business as usual and improving the programme to make things better and more effective for everybody. Our contracting relationship is direct with the DTI, we are not instructed jointly. The DTI sets the priorities and the terms under which we engage with our parties. Q86 Chairman: You have got targets to meet in reference to the work which goes through and the speed of the claims and things like that, is that correct? Mr Trainer: Absolutely. Q87 Chairman: Does that have incentives for you to try harder? Mr Trainer: Yes. The essence of our contract is that we agree our resourcing plans with the Department in advance and most of the costs which we incur on the scheme are directly recoverable from the Department. Our reward is based almost totally upon achieving targets which are agreed and set with the Department. Q88 Linda Perham: We have heard from other witnesses that the administration of the schemes was poor from the outset, but things are improving now. Do you have any explanation of the underlying reasons for the bad impression? Mr Wilson: When we go back to when the schemes were formulated, when the Claims Handling Agreements in 1999, there was an estimation that there were potentially 100,000 claims which would be dealt with over five years. What has happened throughout time is more and more claims have come into the pot to the extent that when the COPD - that is the chest disease scheme - cut-off was applied in March 2004, in the 12 months prior to that there were 250,000 claims which were submitted and approximately 150,000 claims submitted in the final quarter of that period, so volume and scale has increased significantly from the original projections. Q89 Linda Perham: It was really the sheer size of the problem rather than poor planning or poor project definition on behalf of the customer? Mr Wilson: The sheer size has taken all parties by surprise. As far back in the days of British Coal, they employed statisticians to try and predict the potential numbers. The DTI and all parties have constantly tried to predict the number of claims throughout this process. In fact, in the 12 months prior to the cut-off, we spent a lot of time with solicitors and other parties trying to get a feel for the scale of the numbers. Ultimately it is the sheer scale of the numbers involved. Q90 Linda Perham: We may come on to the specific problems in a moment, but how do you assess your performance compared to one, two or even three years ago? Ms Roy: In relation to performance targets, which for both schemes are predominantly linked to the preparation of claims and ultimately the payment of damages within the scheme, we have year on year, since the signing of the claims handling arrangements, increased the throughput on both schemes. To date, we have paid over two and a half billion pounds worth of compensation out to claimants within the scheme. We have consistently increased our full and final offer outputs over the last three years. For COPD alone, we moved from 50,000 offers to 60, 000 offers to 70,000 offers last year and we anticipate somewhere in the region of 120,000 offers including the fast-track system, which went live yesterday, to be able to take claims out of the system this year as well. Q91 Linda Perham: How have you managed to make those improvements? Has it been more efficient? Are there more staff? Ms Roy: It is a combination of staff recruitment and ramp-up. We have increased our staffing numbers consistently to some significant level over the last four to five years. Four years ago we had somewhere in the region of 150 staff involved in the claims handling process, we have almost 1,400 staff now across four sites across the country in mining areas managing throughputs on both of these schemes. Mr Trainer: Since Capita acquired the business last year, we have engaged with the Department and set in place an Emphasis Improvement Programme which is designed to improve efficiency, effectiveness and value for money across the piece. We have got a significant investment which has been going on now for something like eight months which is designed to, and is already delivering significant results, which will increase productivity, throughput and quality. A continuous improvement culture is very much the message. We have got a great team in IRISC, they have been working very hard for a long time and they understand the concerns which are utmost to all of us, the Departments and other stakeholders, the claimants and the claimants' solicitors. We are very proud of what we do and our sole mission in life, as it were, obviously is to pay the right amount of money to the right person as quickly as possible. We are proactively engaging with all the stakeholders to try and drive forward, as far and as fast as we can, the estimates of when the schemes will ultimately be closed. Q92 Sir Robert Smith: Whose initiative was it to bring the Business Improvement Programme forward? Mr Trainer: When we were in the process of discussing with the Department and Aon the possibility of Capita acquiring the business, there was discussion, which had already been initiated between the Department and Aon, about a Business Improvement Programme. Capita made the point that we would normally expect to do a Business Improvement Programme on a business which we acquired, therefore we were absolutely very supportive of the idea. We have maintained that concept and enhanced and invested significantly in it over the last 12 months. Q93 Sir Robert Smith: To follow up, there are 40,000 staff now? Mr Trainer: There are 1,400 staff. Q94 Sir Robert Smith: The question we had from one of the witnesses we had last week was how much expertise and training those staff had, particularly the claims adjusters. There was a concern by the witnesses to the feeling that they did not have enough. How do you respond to that? Mr Wilson: We have bespoke training schemes and we have invested a lot of time and money in training new staff. Most staff spend between six and nine months on a training programme which is accelerated depending upon their progress and their level of skills which they bring to the claims. We have mentoring and coaching systems in place and we have 40 technical staff who are ex-British Coal people who give mining information and expertise. In addition to that, in the Group 3 we have 61 staff who have a considerable number of years of mining experience. In fact, one of our problems is our technical staff training is particularly so good that we lose people to other solicitors in the process. We go out and we train solicitors, we go out and we give calculators, so ultimately we spend a lot of time and investment of training, but in any new process when you train it takes time for it to bed in. Also, it is accepted that when staff are being trained, in some respects their experience only progresses to the point where they are fully trained over a period of time. Q95 Sir Robert Smith: You mentioned that you train them and then they move on and that was the second concern which was raised, that there was a high turnover of the workforce. The suggestion was in 2004, it was as high as 25 per cent. Is that accurate? Ms Roy: It is important to remember that we are currently on plan for all of our staffing targets, we are ahead on the overall staff numbers this year against last year. You are absolutely right, we recognise that we have to manage the turnover issues within the business. No one should be really surprised at the level of turnover we are seeing, which is currently at around 25 per cent. Our four key operational sites are situated within very buoyant employment markets. In Sheffield, in particular, we have a high degree of employment for this type in this sector of job and, as my colleague has already mentioned, particularly in Sheffield, nearly 28 per cent of our leavers have gone directly to solicitors who operate within the scheme. This has been brought to the attention of the judges within the process. We are aware of it and we have managed to those constraints. This is almost a naturally inflated number of staff turnover within these schemes by the very nature of its uniqueness. Q96 Sir Robert Smith: Would it be worth resourcing them more to try and stop the turnover? In a sense, which is better: keeping the person you have trained or putting the effort into training a new person? Ms Roy: Clearly the effort of investment, both in time and resources in training new staff, would be far better spent, in our view, by retaining them in the first place. Under the