First Standing Committee on Delegated Legislation

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First Standing Committee on Delegated Legislation

The Committee consisted of the following Members:

Chairman:

Mr. Kevin Hughes

†Ainsworth, Mr. Peter (East Surrey) (Con)
†Atkinson, Mr. David (Bournemouth, East) (Con)
†Boswell, Mr. Tim (Daventry) (Con)
†Challen, Mr. Colin (Morley and Rothwell) (Lab)
†Hamilton, David (Midlothian) (Lab)
†Holmes, Paul (Chesterfield) (LD)
†Irranca-Davies, Huw (Ogmore) (Lab)
†Jones, Helen (Warrington, North) (Lab)
†Kennedy, Jane (Minister for Work)
Lewis, Mr. Terry (Worsley) (Lab)
†McDonagh, Siobhain (Mitcham and Morden) (Lab)
†Mole, Mr. Chris (Ipswich) (Lab)
†Moran, Margaret (Luton, South) (Lab)
†Price, Adam (East Carmarthen and Dinefwr) (PC)
†Randall, Mr. John (Uxbridge) (Con)
†Rapson, Syd (Portsmouth, North) (Lab)
John Benger, Committee Clerk

† attended the Committee

Tuesday 22 February 2005

[Mr. Kevin Hughes in the Chair]

Draft Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) (Amendment) Regulations 2005

9.55 am

The Minister for Work (Jane Kennedy): I beg to move,

That the Committee has considered the draft Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) (Amendment) Regulations 2005.

The regulations were laid before the House on 26 January 2005, and I can confirm that the provisions are compatible with the European convention on human rights. It is a pleasure to serve under your chairmanship this morning, Mr. Hughes. I can think of no more appropriate person to take an interest in this matter, given your previous employment as a miner, experience in this matter and the persistence with which you have lobbied Ministers on it for many years.

The regulations are being made under the Pneumoconiosis etc. (Workers’ Compensation) Act 1979. The scheme is designed to pay compensation to people suffering from some dust-related diseases when there is no recourse to legal action against their former employers. The purpose of the regulations is to increase by 3.1 per cent. the amounts of compensation paid to those who satisfy all qualifying conditions on or after 1 April later this year. The increase is in line with the general increase in the retail prices index and is the same increase being applied in the general uprating order for other social security benefits that the House will consider later today.

At the equivalent Committee meeting last year, my predecessor made the commitment that the rates paid under the 1979 Act would be increased annually and at the same time as increases to other social security benefits. These regulations fulfil that commitment. I am pleased that we have been able to take such an important step, because annual increases in the rates of payment under the 1979 Act are a significant improvement to the administration of the scheme.

It may help the Committee if I take a few moments to set out the background to the scheme, without tediously repeating what my predecessor said last year. The scheme was set up in recognition of the difficulty that people experience in obtaining civil compensation when certain dust-related diseases have occurred as a result of their work and when the employer cannot be sued for damages. The Act provides for a lump sum payment to be made to sufferers—or, when the sufferers have died, to dependants— when there is no realistic chance of obtaining civil compensation for contracting such dreadful dust-related diseases.

David Hamilton (Midlothian) (Lab): I am aware of how many of those whom we represent are covered in the regulations and I appreciate the increases that are being made. However, would it be possible to consider the situation for deceased personnel, where the differential is substantial? It is a rather paltry sum in relation to somebody under the age of 67.

Jane Kennedy: That may become clear in the course of this morning’s proceedings. I am not yet in a position to say what our thinking is, but we are examining the workings of the Act with a view to reviewing it to improve the assistance that can be given to families in such circumstances.

Asbestos-related diseases are long-latency diseases that are often not diagnosed until 20 to 40 years after exposure. Given that time scale, it is not surprising that by the time that the disease is diagnosed and the effects become apparent, the employer responsible may no longer exist. Payments under the scheme can be made for mesothelioma, pneumoconiosis—which includes asbestosis—diffuse pleural thickening, primary carcinoma of the lung if accompanied by diffuse pleural thickening or asbestosis, and byssinosis.

