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Fraud Bill [Lords]

Draft Recovery of Health Services Charges (Northern Ireland) Order 2006

The Committee consisted of the following Members:

Chairman: John Cummings
Baldry, Tony (Banbury) (Con)
Cooper, Rosie (West Lancashire) (Lab)
Dean, Mrs. Janet (Burton) (Lab)
Foster, Mr. Michael (Worcester) (Lab)
Goggins, Paul (Parliamentary Under-Secretary of State for Northern Ireland)
Jones, Lynne (Birmingham, Selly Oak) (Lab)
McCarthy, Kerry (Bristol, East) (Lab)
Mates, Mr. Michael (East Hampshire) (Con)
Mitchell, Mr. Austin (Great Grimsby) (Lab)
Murphy, Mr. Denis (Wansbeck) (Lab)
Reid, Mr. Alan (Argyll and Bute) (LD)
Robertson, Mr. Laurence (Tewkesbury) (Con)
Robinson, Mrs. Iris (Strangford) (DUP)
Rosindell, Andrew (Romford) (Con)
Spink, Bob (Castle Point) (Con)
Waltho, Lynda (Stourbridge) (Lab)
Williams, Mrs. Betty (Conwy) (Lab)
Libby Preston, Committee Clerk
† attended the Committee

Seventh Standing Committee on Delegated Legislation

Wednesday 21 June 2006

[John Cummings in the Chair]

