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Session 2006 - 07
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Public Bill Committee Debates

Draft Personal Injuries (NHS Charges) (Amounts) Regulations 2006

The Committee consisted of the following Members:

Chairman: Mr. Christopher Chope
Borrow, Mr. David S. (South Ribble) (Lab)
Crausby, Mr. David (Bolton, North-East) (Lab)
Davies, David T.C. (Monmouth) (Con)
Fallon, Mr. Michael (Sevenoaks) (Con)
Flint, Caroline (Minister of State, Department of Health)
Gidley, Sandra (Romsey) (LD)
Greenway, Mr. John (Ryedale) (Con)
Griffith, Nia (Llanelli) (Lab)
Hall, Patrick (Bedford) (Lab)
Howarth, Mr. George (Knowsley, North and Sefton, East) (Lab)
Love, Mr. Andrew (Edmonton) (Lab/Co-op)
McIsaac, Shona (Cleethorpes) (Lab)
Mactaggart, Fiona (Slough) (Lab)
Murrison, Dr. Andrew (Westbury) (Con)
Pugh, Dr. John (Southport) (LD)
Rosindell, Andrew (Romford) (Con)
Ward, Claire (Lord Commissioner of Her Majesty's Treasury)
Jenny McCullough, Committee Clerk
† attended the Committee

Seventh Delegated Legislation Committee

Thursday 14 December 2006

[Mr. Christopher Chope in the Chair]