Business Improvement Programme, which my colleague has already mentioned, we have a number of initiatives which we are looking at to ensure we can retain greater levels of staff. Specifically, and not surprisingly to the Committee, we are looking at reward and recognition packages, ensuring that we are paying competitive market rates to not only attract the best staff but to make sure they stay with us. We are looking at the performance targets and rewards and bonuses involved within that process and we are looking at the environment within which they operate. When you are in a buoyant employment market, our surroundings, in terms of air conditioning, the desks, the circumstances that they will work in, can all be instrumental in encouraging people to look elsewhere. We are addressing each one of these areas under our Improvement Programme. Q97 Chairman: Maybe the lawyers are getting more money than you are? Ms Roy: It would not be for me to comment. Mr Wilson: We take the view that if people at least go to lawyers in this process, they are still in the process and, certainly, we would meet with our ex-colleagues and other solicitors and in certain instances to share and compare notes. Q98 Mr Clapham: Can I ask a question about the Occupational Group Procedure because some of the submissions we received, and particularly taking evidence from the solicitors last week, they were critical that the process was first introduced to speed up the claims, but now you have introduced various new aspects - for example the adjusters, the mining expertise - and it has slowed down the claims. In particular, they were critical about the Group 3 claimants. How would you respond to that criticism? Mr Wilson: The Occupational Group Procedure sets out the level of evidence which must be submitted by the claimant and it was negotiated between the DTI and the CSG. The DTI look to be satisfied that the claimants did handle vibrating tools in jobs which would not normally be perceived as being exposed to vibration. Capita's job is to assess the evidence to make sure the employment criteria are met. It is important that when information and evidence is submitted in the Occupational Group Procedure, it follows the form of proper evidence in terms of claims, questionnaires and witness statements. There will be instances where we will have to quality check that information and return it to the solicitors. I understand the concerns regarding the Group 3 adjusters, but what we have employed are 61 individuals who have got 1,500 years of mining experience. Ultimately, what they are trying to assess is the evidence before them. What we try to do is encourage our adjusters to look for ways to pass a claim rather than fail it. We should be alive to the fact that approximately 50 per cent of the claims which they have assessed have been accepted. The issue remains about the level of those claims which are denied and that is a process which is designed and constantly reviewed. Over the last 12 months we have tried to continually improve the process. We have had audits from external parties, like Ernest & Young, and we have listened to the concerns of the monitoring groups and other people. As a result of that, we now give out more detailed information to solicitors. We have enhanced the quality checking where people who are new to the job have 100 per cent checking of their decisions and even the experts have something like one in ten. We brought regional experts in who were recommended to us by the unions to assess this. Month on month last year, we increased productivity and output but there is still some way to go to do that. Q99 Mr Clapham: Given some of criticisms, and bearing in mind what you have said about the mining expertise, there comes a point when perhaps mining sense rather than the expertise is required if we are going to move some of these cases on. Is this one of the issues which has been discussed with the adjusters, but the adjusters have perhaps been told to focus a little more and use some mining sense rather than merely the expertise which relates to the book? Mr Wilson: We constantly review that and we encourage people to look at things in the balance of probability and try and find in favour of the claimant. What happens is the senior expert team which we have regularly have monthly workshops with the adjusters themselves and we do measure the outbuyers and the decisions which they make. For example if someone has a high proportion of denials that might look unusual or a high proportion of acceptances. We move the claims around constantly to different adjusters and we measure the decisions which they take. Q100 Mr Clapham: Would it be fair to say that in some cases it may appear that the use of the adjusters has introduced another adversarial tier? Mr Wilson: It may appear like that, but we are committed to moving these claims through the process and we are committed to the right decisions being made and the right compensation being paid to the claimants. These are individuals who are employed by Capita and the standard that we set is they have to be consistent in the decisions which they make. At the end of the day, there will always be a proportion of claims which come through that will be denied and those that tend to be the case are claims which tend to be amounted and contested. Q101 Judy Mallaber: Following on from that, the solicitors were complaining to us about requests on the VWF Services Agreement for irrelevant and inappropriate information and they were being asked for information which they did not see was relevant and that was resulting in delays. Is that not a problem which you recognise at all? Mr Wilson: Obviously in any scheme we have to have evidence to support a claim. We are required to ask questions to check that level of evidence. We ask questions to support a claim so we can decide on the compensation to pay. Q102 Judy Mallaber: The Claimants' Group told us that in some instances you have been responsive to complaints about the conduct of individual cases and you put matters right, but that seemed to be dealt with very much on a case-by-case basis. They said you did not seem to share that knowledge amongst claims adjusters to make sure when a mistake was made in one case it was not repeated elsewhere. Is that fair and what steps do you put in place to make sure there is a spread of best practice and to stop any errors being duplicated? Mr Wilson: I think they may be referring to the time when we talked about the Services Pilot which was a couple of years ago, where in that period we invited solicitors in to discuss with us seeing things from the other side. What we have done since then is we constantly measure performance across all claims in terms of quality assessments and checking. We constantly discuss experiences and give training advice based on any issues which arise from monitoring groups and meetings with the Claimants' Group. Q103 Judy Mallaber: You are confident that experience is fully shared and once you have discovered one way of doing things, which maybe was not quite right, that is passed on to all your other claims adjusters? Ms Roy: From an operational perspective, we have some fairly rigorous internal audit procedures and processes where, by checking individual claims and looking at the quality of claims handling decisions being made within those claims, we analyse the outputs from that, we feed that back in not only to our training programmes, we deliver it back to the individuals concerned and we learn lessons across our technical team. It is the case that some of those claims have evolved over the last few years, whilst the Agreements were signed some four or five years ago. We are still making new decisions within the process, so there is a constant need to review how the operation will implement a legal decision or a legal agreement which has been reached and there is a need for us to constantly review how effective that is. Feedback from the solicitors is exceptionally helpful in these instances. Q104 Judy Mallaber: You are happy when we write to you about things? Ms Roy: Absolutely. Q105 Sir Robert Smith: One of the concerns raised with us, dealing with the Vibration cut-off, is the deadline set by the court for submitting evidence. Do you anticipate a surge in claims because of people trying to get in before the deadline? Ms Roy: Across both schemes we have managed the VWF general damages cut-off both for live and posthumous claims. We have managed the fairly significant operational spike which