Draft Recovery of Health Services Charges (Northern Ireland) Order 2006

2.30 pm
The Parliamentary Under-Secretary of State for Northern Ireland (Paul Goggins): I beg to move,
That the Committee has considered the draft Recovery of Health Services Charges (Northern Ireland) Order 2006.
It is good to see you in the Chair this afternoon, Mr. Cummings. The order will replicate measures that already exist in Great Britain legislation and replace existing Northern Ireland legislation. For over 70 years, hospitals in Northern Ireland have had the right to recover the costs of treating people injured in road traffic accidents where the casualty has been paid personal injury compensation. In those cases the health service costs are borne by the compensator rather than by the casualty or hospital.
The underlying principle is that those responsible for causing injury to others should pay the full cost of their actions or negligence, including the cost of treating the casualties’ injuries. Under part 2 of the Health and Personal Social Services Act (Northern Ireland) 2001, the treatment costs are recovered centrally and then paid directly to the health and social services trust that provided the treatment. The current scheme has so far paid over £20 million to hospitals in Northern Ireland for them to re-invest in front-line patient care.
In almost all cases the compensator is an insurance company and the cost of the scheme to the motorist is met through insurance premiums. Following separate consultations on both the policy and the draft order, which proved broadly supportive, I now propose to extend the principle beyond road traffic accidents to cases involving personal injury compensation more generally. I propose to replicate measures introduced in Great Britain by part 3 of the Health and Social Care (Community Health and Standards) Act 2003. It is worth mentioning in passing that one provision in that Act which relates to contributory negligence will be amended by the Health Bill that is currently going through Parliament. I should also explain that this measure is now likely to commence in January 2007, rather than October 2006, which is the date given in the explanatory notes.
There seems to be no reason either in principle or in practice why the existing scheme, which has proved so successful, should be restricted to road accidents. We propose, therefore, that in future when a person receives compensation for any injury, the cost of any health service hospital treatment and ambulance services received in connection with the injury will be recoverable from whoever has paid the compensation. That further supports the principle that the person causing the injury, rather than the taxpayer, should pay the full cost of his or her actions.
Apart from being the right thing to do, this measure will provide a good incentive for improvements in health and safety, for example in the workplace. As with the existing scheme, the income raised will be paid straight to the Compensation Recovery Unit, which is part of the Northern Ireland Social Security Agency, and then straight to the trusts whose hospitals provided the treatment. The hospitals will be free to use the money to improve patient services as they see fit.
In this way we hope to recover at least an additional £4.5 million a year, once the expanded scheme has been operative for about three years. That would equate to the provision of around 800 hip or knee replacements. We estimate that the overall scheme should be worth around £10 million to the health service in Northern Ireland. Again, in most cases the compensator will be an insurance company and the additional cost of the extended scheme will be met through marginally higher insurance premiums. We estimate that that will be no more than 4 per cent, mainly in the employers and public liability fields.
The order itself differs very little in substance from its Great Britain equivalent. The main differences from the Act that it replaces, apart from extending the scope of the recovery scheme from just applying in road accident cases, are that ambulance costs will be included; contributory negligence will be taken into account in calculating the amount of charge recoverable; and any compensator wishing to appeal against a certificate of charges will be able to seek to have the requirement that any charges due must be paid before an appeal can be made waived on the grounds of exceptional financial hardship.
Mrs. Iris Robinson (Strangford) (DUP): Given the very real dependency of large numbers of people on income support and the various benefits in Northern Ireland, where will the money come from if there is a road injury or an attack and the person responsible for the injury can claim that they just do not have the money or the facility to compensate the victim?
Paul Goggins: The hon. Lady makes an important point. The money will not come from the person who is being paid compensation. The victim of the road traffic accident or of the other injury will still get their compensation as they would now. This is a payment made by the person who is paying out the compensation, usually an insurance company. It will be a payment over and above the compensation. So the argument about financial hardship will be for the compensator if for some reason they have some financial hardship. It should not affect the person who is being compensated. It should make no difference to them whatever.
I am confident that introducing this proposed legislation and the extended health service charges recovery scheme will bring in more income for spending on front-line services in hospitals and by the ambulance service, with the additional benefit of encouraging people to take active steps to reduce the risk of causing injury to third parties. It is a very sensible measure.
2.37 pm
Andrew Rosindell (Romford) (Con): It is a pleasure to serve under your chairmanship, Mr. Cummings. This is my first opportunity as a member of the Northern Ireland Opposition team to speak in a debate such as this. I look forward to many more occasions in the future. I should like to apologise on behalf of my hon. Friend the Member for Tewkesbury (Mr. Robertson) who otherwise would have led for the Opposition. He cannot be with us today but he has asked me to stand in on his behalf. I should like to thank the Minister for his explanation and to make a number of points.
The Opposition certainly support the principle of the order as when a wrongdoer is identified and injury is caused to the extent that compensation must be paid to a third party, it is a natural progression that the already overburdened taxpayer-funded national health service should receive the necessary recompense for treatment that is essentially avoidable as a consequence of wrongdoing. It is particularly important that the provision of ambulance services will be brought into the scope of this scheme. This is an integral and particularly costly area of treatment where unnecessary usage needs to be kept to an absolute minimum.
I very much hope that the widening of the scheme will achieve the Government’s objective of encouraging people to take steps to reduce the risk of causing injury to others. In terms of administering the scheme, what additional burden will be put on the health service providers to assess the cost of the recovery process? I am sure that the Minister would agree that it is essential that as much money as possible that is recovered is ploughed back into front-line services and not diverted into administration and bureaucracy. Does he expect that more staff will need to be employed for administrative purposes?