The main conditions of entitlement are these: first, that there is no relevant employer that can be sued; secondly, that no court action has been brought or compensation received in respect of the disease; and thirdly, that an assessment under the industrial injuries disablement benefit scheme has been made. The amount paid is based on a simple calculation involving the age of the claimant and the level of disability. The higher amounts are paid to people with higher levels of disability or in cases where the disability arises at an early age. A lower amount is paid when the claim is made by the dependant after the sufferer has died. Following the increase set out in the order, the maximum amount will be £63,808, which would be for a person aged 37 or under with a 100 per cent. assessment. However, such large payments are rare. On average, sufferers receive about £14,000 and dependents receive about £7,000; that is the point to which my my hon. Friend the Member for Midlothian (David Hamilton) drew attention.

More than 21,000 claims were received in the period between the 1979 Act’s coming into force and this January. Of those people, 14,000 have been paid, resulting in total payments of about £150 million—a considerable sum. In the past financial year, 2,107 claims were received, of which 1,501 were paid sums totalling some £19.3 million. The vast majority of claims—more than 70 per cent.—are for cases of mesothelioma, which, as hon. Members will know, is a particularly unpleasant and terminal condition caused by asbestos fibres.

The number of people successfully claiming under the scheme reflects the scheme’s success, and I am pleased with the major contribution that it makes to the level of support provided for people suffering from those distressing diseases. I should also add that the lump sum payments paid out under the Act are in addition to industrial injuries disablement benefit. Together, they form a significant package of financial assistance for people suffering from mesothelioma and the other diseases covered by the Act.

I am committed to continuing to review the current provisions to make them as effective as possible. Hon. Members—particularly members of the all-party sub-group on asbestos—will know of the document, “A Charter for Reform of Benefits Legislation”, which was produced by the Greater Manchester asbestos victims support group. I received it before Christmas and have read it with great interest. I am aware of other suggestions for improving the current scheme, and I am very sympathetic to many of them. I hope soon to be able to respond to many of the suggestions that are being made and to consider how changes to the scheme can be taken forward. In doing so, I assure hon. Members and the unfortunate people who contract such diseases that the scheme is as responsive as possible to their needs and circumstances, both now and for the future.

10.3 am

Mr. Tim Boswell (Daventry) (Con): May I first welcome you to the Chair, Mr. Hughes? Given that you know the subject intimately, we shall all forgive you if you find it necessary to leap from the Chair to make a contribution—we shall take your contribution as implicit.

This is a welcome debate. I am grateful to the Minister for the way in which she put the case with a degree of sensitivity and clarity that is appreciated. I do not anticipate any difficulty from Conservative Members in responding to the order. I am glad to have reinforcements, not only from my colleagues, but from the Liberal Democrats and, indeed, the Welsh nationalists in the shape of the hon. Member for East Carmarthen and Dinefwr (Adam Price), who has a background of direct knowledge of the subject.

As my constituency is not a mining constituency—any coal is many thousands of feet below sea level; it has not been extracted and it is unlikely to be through conventional mining methods—I cannot claim much direct experience of the matter. However, terminal bronchial conditions are extremely distressing. I remember a connection of mine by marriage dying from flour inhalation over the years because he was a miller. It is an extremely unpleasant situation for anyone; no one need minimise its consequences and the degree of distress felt by the individuals concerned and their families, and I hope that my remarks will not be construed in that way.

May I ask the Minister one or two straightforward, technical questions? The first relates to the operation of the scheme. Clearly, this an uprating order. It is what we are doing on the Floor of the House in relation to social security later today. In this case, it is not by statutory requirement. Nevertheless it is welcome that we should move these benefits in step with social security legislation. There is no difficulty with that, but there is a slight distinction further to the one raised by the hon. Member for Midlothian about individuals and dependants.

The fact of dependency is sadly triggered by the death of the person involved, so presumably the compensation is fixed to that point. In the case of people who are alive but are designated in this way, an uprating of 3 per cent. makes quite a substantial difference to the lump sum, particularly when the larger sums of compensation running up into the £50,000-plus bracket are involved. I am not quite clear what happens in relation to the trigger point and whether it is last year’s payment; is it the 2004 level or the 2005 level? I hope that the Minister and her officials will try to give as many people as possible the benefit of the uprating, as they will have to live with this condition indefinitely.