came around with the COPD cut-off in March last year. We have just managed the VWF wage loss cut-off which took place on 31 January. We have fairly advanced planning in place, from an operational perspective, to manage the services cut-off which is scheduled for the end of this month. We have plans in place to manage the cut-off for Group 3 evidence submissions at the end of June. All of these cut-off processes have been formally managed through standard project management processes in partnership with the DTI involving other stakeholders and solicitors where necessary. Certainly the COPD case is an example with large numbers and it was planned for over nine months to ensure that we could successfully secure the cut-off. Q106 Sir Robert Smith: Is the aim that the cut-off will not affect other claims? Ms Roy: Our experience would be no. Q107 Mr Berry: Can we turn to fraudulent claims. How big a problem is this? Ms Roy: To paint a picture in relation to our position as the appointed claims handlers, our primary role is to accurately disburse public monies in terms of compensation to over three quarters of a million claimants across both schemes. The Claims Handling Agreements clearly set out how those payments should be made, so we have a number of internal screening and validation processes which ensure we get the right level of compensation to the right claimant at the right time. Taken in that context, there is a requirement, with the levels of public money which we are involved in, to have fairly robust procedures where those validation processes suggest there might be something which potentially needs some further investigation. In context, out of the three quarters of a million claims we are currently processing, so far 1,500 have been referred for some further investigation where there may be some potential concerns around those validation processes. Q108 Mr Berry: The DTI in their submission said that there have been 1,500 cases registered as potentially fraudulent. Do you know how many are fraudulent? Ms Roy: There is a distinction to be made between a fraudulent prospective, where we are looking for evidence of intent to mislead, and where there may be a degree of exaggeration involved within the claims handling process. The claims handling processors themselves are designed to identify that if someone does not meet the criteria, they do not progress. In relation to those who have been concluded so far, of the 800 concluded investigations, 300 have resulted in either a reduction in overall compensation being paid or a prevention of that compensation being paid. Q109 Mr Berry: Last week the solicitors expressed some concern about the tactics adopted by fraud investigators. Is it right that when applicants are being investigated they are not given a clear idea of why they are being investigated and what the issues of concern are? Ms Roy: In the small number of instances where there is an external investigation involved, the process for the external organisation will always be, first of all, to correspond with the claimant's representative and seek their permission to reach agreement, and each claimant representative is given the option to attend an interview or be involved in any subsequent correspondence between both of those parties. We recognise that the claimants within this process have a right to representation at every step of the process, and we continue with that during the external investigation as well. Q110 Mr Berry: Does the claimant or the claimant's representative know the reason why the investigation is taking place? Are they told, "our cause for concern is ..." or is it a trawl? Ms Roy: They will be made aware that this has been highlighted as having the potential for further investigation. Q111 Mr Berry: Do your investigators operate under DTI guidelines? Ms Roy: Our investigators are an external organisation, part of the Cantor Group, who are compliant to FSA standards. They operate within the insurance industry, which is tightly governed by FSA standards. Q112 Mr Berry: In the DTI's submission, interestingly, the question about the guidelines which claims handlers use to identify potentially fraudulent cases is referred to, and we are told that these were intended as internal documents, and that is why they are not in the public domain. There would be no reason, would there, why these guidelines could not be provided to the Committee in confidence? Mr Trainer: They are certainly documents that are agreed with the Department. As to whether they could be provided to the Committee, we have no objections to that, but that is a matter I suggest you might want to raise with the Department. Mr Berry: Thank you. I think we will. Q113 Chairman: Am I right in thinking that from the figures you have suggested there are 1,500 out of 750,000, so it is about two per cent? Ms Roy: Yes. Q114 Chairman: We have spoken about the fact that you are incentivised, and it is understandable that we have that, but we have now got a series of aspirational end dates. Are they more realistic than aspirational, or more aspirational than realistic? Ms Roy: In the early part of last year, we alongside our contractors were involved with the Department in looking at ways in which we could bring some closure for the claimants within VWF scheme. As a consequence, we, in partnership, created seven aspirational end dates in relation to the various stages of the VWF process. By enhancing our planning capabilities and forecasting methodologies during the course of last year, we have now some confidence over both the realistic elements of these end dates and, consequently, our ability to deliver them, subject to the co-operation of all parties, so if certain assumptions take place, we can plan and forecast much more accurately now. There is a recognition that we are only one part of the big process here, and all stakeholders need to be engaged. Q115 Chairman: So with all these qualifications would we be right in assuming that complete investigation of Group 3 claims will be achieved by the end of quarter three of this year; that you will be able to finish services MAPs by the end of 2006 and settle all service claims by the end of 2007? Do you think these are realistic? Ms Roy: Yes, we do. Mr Trainer: I would just like to put a couple of caveats to that. As Kate said, there is significant inter-dependence between ourselves and the claimants' representatives, and the claimants' representatives need to buy into these timescales and targets and do their part of the piece. Secondly, our contract expires in 2006 so if we are still involved beyond 2006 we are confident, but obviously it remains to be seen whether that is the case. Q116 Chairman: You have been parachuted in here. Do you have any regrets? Do you wish you had never started? Mr Trainer: Absolutely not. Q117 Chairman: It is not uncommon for us to find that people come in as visiting fire people or whatever, and they say, "God, we wish we had never got into this". Mr Trainer: If I go back 15-16 weeks ago, I guess when I first became aware of the scheme I was quite astonished, to be honest, that something of this scale and magnitude was going on. It was really outside of the mining areas, and it was not widely known what was going on. Having got into the process and met the team and seen what is going on, it is a wholly worthwhile endeavour, and we are very proud of what we do and we are very pleased to be doing it. Chairman: Let us hope we do not have to call you in again and say, "why have you not done this?" Certainly I would not, but some of my colleagues may well do. Thank you for your evidence. If there is anything else that we need, we will get back to you, but you have been very helpful. Witnesses: Mr Nigel Griffiths, a Member of the House, Parliamentary Under-Secretary of State, Mr Nigel French, Assistant Director, COPD Operations, Ms Ann Taylor CBE, Director, Co‑Liabilities Unit and Ms Christine Chamberlaine, Assistant Director, Vibration White Finger Operations, Department of Trade and Industry, examined. Q118 Chairman: Good afternoon, Mr Griffiths. Would you like to introduce your team, and then we will get started? Nigel Griffiths: Thank you, Mr O'Neill. Ann Taylor, CBE, is the Director of our Co‑Liabilities Unit; Nigel French is the Assistant Director of the COPD Operations, the respiratory claims, and Christine Chamberlaine is the Assistant Director of Vibration White Finger Operations. I should like to thank you and the Members here for your long-term commitment on behalf of constituents