Draft Personal Injuries (NHS Charges) (Amounts) Regulations 2006

8.55 am
The Minister of State, Department of Health (Caroline Flint): I beg to move,
That the Committee has considered the draft Personal Injuries (NHS Charges) (Amounts) Regulations 2006.
I am pleased to bring these regulations before the Committee. For 70 years, hospitals have had the right to recover the costs of treating people who were injured in road traffic accidents where such people were paid injury compensation. The NHS costs are borne by the compensator, rather than by the accident victim or the hospital. The principle is that those responsible for causing injury to others should pay the full cost of their negligence, including the cost of treating the victim’s injuries.
Under the existing Road Traffic (NHS Charges)Act 1999, costs are recovered centrally and then paid back directly to the NHS trusts that provided the treatment. So far, £300 million has been paid to hospitals in Britain—money that they can reinvest in front-line patient care. For example, last year, Leeds Teaching Hospitals trust recovered £1.3 million, which is enough for 250 hip replacement operations.
Part 3 of the Health and Social Care (Community Health and Standards) Act 2003 took powers to extend recovery of NHS costs to cases involving personal injury compensation in general. When a person receives compensation for an injury, the cost of any NHS hospital treatment and ambulance services received in connection with the injury will be recoverable from whoever paid the compensation. That is particularly relevant to a case in which an employer is liable for health and safety and an injury has been caused to a member of their staff.
The new injury costs recovery scheme will come into force on 29 January 2007. The income raised from the scheme will be paid straight back to the hospitals that provided the treatment. Those hospitals will be free to use the money to improve patient services as they see fit. We hope to provide the opportunity to recover an additional £150 million, which can then be reinvested in front-line patient care.
The regulations make provisions concerning the amounts of NHS charges to be recovered under the ICR scheme. As well as setting tariffs for out-patient and in-patient treatment, the tariff for the provision of NHS ambulance services, and the maximum amount to be recovered in relation to any one injury, the regulations set out how the scheme deals with the range of circumstances in which the amounts to be recovered need to be adjusted.
The ICR scheme will be administered by the Department for Work and Pensions compensation recovery unit on behalf of the Secretary of State for Health. The unit has operated the current road traffic scheme since 1999; it operates the benefit recovery scheme; and it has extensive links with, for example, solicitors and insurers. Compensators will have a legal obligation to inform the CRU of any claim for personal injury compensation.
The postponements of the implementation of the regulations are due in part to concerns about the market for compulsory insurance in relation to employers’ liability. The concern was whether the measures would lead to a huge increase in premiums for employers. I will be happy to answer questions on that. Due to those postponements in implementation, considerable work in preparation for the successful delivery of the scheme has already been undertaken. For example, the electronic data transfer system used by the CRU to communicate with NHS trusts on the road traffic accident scheme has already been updated and redesigned to accommodate the additional requirements of the ICR scheme. NHS trusts were involved in the testing of those changes to the electronic system, and have had input to the accompanying guidance, to assess whether the system is user-friendly and fit for purpose.
Due to efficiencies achieved by CRU, the cost of operating the expanded scheme will, at £2.4 million, cost only slightly more than the current scheme, at around £2.2 million this year. That is a good example of how effectively the CRU works.
Under the existing RTA scheme, the amounts to be recovered are set using a simple tariff scheme. The tariff consists of a single one-off payment where hospital treatment is provided without admission, currently £505, or a daily rate, currently £620, for each day or part day of admission to hospital, excluding the day of discharge. There is also a statutory ceiling on how much can be recovered in relation to the treatment of injuries resulting from any one incident. The ceiling is currently £37,100, which is roughly equivalent to 60 days’ in-patient treatment. Those amounts have been migrated to the ICR scheme, with the addition of a new element to cover the cost of any ambulance journeys that may be required. That amount has been set at £159. Regulation 2 sets out the amounts of NHS charges payable.
The tariff system means that the amounts recovered frequently do not exactly match the cost of providing treatment in a specific case. For simplicity, however, and to reduce administration costs, the tariffs represent average treatment costs. All the amounts have been established by calculating the average costs of treatment for injuries that are typically suffered in accidents. For ambulance journeys, the calculation is based on the average cost of providing ambulance services.
In summary, the regulations remove from the general taxpayer the burden of paying to treat victims of other people’s negligence. They are consistent with the principle that those responsible for causing injury to others should meet the full cost of their wrongdoing, including the costs of NHS treatment; otherwise, wrongdoers are subsidised by the taxpayer. The regulations are a logical extension of the Road Traffic Act scheme. The income that is collected will be paid straight back to the hospital or to the ambulance service that provided the treatment. That could contribute an additional £150 million for reinvestment into front-line services, adding to the £300 million that is already delivered by the RTA scheme. I commend the regulations to the Committee.
9.1 am
Dr. Andrew Murrison (Westbury) (Con): It is curious, is it not, that we are considering these regulations in the week of publication of the Department of Health simplification plan, which purports to reduce the amount of regulation and red tape. That said, there is much in the regulations that the Opposition are inclined to support. As the Minister said, the regulations will simply extend the existing provision covering road traffic accidents. That will produce a sizeable sum of money for the national health service.
I am a little confused about the figures that the Minister gave, however. We understand that the cost of treating and managing cases that have arisen out of negligence is something like £170 million to£190 million, and the Minister thinks that she is going to save £150 million. However, when one drills down into the regulatory impact assessment—as I did last night—one finds that £77.5 million will evaporate in public liability costs. So perhaps the news is not as good as we had hoped.
There will be a burden on business—though we do not know how much, and the Minister said that she would comment on the extra insurance costs that would result. That burden will fall disproportionately on certain sectors, some of which have been particularly hard hit in recent years. So, despite our general support for the regulations, we should not imagine that there will not be unintended consequences, because clearly there will be.