My second question relates to the points the Minister made about the application of the scheme when there is no employer to sue. There is a related issue. A meeting to discuss the fallout from the Turner and Newell pension fund issue will begin shortly elsewhere in the House, and some of us would like to attend on behalf of our constituents. It is one thing to say that no employer can be found, because he is out of business, or no employer can be identified, because it is difficult to tie the condition to the particular situation. But what about an employer who is, or might become as a result of litigation, insolvent? Can he be covered under this scheme? A succession of successful litigation claims might tip him over the edge and there would be no money to pay up through the compensation route. The Minister may want to respond to that or take it into account in her welcome review.

The third technical point is about the question of taxability. Presumably any funds that are derived by way of a lump sum are themselves taxable, or can they be protected in any way? The Minister will know that there are some very sensitive issues in relation to compensation for thalidomide payments, about which a number of us have argued with the Treasury in the past. It is an important issue. Clearly, it is within the spirit of the House’s decision to have this special scheme that there should be the best possible benefit to those involved who are suffering from the condition or their dependants.

Those are the technical questions and I have three more general ones to put to the Minister. First—again, this can be seen in the context of her review—is she satisfied that the present definition of the pneumoconiosis etc. workers’ compensation conditions is sufficiently wide to cover most normal situations? I do not anticipate that it is not, but when Parliament produces a special scheme, I am always conscious that some people may be left outside who may labour under a sense of unfairness or difficulty when others are being compensated.

We all know the background. We know that the mining industry, particularly coal mining, and the asbestos industry have given rise to these conditions extensively. I mentioned the flour-milling industry and there may be others. If there is a condition that is similar to those defined in the scheme, we should all like it at least to be considered for inclusion in due course.

I come now to the other two questions. Will the Minister give the Committee a little more light and shade on the number of claims and on the incidence in any one year? It should be borne in mind that we are talking about lump sums paid either to individuals or to their dependants. That is the current position. Going on from that, will she give the Committee an indication of the likely financial implications in the medium and longer term? As she said, these are long-term conditions, particularly in relation to the asbestos inhalation and mesothelioma arising from it. We may not know the answer at the moment; we may not even easily be able to produce projections.

In a separate response to me by letter, the Minister has helpfully replied to some of the questions that I raised with her about asbestos. She said that some 3,500 additional cases of asbestos-related disease were generated every year. I am not sure that by any means all those cases would necessarily fall within this scheme. In certain cases, the employer may be known or there may be no possibility of qualification, but that is a significant load. That said, given that practices in the coal-mining industry have hugely improved and that we have taken a grip on the problem of asbestos—which clearly had to be addressed, even if some aspects of it are debatable—we should be beginning to cut off some industrial exposure at source. We all hope that that will eventually reduce the overall cost and, much more importantly, the overall distress for individuals involved with these distressing conditions.

It would be helpful if the Minister said a few words about roughly how the scheme is going, where it is anticipated to go and what it costs. Over the years, Parliament has successively taken the view—it is also my view—that if people are in the situation that we are discussing, it must be right to do something about that, particularly when there is no practical source of legal redress. I do not think that anyone would begrudge that, but I want to be able to feel that the operation of the scheme is as fair as it can be and that, in future, the need for it will be reduced to the minimum that it is possible, through the agency of man, to achieve. I want to feel that we have learned the lessons of the past, that we have treated those caught up in this problem as fairly as we can and that, eventually, we can virtually close this sad chapter in our affairs. It is in that spirit that I make my remarks and am content for the regulations to proceed.

10.13 am

Paul Holmes (Chesterfield) (LD): I wondered whether I should declare an interest, not because I represent a constituency in the north Derbyshire coalfield and many of my constituents are affected by what we are discussing, but because a few weeks ago my mother received a small cheque that was her part of the family settlement of a posthumous claim relating to my grandfather, her father-in-law, who was a miner. However, given that the case has been settled and the sum was very small and paid to my mother, and not to me, I do not think that I need to declare an interest.