to this scheme. I estimate that the six Members present on the Committee - and I know others are in the Chamber - have represented up to 12,488 sick miners, at a total cost in compensation of £67.2 million. Thank you for your help. Q119 Chairman: I am sure our constituents will be informed. We started with the best of intentions. It probably could have had a better beginning, but there is a sense now that we seem to be on the right track, and there are probably still some shortcomings, and we will want to explore them, but after a difficult start and a period when it looked as if you were being swamped, are you beginning to see lights at the ends of tunnels? Nigel Griffiths: I think that is a very fair summary. If you look at the estimates that the National Union of Mineworkers, the solicitors and the DTI had provided in the beginning, they were far too low: 5,000 vibration white finger lead cases, with a forecast of 40,000, was more than four times an underestimate of 170,000; and 30,000 respiratory COPD claims, with a forecast of 70,000 cases, more than eight times underestimated. There was a rapid response in the early days which meant that solicitors as well as us had capacity problems; but the desire of members and my predecessors and of the Department staff was to catch sick miners while they were still alive and make payments as quickly as possible. What have become the two largest personal injury compensation schemes in the world have evolved from there, and so have the staffing ratios been ratcheted up. Q120 Judy Mallaber: I should declare an interest as we have had nearly £17 million of compensation into Amber Valley so far. You will not be surprised if I raise this issue, though: both the claimants' solicitors group and the voluntary groups drew our attention to the fact that the DTI negotiated a separate handling agreement with the UDM, but not with the other unions and not with the NUM or NACODs. Why did the UDM get special treatment? Nigel Griffiths: It did not get special treatment. What happened was that in the 1990s the National Union of Mineworkers wound up its claims-handling department and transferred all its claims processing to nominated solicitors; but UDM separately continued to handle members' claims. The UDM were not represented by the claimants' group, the original group representing solicitors, and the NUM and others that put together the agreement. That agreement was reached on COPD in September 1999, and two months later the UDM signed an identical agreement. It was identical for 476 pages. We have them here. There were two pages that were different, and those concerned the payment. The UDM levies a lower fee, and that is reflected on page 446 of the contract. Indeed, my predecessors had a correspondence with the NUM to ask whether they wanted a similar agreement, and the answer was "no". They had an agreement with the CG. Q121 Judy Mallaber: But according to the evidence we had from the English monitoring group, the trade unions have denied that they were made such offers, and there has not been any evidence of that from the DTI. Nigel Griffiths: I am very happy to furnish you with the minutes from Helen Liddell through to Brian Wilson that reinforce that offer. I understand that no response was given to the offers of my predecessors to sit down. I am not quite sure why they wanted to sit down and have separate agreements. As I say, for 476 pages these are identical, so there is nothing special. The only special deal is that the UDM, by not using solicitors, in particular more latterly, I am informed charge a smaller fee. Q122 Judy Mallaber: However, the claims handling organisation, Vendside, which is clearly integrally connected with UDM - I am not sure of the exact structure - does insist on taking a payment out of the settlements that are made, and you know that that is a source of considerable grievance when people are asked to sign up to those agreements with Vendside, in my area in Derbyshire, in Nottinghamshire and the Leicestershire coalfields. Nigel Griffiths: I am aware of that. That, of course, is nothing to do with the claims-handling agreement and is not reflected in the claims-handling agreement; and that is why there is no preferential treatment. It is quite a separate issue. Indeed, the NUM in some areas - the UDM and NACODs charge a sort of membership fee or whatever in various areas, so it is not just Vendside that has this type of arrangement. It is not covered by either the claims-handling agreement, or by the agreement with Vendside, which I am informed is identical apart from the payment pages - sorry, it is a reduced fee basis. Q123 Judy Mallaber: But from experience that does not seem to happen with the claims in my area that are settled through the NUM-connected organisations. Nigel Griffiths: That could be well why I did choose my words carefully. I said that the NUM in some areas ----- Q124 Judy Mallaber: Is it acceptable that that money is taken out by Vendside in claims-handling agreements, and is it also acceptable that the UDM and Vendside have come touting for business, even in areas that are not majority UDM areas? Nigel Griffiths: I am not here to give a personal view on whether it is acceptable or not. Is it permitted within the present rules of how trade unions run their affairs? I understand it is. Colleagues who have discussed this with me who feel it is not I do not believe have succeeded in getting those responsible for regulating union conduct to reach a conclusion that I may concur with and that you have certainly got a strong view on, but is outwith the claims-handling agreement. Q125 Sir Robert Smith: Can we move on to the relationship between the DTI and other stakeholders. The claimants' solicitors and the English and Scottish monitoring groups have voiced a fear that there was initially a constructive and collaborative approach adopted by the Department, but they sense it is changing. The solicitors specifically referred to deterioration of constructive dialogue aimed at resolving issues by agreement. Is that a concern you would share? Has there been a change in relationship, or a move away from a constructive dialogue to a more adversarial approach? Nigel Griffiths: In my time of doing this job, Sir Robert, it is not my impression, chairing regular meetings with the solicitors, the unions and MP colleagues, that there has been this marked deterioration. Of course, there are differences of opinion, but we have given solicitors unprecedented access both to British records - a decision I took in December 2003 - and to other data supplied by IRISC. I accept that the solicitors, the unions and others, together with us, have a common cause, and that is to make sure that those sick miners, their widows and their families receive the payment to which they are entitled as quickly as possible. Such accounts as the one you have given do distress me, but I do not believe they broadly reflect the relationship between all the parties involved in securing what is our aim to deliver. Last month I was checking the figures, and our DTI team, which incidentally was praised by the National Audit Office in its report last year, met solicitors on four occasions over COPD, on three occasions on vibration white finger; and that was outside informal discussions which had taken place in court and elsewhere. Our officials met them again yesterday and they have another meeting again next week. I think that I cannot allow my own civil servants to be criticised for complying with issues that the Judge has instructed us to do, which I know again have been the source of some complaint by the solicitors' group, the claimants' group. Q126 Sir Robert Smith: If the National Audit Office endorsed the DTI's role, would that be partly in a sense perhaps where they were coming from in terms of protecting public money? Would the solicitors have been concerned that things had got more difficult because of the desire to ensure that the public money is not paid out when it should not be, or to reduce the size of the claim? Nigel Griffiths: The National Audit Office is not simply limited to an assessment of how public money is spent; it is also very interested, as Sir John Bourne proselytises for in best practice too, so it is in a slightly wider context year. Last year has been a frustrating time for the solicitors; they have had high hopes in certain areas of these compensation claims, with, as far as I am aware - and I can assure the Committee they co-operated fully with them - but some of the