We have some questions for the Minister. Some of them concern that which is not evident in the otherwise fairly good guidance to the regulations. There is very little discussion of contributory negligence and how that will be managed in terms of apportioning blame and recouping cost. That is potentially a lawyers’ beanfeast, and I should like to hear how the Minister proposes to handle complex situations. Her remarks suggested that identifying a culprit is invariably straightforward, but it is not.
It would be useful to know the reason for the ceiling on sums recoverable from parties deemed to have been negligent. It seems to me that £37,100 is a relatively minor sum in the context of many injuries. If the principle behind the regulations is accepted, it seems artificial to create a ceiling, particularly a low-level one.
These days, health interfaces very much with social services, and the boundary between them is constantly being eroded. Many of the costs that bear on the state as a result of injuries accrue in fact to social services. Does the Minister perceive a difficulty in apportioning those costs in the context of the regulations? On a more philosophical note, does she envisage an extension, in the fullness of time, to allow for injury costs that are attributable to negligence, and that bear on social services, to be recouped from the parties deemed liable?
In general, we support the measure and hope that it will raise funds for the NHS, which is its intention. As we accept the principle that the NHS may be reimbursed costs from road traffic accidents, which has been long established for 70 years, we have no philosophical objection to the extension of that provision in the regulations.
9.6 am
Dr. John Pugh (Southport) (LD): We, too, welcome the regulations, which extend a scheme that seems workable, practical and is already raising revenue for the NHS.
I understand that this is a compensatory scheme for the NHS when there is an accident, when someone is liable and when compensation is already paid. Under those circumstances, the NHS can claim back costs based on a fixed tariff. Compensation follows admission or proof of liability, and I think that I am right in saying that it can be paid either by an insurance company or by an individual if they are devoid of insurance. Clearly, that will up the cost of insurance. The Lords debate on this matter was largely preoccupied with that and with the readiness of the insurance market to cope with the new circumstances. This scheme seems highly desirable, however, because it forces employers to focus clearly on their responsibilities and will put a real financial burden on them if they do not provide adequate insurance. The measure therefore encourages safety and should save the NHS funds. All that has got to be good. Where liability is contestable—where it is not pursued or established—the scheme does not apply, because it requires proof of liability, agreement and a willingness to compensate.
I should like to raise only two sets of concerns, the first being legal and the second financial, bearing upon the funding of acute trusts. First, in the case of clear liability but an unwillingness to pay, could a situation transpire in which the NHS had the resources to pursue its claim but the individual did not succeed in pursuing theirs? In other words, the NHS may be compensated for its trouble, but the individual may not get anything from the negligent employer, or whoever. Is that possible under the scheme, or does compensation for the NHS require compensation already to have been acquired for the individual who is affected? In the event of compensation funds being exhausted—where the person providing the compensation does not have the money to provide that at the level required—is there a principle of first call? Does the NHS have priority in getting its money back over and above the individual who is directly affected? Are there any ground rules on that?
Secondly, on acute trust finance, I am happy with the principle of tariffs; it is a swings and roundabouts system, and it is better than going through a bureaucratic process of detailed calculation. The costs come to the acute trust, which can claim costs in all circumstances, except where it is the negligent employer, or whatever, in which case it cannot make a claim on itself. However, thinking of the future, will this process of rewarding or paying the NHS for work done be unconnected from the payment by results system? In cases of mixed liability, as the hon. Member for Westbury mentioned, where it is complex to follow up and find out who was negligent, how far they were negligent and to what extent there was contributory negligence, will it be worth following the process in all cases? It will be a fairly complicated process and in some cases the trust will be obliged to pursue it, but if that is so, the cost of pursuing it may not be worth the reward that is subsequently obtained.
If, for example, the process of investigating or pursuing the negligent employer fails to secure the funds—if, say, the employer disappears or goes out of business—is it possible for the hospital to claim ordinary payments under the payment by results scheme, assuming that there is an overlap in the funding, or would that be regarded as a loss? Would it be regarded as a loss to the acute hospital if the money did not arrive for whatever reason, given that a case that was not a matter of negligence would be paid under the payment by results scheme and a negligence case would be expected to be paid for from compensation money? In pursuing such claims, does the acute trust pay any kind of transfer payment to the compensation recovery unit, or is any claim that it makes, or asks the CRU to make, purely a win for the hospital, with no additional costs incurred in pursuing it? Whose decision is it to pursue more complex cases? Can the acute trust call it off or can the CRU call things off at a certain point?
Is the situation of all trusts the same? Are foundation trusts in the same boat on this issue as any other acute trust? Those are matters of detail, not matters of principle, to which I should like the Minister to respond.
I should like to mention two specific issues with regard to the impact assessment. It seems that some employers will worry more about their insurance and liabilities than they would previously have done—and so they should. However, in the building trade, for example, there is a tendency for people who work for agencies or are subcontracting to be employed on building sites, which are dangerous environments in many respects. I suspect that the regulations will accelerate that trend, because they shift the liability from the builder who runs the site on to the direct employer, who would in such cases be the subcontractor or the agency providing the staff. Have the Government assessed specifically the effect that the regulations may have on the building trade?
Finally, although I am sure that I could almost answer my own question, what would happen in the event that an organisation—the House of Commons, say—failed to provide adequate security and some accident or disaster affected a good number of employees who then made compensation claims against the House authorities? That could apply to any enterprise. Such an incident would not necessarily be a matter of negligence; it could be connected with terrorism, for example. Would there, equally, be a claim for the NHS services that provided whatever was necessary to sort out such an awful situation? If a terrorist incident happened where adequate concern for public protection had not been shown, would the NHS be compensated as a result?
9.14 am
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Prepared 15 December 2006