In themselves, these amendment regulations are uncontroversial and welcome. They uprate the current rates of compensation payments by 3.1 per cent. from 1 April this year to keep the payments in line with inflation and other social security benefits. The only direct criticism that could be made of the regulations is that there is no statutory requirement for that uprating to take place every year. The Government are doing it annually, but it does not have to be done. We are all aware of such payments not being uprated in the past and therefore losing their value and purpose. One criticism of the regulations might be that there should be a statutory requirement, rather than a voluntary process.

There are other criticisms, which the Minister touched on in referring to documents submitted by, for example, asbestos campaigning groups. Those criticisms relate not to what is in the regulations, which we all support and agree with, but to what is not in them. I should like to cite a couple of examples from the Coalfields Communities Campaign, which is headed by an old friend and sparring partner of mine, Councillor Bill Flanagan. In the 12 years that I was an opposition councillor in Chesterfield, he led the Labour group and the Labour council; he is now a distinguished opposition councillor on that council. Over the years, the campaign has submitted much material in evidence on these issues, and I should like to make two points that it makes about what is missing from the regulations.

First, when the scheme was introduced, the overriding concern was to ensure that the huge number of expected claims would be processed fairly, without swamping the law courts, which would have taken many years. It was estimated that if the claims had been left to follow normal procedures in the law courts, they would have taken 15 to 20 years to complete. One of the points of the scheme is to enable compensation to be paid as quickly as possible either to the families of people who are already dead, such as my grandfather, or to the many people who are still alive but in the later years of their lives. However, we are already six or seven years on in the process, and many claims have still to be settled. The Coalfields Communities Campaign is concerned that, at the current rate of progress, it is hard to estimate how many years it will take before all claims are settled. The regulations were designed to avoid the 15-years figure—the bottom of the 15-to-20 year range—that it was estimated that the law courts would take. I should appreciate the Minister’s comments on that.

The second major point made by the Coalfields Communities Campaign is whether there should be a minimum payment for respiratory diseases that fall under the regulations, rather than an individual assessment of all cases on sliding scales. The campaign argues that it was never intended that the handling agreement would result in a payment lower than would have been received in a court of law.

The Chairman: Order. The hon. Gentleman is talking about an entirely different scheme. I think that he is talking about the Department of Trade and Industry scheme, rather than the uprating order that we are debating today. I shall let him carry on, but he should be careful about what he is talking about. We are here to debate this scheme, not an entirely different one.

Paul Holmes: I appreciate your guidance, Mr. Hughes. I assured Bill that I would try to raise those points, so at least I have put them on the record.

In Chesterfield, two organisations—the trade union safety team and the Derbyshire asbestos support team—have offices about five streets away from where I live. They have raised a number of points that they feel should be in these regulations. The Minister referred to the document “A Charter for Reform of Benefits Legislation”, which was sent out before Christmas. She said that she read it with great interest and a degree of sympathy and hopes to be able in the near future to comment on what actions might be taken to meet some of the requirements. With your indulgence, Mr. Hughes, I should like to outline three points that were made in the document, to which the Minister has already made favourable reference.

First, a sufferer of an asbestos-related disease can claim under the scheme only if they are in receipt of industrial injuries disablement benefit. However, one of the problems is that many sufferers deliberately do not claim that benefit, because it counts as income for means-tested benefits such as housing benefit, council tax benefit, pension credit and income support. They do not claim IIDB because it would cost them in terms of other benefits. Campaigners in the field, such as the Derbyshire asbestos support team, feel that many poor people are missing out on the benefits of the regulations because of the counter-productive effect of the other benefit if they do not claim it. The benefit rule is not consistent with the aim and purpose of IIDB, as it directly affects the workings of the scheme. The charter to which the Minister referred makes the case that the regulations should be altered so that IIDB is not taken into account as income and offset against other benefits. That would remove the false value that excludes people from gaining access to the scheme that we are talking about today.