areas they thought would bear fruit for their clients just did not, and I think perhaps that frustration is reflected in their statements about co-operation. I take all criticisms seriously, and I do not believe that these are fair criticisms. Q127 Sir Robert Smith: I think other members of the Committee are now going to explore the specific areas, which maybe will tease out where the differences are. Ms Taylor: I think we have been in a slightly different situation in the last few months in that the Judge is now more involved on the lung disease scheme, in terms of setting parameters for the fast-track office; so things that we had previously negotiated ourselves, the Judge has been involved in the process. Q128 Sir Robert Smith: Is that not a symptom of the point they are making, that things have got away from the ability to come to a negotiated settlement, and now the Judge is back into the process? Ms Taylor: We had a workshop meeting with the Judge in September, with the solicitors, altogether, and it was at that point that we were all agreed that continuing with the scheme we had got was going to take far too long and we needed collectively to adopt a fast-track approach. The Judge was then drawn into that and became involved in that. That was one of the reasons why we put forward a suggestion about mandatory offers, which we know did not find favour, but it was the Judge that asked us to do that; it was not something we did of our own volition. Ms Chamberlaine: Can I just say on VWF that on a working level since I have been in post over five years we have increased the frequency with which we meet the claimants' groups, some of the members you met last week. We meet them more often on more subjects than we have ever done, and we correspond with them regularly. Virtually every day there are letters coming in and out on various issues. I do not necessarily recognise that we have been less transparent. It is a feature particularly on VWF that we are at the very end part of the scheme, and therefore any issues that are easy to resolve we would have resolved by now; however, we have got the sticky issues which clearly are not so easy to resolve, and they might require the Judge's intervention. Q129 Mr Clapham: Minister, could I look at three issues that were raised by the claimants' group of solicitors, but before doing so I should like to ask about the particularly scandalous operation that has been run by claims handling companies. I know that you feel the same as I do about the way in which claims-handling companies have been able to exploit the situation. We did expect something more robust coming from the Clementi report. I want to explore whether you take the view that the best way of being to control these claims-handling companies would be by way of insisting that where a company provides a solicitor with claims, that it is up to that solicitor to pay the fees for the claims-handling company rather than the claims-handling company to exploit the situation and take the fee from the claimant. Nigel Griffiths: That arrangement would certainly make claims-handling companies' activities far more accountable, and I am sure far more acceptable to colleagues. Q130 Mr Clapham: Is that something that you would support? Is it something, for example, that we might find the department may well suggest to the Constitutional Department, that there should be a way of controlling these claims-handling firms? Nigel Griffiths: We are very happy to give our advice and experience to colleagues in other departments, and to highlight from the sort of cases that you and other colleagues have assiduously brought to our attention the real difficulties that this is posing - the resentment of miners who find that they are having to give up some of their compensation. My stand, and that of my predecessor and the Department, has been very clear on this. We have spent £477 million on the legal and other expenses separate from compensation to ensure that not one penny of compensation is lost by miners. We have heard already how certain organisations have charged fees that colleagues have been critical of, and this is another area. It is certainly true that if they were required in any way to work through solicitors, then all the control and supervision that is required by the Law Society would be brought to bear on their activities. Q131 Mr Clapham: The Law Society has been particularly helpful in relation to their members, but it is the group of claims companies that are very difficult to control, and it is a way of finding how we might exercise control on them. Having said that, I turn to three particular points that were raised by the claimants' group of solicitors around stalled claims. One of the questions they raised was why the DTI insisted for example to tackle the backlog of claims stalled under the claimants' side whilst it appears that on the side of the contractors there was not any pressure exerted to deal with that backlog. Nigel Griffiths: You will know, and I want to make clear to everyone, that there is quite often on stalled claims a simple confusion - because of the 750,000 claims going in - about just where they are in the chain. Sometimes solicitors believe that IRISC is sitting on them, and they are stalled at IRISC, and sometimes on exactly the same claim there is that misapprehension that it is the solicitors. In order to tackle that, we asked the Judge last year to put in place a mechanism where claims that have not appeared to move for some time were resolved; and this is under discussion. I understand the solicitors put forward their attempt at a solution to this on the VWF claims and separately on the COPD claims, because we are dealing with two different judges. We are getting back to them this month on the VWF claim, and shortly afterwards the COPD claim. We are trying to resolve this. Capita of course, as they touched on, do get an element of payment by their results. It is not in their interest to stall claims. That is not an efficient use of their human resources or other resources, and nor does it ensure that they get full payments under the contract. They are required to meet certain targets, and those targets are determined not by stopping people getting paid but by making sure that people get paid and as quickly as possible. Q132 Mr Clapham: Nevertheless, as you say, where stalled claims have occurred on the contractors' side, you take steps to make sure that they are moving on. Nigel Griffiths: We are on both sides. As I say, we are grateful to the solicitors for their suggestions about how to speed things up. This is part of the dialogue that my colleagues are having with them, and I hope we can reach agreement on COPD before the end of this month. That is the intention for VWF before the end of this month, and, shortly after, respiratory. Q133 Mr Clapham: One of the other things that the claimants' group raised was the fact that IRISC were instructed by the Department to send out some 4,000 letters, when in fact they were not in a position to deal with responses. What was the reasoning behind that? Did it cause delay and, if it did, have we now got over the delays? Ms Chamberlaine: We have certainly got over those delays. Let us put this into some sort of context. Managing the contractors and the process is not a passive experience for the Department; we are actively managing various stages of the process, and that means where there are blockages, wherever that blockage is it is part of our role and responsibility to try to unblock that. It is proper that we should look at those claims that are stalled with solicitors for clarity's sake and certainty's sake, and to at least try to bring some certainty to those claimants that are still in the system. The point that I have made about where we are in the VWF scheme - we are virtually at the end of general damages. There are perhaps only between ten and twelve per cent of all claims in general damages that are yet to be settled or to have a decision. We are not at the start. We are really at the end. It is this remainder of claims that we need to seek some clarity on, as to whether or not they are progressing through the system. That is the background as to why we felt it was appropriate as proper, good business governance of the scheme, to say that if a claim has stalled and is stuck in the system, why is that? If we can progress, let us progress it; but the onus is on the solicitor, as far as we are concerned, to tell us what the problem is. With any new process there are