The Government state in the regulatory impact assessment that the cost of administering the scheme may increase initially by about £100,000 in total, but a revised IT system should mean annual savings in the longer term. Given the Government’s continuing failures on IT projects, what faith can we have in the scheme being administered efficiently and effectively? Finally, how will small businesses be affected by rising insurance premiums. The Federation of Small Businesses has expressed concerns about the proposals, especially due to the fact that Northern Ireland businesses already pay among the highest insurance premiums in the UK.
Will the Government do everything possible to reduce the regulatory burden on business in Northern Ireland and set up an insurance task force to try to address the problem of escalating insurance premiums for small companies?
I do not want to prolong the debate, but if the Minister would address some of the matters I have raised I would be much obliged.
2.40 pm
Mr. Alan Reid (Argyll and Bute) (LD): I welcome you to the Chair, Mr. Cummings. I support the principle behind the measure, that in any case that results in compensation the wrongdoer, rather than the health services and the taxpayer, should meet the cost of their wrongdoing. The proposal will encourage people to take active steps to stop the risk of their causing injury to third parties.
I hope that the Minister will be able to answer one query: will the legislation apply to allegations of medical malpractice? The situation that I envisage is one in which a doctor in one hospital makes a mistake in treating a patient and as a result of that mistake the patient has to be treated in another hospital. Would the second hospital, which had to meet the costs of treating the patient, sue the first hospital in which the doctor who made the original mistake works? I should be grateful if the Minister would clarify that point.
2.41 pm
Mrs. Iris Robinson (Strangford) (DUP): I agree with what my two colleagues have said. I welcome the proposal on behalf of my party; it is not before time that it has been introduced, and I am happy to support it. The Minister has reassured me that the onus is not on the victims to pursue through the courts their right to compensation from the person who caused the injuries in the first place.
The FSB is very concerned because we pay higher insurance costs in Northern Ireland and I ask the Minister if he has received any representations from those in the insurance field on the impact of the proposal on their businesses. I would welcome an assurance that the £10 million envisaged as savings will be ploughed back into our health service and not into the central coffers of Government.
2.42 pm
Paul Goggins: I thank the hon. Members who have spoken for their support.
I shall respond first to the hon. Member for Romford (Andrew Rosindell), whom I welcome to his role in the shadow Northern Ireland team. I look forward very much to exchanging views with him. I welcome his support for the measure, in principle and in practice. He mentioned the extension of the remit to cover ambulance services, which are expensive and which therefore should, rightly, be covered by the proposal.
The hon. Gentleman asked me about the system for assessing claims and said how burdensome and expensive it would be. It is worth explaining to the Committee that no assessment is needed; the only thing that the compensation recovery unit does is to confirm with the hospital that treatment was given. Once it knows that fact, a certificate will be issued and the compensator will have to make a payment in line with the sliding scale of charges that applies. It is a simple administrative process, which does not require complex judgments.
The current scheme costs about £130,000 a year to administer. Initially the cost will go up, perhaps by about £100,000 but it will come down with improvements in IT. I smiled when the hon. Gentleman made his comments about IT, but I emphasise that it is a simple IT system relative to some of the large projects that he was perhaps thinking of. There will be efficiencies in this very low cost scheme, which will have huge advantages. I will not speculate on a precise figure, but if it is less than £200,000 to administer a scheme that will bring in £10 million a year it will be good value for money. It is an efficient system that involves very few staff.
The hon. Gentleman also mentioned the burden on small businesses. We estimate that the increase in premiums would be an average of 4 per cent., which I accept is an additional amount but it is proportionate. The key matter is that there is an incentive for businesses to demonstrate good practice in health and safety. Those who offer employer liability and other forms of insurance should reward the people who take those positive steps, perhaps with lower premiums than those who do not show good behaviour and good practice. That is a matter for the industry rather than for Ministers, but I hope that the industry will offer that kind of encouragement to small businesses to ensure that they have top quality health and safety procedures.
In response to the question asked by the hon. Member for Argyll and Bute (Mr. Reid), yes, medical malpractice by general practitioners will be covered by the proposal. If they have done something that results in an injury and there is a compensation payment by those who insure general practitioners, the charges will be paid in the normal way. The same will apply to hospitals, with one exception: when the hospital trust that was liable also treated the victim. Clearly, there would be no charge in that case because it would be an unnecessary bureaucratic procedure.
The hon. Lady also mentioned the additional burden of employer liability insurance. As I said to the hon. Member for Romford, I hope that the proposal will encourage good practice and that extra burdens will be reduced. However, in the end it is a transfer across from the taxpayer to the individual covered by insurance, whether it relates to road traffic, employment or other spheres. That seems to me to be the right way to proceed so that the burden is laid in the right place, not on the taxpayer but on the individual whose conduct is covered by insurance.
The hon. Lady made one final point, which I want to emphasise: every penny, other than the costs of running the system, will go back to the trust that provided the treatment, which means that it can spend the money on front-line patient care. We estimate that there will be an extra £10 million, a considerable boost to the funding of the health service in Northern Ireland, which will buy extra treatment. We can all be satisfied with it.
I hope that I have responded sufficiently to the points that have been raised. I am grateful for the Committee’s support for this practical, sensible measure.
Question put and agreed to.
That the Committee has considered the draft Recovery of Health Services Charges (Northern Ireland) Order 2006.
Committee rose at twelve minutes to Three o’clock.

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