The second point in the charter is that widows are eligible to claim under the scheme if the deceased would have qualified for a payment. However, the widow receives only approximately one third of the in-life payment that would have been awarded. Mesothelioma is difficult to diagnose; it is often diagnosed very late in a person’s life or only after death, in a post-mortem. For example, there was a case in Derbyshire of someone who had been treated for asthma for six years but when he died, the post-mortem revealed that he had been suffering from mesothelioma. The widow received only a very small fraction of the payment that would have been made had the disease been diagnosed during life. Because of the nature of this asbestos-related disease and its late diagnosis, often only after death, the Derbyshire asbestos support team argues that the regulations should be changed to allow widows to receive a much more generous proportion than one-third of the in-life payment.

Two other points are raised: first, the workers compensation scheme payment should be made automatically regardless of whether the company for which the person worked when they contracted the lung disease was still trading. The argument is that civil claims are often lengthy.

The Chairman: Order. The hon. Gentleman has gone back to a different scheme again. He must confine his comments to the scheme that we are discussing.

Paul Holmes: Thank you for your guidance, Mr. Hughes. I thought that, as the Minister referred so favourably to the points made in the charter, we might be allowed to talk about them. However, I have put the general points made by the Coalfields Communities Campaign, the trade union safety team and the asbestos support team.

The Minister made some very favourable comments and said that she hoped she would be able to say what might be done to meet criticisms of the regulations. No one would criticise their contents, other than saying that it is a voluntary, rather than a statutory, uprating. A statutory uprating would give claimants a safeguard against losing the value of their benefits in the future.

Many issues arise in relation to the regulations and other associated benefits and Acts. I hope that we can have the Minister’s assurance that the Government will take action to meet those concerns.

10.22 am

Adam Price (East Carmarthen and Dinefwr) (PC): The last time we discussed these matters, I spoke on the inter-relationship between this set of regulations and the sister scheme administered by the DTI, not the recent miners’ compensation case but the earlier agreement in 1975 between the mining unions and the National Coal Board—the coal workers’ pneumoconiosis scheme. It is an exact parallel to these regulations in terms of the sliding scale, albeit that it is much less generous than the terms under this Act. As the Minister said, it applied to businesses that were no longer operating. Therefore, it did not apply to the National Coal Board or the British Coal Corporation, until 27 March 2004.

I raised the matter in Committee when British Coal was dissolved. I understand from the mining unions that the Government accept that former employees of British Coal are entitled to bring claims under these regulations because British Coal no longer operates. Although the intention of the 1979 Act was to provide some redress to workers when there was no likelihood of bringing a civil action because the employer was no longer solvent, the Act specified where a business was no longer operating, which is a much broader definition. I understand that the Government have accepted on that legal technicality that British Coal employees may now bring claims under these regulations.

The individuals who brought claims lodged applications under the Industrial Injuries and Diseases (Old Cases) Act 1975 but, having heard the Government’s ruling, have now declined the offer from the Department of Trade and Industry, because the 1979 Act is more generous. I will not detain the Committee for too long on that matter, but the difference, in many cases, is more than £20,000.

Mr. Boswell: Is there not also an inequity in relation to those who accepted the terms on offer from the DTI and then found that if they had waited a bit longer, they might have received a better benefit under the scheme?

Adam Price: Indeed. I am in favour of retrospectiveness in all cases. However, we need clarity on the matter. I am not a lawyer, but I imagine that people who have not accepted an offer under another scheme would still be entitled to pursue their legal rights under the 1979 Act. I would be grateful if the Minister could clarify whether British Coal employees can bring applications, and whether those who have not accepted terms under the 1975 Act can proceed with their claims under the terms of the 1979 Act. Can she also tell me how many claimants have so far been refused payments under the 1979 Act because they have received offers—although they have not settled—under the 1975 agreement, and how many of those come from Wales?

On a different point, can the Minister tell us what impact last week’s High Court decision by Mr. Justice Holland on pleural plaques has on the regulations? We are familiar with the fact that there has been a 20-year campaign by workers in the construction industry on pleural plaques—an asbestosis-related condition that affects the lungs. It appears to me that that condition should come within the remit of the eligible diseases under these regulations. That decision was taken in a civil case brought against the insurers, but should not the same principle apply to workers who have pleural plaques but unfortunately no longer have a solvent employer against whom they can bring a case? I should be grateful if the Minister could address that issue.

10.27 am

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Prepared 23 February 2005