teething problems, and we have had further negotiations with the CG about areas of the stalled claims process that we can refine and amend. We think we have got to the stage now where it is operating properly, and while there were those discussions going on, we suspended the process because we thought it was proper to do so. But the Judge has endorsed it, and it is back on track now from 1 February, and from an IRISC and Capita perspective they are resourced up to deal with the correspondence that comes in. You are right to say there are only 4,000 claims, and that is something like 3 per cent of all the claims we have handled for VWF that have gone into this process. That is probably an indication of the fact that there are not significant volumes of claims yet to go through the system. There are a small number that are stuck, and we need to know why. Q134 Mr Clapham: Is it fair to say that now discussions are taking place with the solicitor and we are getting over some of the feeling that perhaps there have been some shortcuts taken by not discussing with the solicitors that have led to frayed relationships, shall we say? Ms Chamberlaine: It is fair to say there were frayed relationships but then at the end of the day the Judge was involved on numerous occasions, and on the last occasion she went through the whole of the agreement and endorsed it. In fact, at an earlier hearing she went further than the Department had proposed by deciding that a claim, once it is through this process, is out and outside of the scheme. That was her decision. We tried to involve the Judge in making decisions where it was appropriate to do so, but inevitably when you are talking about claims which potentially have the capacity to exit the scheme, you are talking about contentious areas where there will not necessarily be a degree of unity with solicitors that that is what should happen. Q135 Linda Perham: Minister, can I ask you about the fast-track office for COPD? I understand last year the Department tried to introduce a compulsory system and has now fixed on a voluntary one. Why was the attempt made initially to move to a compulsory system? Nigel Griffiths: Because that is what the Judge asked us to do. The pressure to fast-track has come from MPs, from sick miners, from unions, from widows and from solicitors; and the Judge agreed to that. In September he instructed our Department and my colleagues to look at the options, and he specifically asked the parties to examine a compulsory tariff scheme for miners showing little or no health disability. This was done to try and stop those who are the least affected from delaying the claims of sicker miners. Anyone with high levels of disability at the spirometry tests would still go straight to MAP and still will. I recognise that the Judge's wish for us to examine a compulsory fast-track scheme did not command the support of the claimants' group. In fairness, the solicitors in front of the Judge did object all along; however, it is wrong to suggest that the compulsory scheme originated from us, when the Judge himself said that on the basis of an estimate a compulsory scheme would make the process that we all seek even faster. But I was also aware of course that colleagues felt that that would not be seen as fair within their communities, and we listened to you on that and decided accordingly. Q136 Linda Perham: You are saying you moved to a voluntary system because you were listening to the wishes of other members who, from their experience in their communities, decided that their feeling was that that would be a better system. Nigel Griffiths: Indeed. The Judge instructed us to look at a compulsory scheme as one of the options. We did it, and having taken soundings from those most affected we decided that we would not go forward on the basis of a compulsory scheme; that that would cause claims to be settled a little later, but it would not be seen to be unjust. Ms Taylor: At that stage we were looking only at making offers to those people who on spirometry showed normal lung function, so their respiratory function was normal on the spirometry readings, and only a small percentage of those people would have gone on to show disability in the full MAP process - around 6 per cent of those people. It was a group of claimants who very likely were not going to be disabled, and we were proposing an average tariff. The scheme has moved on since then and we have a wider group in there. Nigel Griffiths: There are those of us who know - those of us in here, but the wider world perhaps does not - that there is only a finite number of medical specialists who can carry out the medical assessment process. There are about 600 respiratory specialists in the country, and we are using 200 of them, one-third of just about all the available man and woman power, to put people through the proper levels of testing that we know unfortunately medical practitioners cannot be brought up to the proper standards on and deliver full and just assessments. It is a desire to harness the resources that we have got there, and that is one of the major bottlenecks of that scheme that we have been working hard to overcome - and I am grateful to the medical profession. Mr French: Around 90 per cent of the claimants with normal lung function would go on to show chronic bronchitis in medical assessment, although they would not have disabling chronic obstructive pulmonary disease. That is why we are proposing fast-track payments to that group rather than denial of the claims. Q137 Mr Berry: May we turn to minimum payments, an issue that you would expect us to raise? From the start of the COPD scheme, the DTI has refused to accept the principle, and has not yet accepted the principle of a minimum payments scheme. Why is that? Nigel Griffiths: Because there is no real scope for the Government to overrule the amount that is calculated using a court formula, and on the basis of millions of cases of civilians who suffered from medical problems that are directly attributable to their workplace, it would leave any litigant who was dissatisfied with a court decision on compensation against a Government department or agency, to say, "give me a higher ex gratia payment". That is one of the key problems with it. Q138 Mr Berry: Why are you discussing the issue of minimum payments? Nigel Griffiths: We are discussing it because the solicitors proposed a solicitors'-funded scheme to provide a minimum payment of £500 to me some time ago. Q139 Mr Berry: Sorry, but is the issue here the principle, or is the issue the funding? I thought your first answer, Minister, was that it was an issue of principle. Nigel Griffiths: Correct. Q140 Mr Berry: If it is an issue of principle, I do not understand why there is a discussion of funding. What is the point of having discussions five years down the line on funding when you are saying you cannot do it or should not do it? Nigel Griffiths: No, I am saying what we are not able to do. I am sorry, I have not made myself clear. The solicitors some time ago proposed to me that there should be a solicitors'-funded scheme to provide minimum payments of £500. I think that that is on the basis, as I said earlier, that we have paid some £477 million to solicitors in fees. I am not making a comment on that. The solicitor's standard fee is £2,300 plus VAT. I can appreciate the feeling of some solicitors that to their client this may seem high when the settlements that they are asking them to accept, because of for instance heavy smoking, were reduced to a few hundred pounds. Q141 Mr Berry: Forgive me, I am still not clear whether it is the principle you are opposing the minimum payment scheme, or you have not yet found a funding way that is acceptable. Is it the first or the second? Nigel Griffiths: The second. The Committee was suspended from 4.04 pm to 4.27 pm for a Division in the House of Lords Q142 Chairman: As I understand it, if I may clarify the situation, the protocol which followed the judicial decision that triggered off the whole process does not provide for minimum payments funded by the DTI. The Judge has indicated however that minimum payments could be introduced provided they did not come from public funds, and that at least some of the claims settlement community are prepared to forego some of their fees on the understanding that they would be used for minimum payments, because the understanding that we got was that since a minimum amount of work is involved in minimum payments, nevertheless the fee is on a pro rata basis, which does not necessarily relate to the amount of effort that the solicitors put in. They are saying that given the minimal amount of effort involved in minimum payments, they would be happy to forego at least a part of their fee, and that that money could be used to fund the minimum payments. Within the confines of the judicial decision, there is a problem, but outwith the judicial decision, where the money would be sourced elsewhere other than government, then it is possible to do it. Nigel Griffiths: I am happy to take that as a summary. Chairman: That is where we start from. Roger would like to pursue a couple of points. Q143 Mr Berry: The solicitors suggested that it would be impossible to fund a minimum payments scheme through the increased funding they will be able to get from the RPI increase. Nigel Griffiths: It would be? Q144 Mr Berry: It would be. Nigel Griffiths: No. On our calculation they have said that that is their preferred way of doing it, which is to take half of the increase in the RPI. The shortfall, if was to be applied last year, is estimated at 400,000 and would not fund it - it would leave 1,600 miners without money to make up for the minimum payment. Q145 Mr Berry: Their argument is that if that scheme had been implemented when they first suggested it, it would have covered the costs. Are they wrong? Nigel Griffiths: I do not know whether they are right or wrong on that. To be fair to them, I have been warned throughout that it would not fund it, and I can tell you retrospectively if it had been brought in to cover last year, on the figures I have seen, our actuaries have advised me that the shortfall would have been £400,000. Q146 Chairman: Can you send us a note? Nigel Griffiths: Yes. Q147 Mr Berry: Is there any argument that has been suggested that a delay in considering that proposal effectively means that it goes from being fundable to being non-fundable? I would be very keen to see the numbers behind that. Nigel Griffiths: I am very keen to supply them, but there is a fundamental objection to that way of doing things, and it is illustrated by the figures I have given; but there is no guarantee that that would be self-funding. Indeed the fears of our officials on this were well-founded, if you apply it back - and I will supply the Committee with the figures. From day one, when the solicitors proposed this, I have given it every encouragement. We have told the court. We were told that they could not fund it directly because the Law Society did not allow for that. We checked with the Law Society and they confirmed that it could be funded in a way that would allow us to cut out the bureaucracy. My objection to the way the solicitors have suggested that they pay this is not just that it could lead to a shortfall of hundreds if not thousands of people not getting that minimum payment having had high expectations, with no chance of a pay-out; but I was suggesting that the simple way to achieve the minimum payment was for the Department to send solicitors monies to cover their fee and the compensation so that the miner would get £500 and the solicitor the balance. If I might give an illustration, if they assess compensation of, say, £400, the solicitor would get a cheque for £2,200 not £2,300, and the miner would be passed a cheque for £500. In terms of making this administratively simple and ensuring the speediest payment, I clearly believe that this is the best way forward. Chairman: We look forward to receiving the additional information. Q148 Judy Mallaber: On surface worker claims, in the evidence session last week the solicitors' group conceded that your refusal to accept liability for surface worker claims was legally correct, but that you should recognise your moral responsibilities. Do you not think that you have some form of responsibility to these men? Nigel Griffiths: My responsibility is to make sure that people who have suffered lung disease because they have inhaled coal dust get compensation. There are two ways of achieving this. There is the way that is open to any individual at the moment, which is through a civil case - and of course the schemes we are talking about were because of a number of civil cases advanced - or to bring them within one of the schemes we have. Our problem is this: in December 2003 I agreed to open the records for the inspection of solicitors to see if they could advance cases that show that COPD has been caused on the surface. From 5 May of last year the solicitors told the Judge that they would be preparing a case for 9 July. On 13 July they asked for an extension to 1 September. On 8 October they asked for a further extension to 17 November, and at that time they asked for an extension to January so that their medical expert, Mr Rudd, could examine 15 cases. On 14 December they withdrew their claim. I have since written to them, asking them why, and I have not yet received a response. Q149 Judy Mallaber: So the ball is in their court. Nigel Griffiths: Very much so. Q150 Judy Mallaber: I understand what you are saying about taking civil claims, but obviously that is a real problem, given the cost for an individual to take a common law claim for this. Nigel Griffiths: Of course there are ways for low income individuals, people with disabilities on low incomes, to look at how they can get funded for that, either through legal aid; or it can be agreed - and I am not speaking as a qualified lawyer here - how a payment can be appointed, in terms of taking those cases between the claimant and the defendant. Mr French: The difficulty we have is that according to our evidence the levels of respirative dust on the surface will be too low to cause COPD in all but the most extreme susceptible cases. On that basis, it does not seem logical to set up a scheme to pay damages for COPD to these claimants, whereas we can look at individual claims that are advanced. The other point that I would like to make is that we do already compensate claimants who had so-called mixed employment, that is to say claimants who worked underground and then on the surface, because we believe that their underground employment would take them to a threshold of exposure after which further exposure on the surface could cause them damage. Q151 Judy Mallaber: As of now, are you saying the door is still open for further discussions if the solicitors' group comes back with further evidence and arguments? Nigel Griffiths: I do not want to egg the pudding, but I went out of my way to accede to their very reasonable request to look at the court records we held, because they felt that they did not have full and appropriate access to them. They were given that. It was as a result of that that I have catalogued the court hearings. Everything was very optimistic until late last year. They informed the Judge they had identified 15 cases. They had set aside their medical experts to look at it, which is why I am sure, because of his commitments, and also wanting to do a thorough examination, they were not expecting to report back to the court until January. However, from the evidence they gave last week it appears that what Nick French has just said is right; that there is not evidence, and they cannot get cases where they can show measurable levels of damage to lungs caused to surface-only workers. Q152 Mr Clapham: Can I respond to that, Minister? As I understood what was said last week, although there were 15 cases, the real difficulty is that there were no readings in the coal preparation plants where these men had been exposed. The underground workings were monitored on a very systematic basis, but the coal prep plants were not monitored as such. Consequently, although one can identify men who have a chest disease, being able to prove that that chest disease was due to excessive dust becomes extremely difficult when there are no gravometer readings taken in the coal preparation plant. I understand that is what the solicitors were saying yesterday; but if you are saying that you would be prepared to discuss the matter further, I am sure it might be able to be taken further towards a conclusion. Nigel Griffiths: I would hope so. That is a very helpful explanation. I think though the reason why there was not monitoring in those surface areas and the reason why the National Union of Mineworkers would have insisted on it, almost throughout the history of the union, was because they well knew that there was a real deep-seated problem underground, and in those locations; and therefore it had to be monitored. There is an element of common sense that says to me that because the surface was not thought in any way to be comparable, then the monitoring was not pressed for by the workers' representatives and certainly not acceded to by the mining companies. That is the strong impression I get, which would reinforce what spirometry and other tests I understand are saying about surface working. Q153 Mr Clapham: Another explanation of course is that the underground took precedence, and there was little done. I can tell you that I worked for two years as a member of the safety team, and as part of that my job was air monitoring and dust sampling. I can count honestly on one hand over the two-year period the times that we sent into the coal prep plant. Nigel Griffiths: You speak with great authority on this subject. Mr French: I think we would all agree that the principal issue relates to dust levels. I do not think the claimants' solicitors' medical expert would suggest that if the dust levels we have are correct, men who worked only on the surface would contract COPD from working on the surface. Their issue is that the dust levels we have are incorrect. We have given access to the claimants' solicitors to look through the dust records, and they have not as yet found evidence that supports their position; but we all agree that it is a central issue. Q154 Mr Clapham: It may be, Minister, if we can sit down and discuss the matter, that we might be able to come to a satisfactory conclusion. Nigel Griffiths: I can undertake to colleagues and to this Committee that we will give maximum co-operation to resolving this. Q155 Judy Mallaber: Can I move on to another unresolved issue and clarify the position on small mines? My understanding from the last correspondence I had with you Minister, is that agreement was meant to have been reached on incorporating small mines in the claims-handling agreement, but we certainly still know of solicitors where - some small mines are still contesting their involvement within that. I, and others, have constituents who may well die before this issue is resolved, and I wonder whether you can clarify the current position. Nigel Griffiths: Not too many, I would hope. I think there have been significant moves by small mines. Mr French: There is agreement between the Department, the claimants' solicitors and AGF who represent the interests of small mines, who are the insurers of small mines from 1972 onwards, about incorporation of small mines into the claims-handling agreement. There is an agreement that is now being operationalised. There is an issue in relation to claims pre-1972, where there is no insurer. Q156 Judy Mallaber: So it is not relating to specific mines; it is relating to the timescale. Mr French: My understanding is that it relates to the timescale. Q157 Judy Mallaber: The other question is how long it will take the British coal insurers to resolve the software issues that we understand are still on disaggregating the claims arising from British Coal and from small mines employment. When will those software issues be dealt with? Mr French: A number of claims have already been processed in relation to small mines, so we are starting to make offers. I think perhaps the software issue you are referring to is in relation to pension calculations. We are in discussion with the claimants' solicitors group and with the small mines about amendments to the pensions calculator that will be required for some claims. I understand that it only affects claims whose last period of employment was with a small mine, so we are paying out those claims that we can at present whilst actively seeking to resolve the issues with the claimants' solicitors and with AGF, so that all of the claims, even those claims where the final period of employment was with a small mine, can be fully discharged. Q158 Judy Mallaber: Are you saying it will not be possible to resolve the pre-1972 claims? Mr French: That is a separate issue. The issue now is that - not the claimants' solicitors but some coalfield representatives - have suggested to us that in the absence of an insurer for those claims pre-1972, that the department should accept liability for them. Our advice is that we have no legal liability for those claims where there is no insurer pre-1972. Q159 Judy Mallaber: Will a moral liability be accepted to include those people who just happen to have slipped through the net? Nigel Griffiths: Obviously, we look at how, within the parameters we work under, we can secure justice, but it is a difficult area. The courts are likely not to find us liable. We cannot be liable for everybody else who is not liable, if you know what I mean; so if people fall down on their liabilities, government of course does not automatically pick that up. That is why we are working hard with the smaller mines to try and ensure that they meet their commitments. I am sadly certain that there will not be 100 per cent justice in this area. Q160 Chairman: Do you think that on some of the points relating to small mines, you could write to us in relation to points you would want to clarify? That would be helpful? Mr French: Yes. Q161 Mr Clapham: Can I pick up a couple of points that Roger raised with IRISC Capita on the issue of the fraudulent claims. There are 1,500 of which it is fair to say that 300 have been found to have some element of exaggeration rather than fraud; and that resulted in the damages being modified in some way or another. Is it possible to say how much money has been saved as a result of having a special investigation department? Nigel Griffiths: I think it will be hard to quantify for one clear reason: there are figures covering those cases, but of course by having such a department and people being aware that they should retain as sharp a memory as possible and exaggerate as little as possible, then there is a deterrent there to any element of dishonesty. The vast majority of people are perfectly honest. I am advised that we estimated the saving on the 156 denied claims to be £1.85 million as a result of this; and the 132 reduced claims that were mentioned by Capita is £1.25 million; so the savings were £3.1 million on those specifically. That was on 1,594 claims that were referred, which, as you rightly point out, were only 0.2 per cent of all claims registered. Q162 Mr Clapham: Is it possible to say how much was spent on investigating those cases? Nigel Griffiths: I am advised it was £500,000. Q163 Mr Clapham: Half a million pounds on investigation and so in cost/benefit analysis there has been a benefit. Is it possible to say how much the special investigation department is costing annually? Ms Taylor: Half a million pounds. Q164 Mr Clapham: Half a million pounds annually. I thought that related to the cases that we had identified rather than the cost of the department. Ms Taylor: It is about half a million pounds a year to keep the special investigations department. Q165 Chairman: I think we have covered all the areas. Having said that, there will be something else that we will think of, so we will be writing to you, I imagine. There are obviously some points that you will want to clarify with us as well, so we would be happy to receive the correspondence. Thank you for your evidence. Ms Taylor: Can I say one thing before we finish? One of the things you said last time really stung me when I was looking back through the transcript, about transparency rarely being found on the heart of officials when they died. Actually, we have tried in my team to wear transparency on our sleeves. We have tried very hard to be open with solicitors and other stakeholders. We did have joint operations meetings. We have provided masses and masses of information to the solicitors' group and other people. That is certainly something that we have tried throughout the whole of this process to do. It is difficult and we have probably failed in all sorts of areas, but we have tried very hard to be as transparent as possible so that when the sunshine shone on us people would say that everybody knew what they were doing. Q166 Chairman: Ten years in this job as Chairman has made me very conscious of the obfuscated tendencies within the British public service, and if for any reason I have lumped you in with the rest of them, please forgive me. There are characteristics within the DTI and beyond in Whitehall that sometimes tend to veer towards opacity rather than transparency - let us put it like that. Thank you for your evidence. Nigel Griffiths: Thank you for your commitment to this issue. |