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In January 1998, the Department of Trade and Industry (now the Department for Business, Enterprise and Regulatory Reform) took responsibility for the accumulated personal injury liabilities of the British Coal Corporation. In the same year, the courts found the Corporation negligent in respect to lung disease caused by coal dust (Chronic Obstructive Pulmonary Disease or COPD) and hand injuries caused by using vibrating equipment (Vibration White Finger or VWF). Under the courts and in negotiation with claimant's solicitors the Department established two schemes to pay compensation. Both schemes are now closed to new claimants.
The Department received over three quarters of a million claims from former miners, their widows, or their estates for COPD (592,000) and VWF (170,000). By the time all the claims have been settled, the Department estimates that it will have paid some £4.1 billion in compensation.
The schemes posed a formidable challenge. Many claimants were elderly, ill and anxious to receive their compensation. The number of claims greatly exceeded the Department's initial forecasts of 173,000 COPD and 45,000 VWF claims. It was ill prepared for the number, and in some cases complexity, of claims made. Consequently some claimants have had to wait as long as ten years or more. In 2005, to address significant backlogs the Department, in negotiation with solicitors, introduced a fast track arrangement to process COPD claims. By September 2007, there were around 116,000 COPD claims and 12,000 VWF claims remaining to be settled. The Department is seeking to process most of the remaining VWF claims by March 2008 and COPD claims by February 2009.
The schemes were costly to administer. By completion, administration costs, including contractor and medical costs, are expected to total almost £2.3 billion. Claimants' solicitors and other representatives' fees account for just under £1.3 billion of this total. The Department's negotiation of the fees with solicitors was weak, with the result that it paid fees significantly in excess of costs. Some solicitors have also levied additional fees on successful claimants.
On the basis of a Report by the Comptroller and Auditor General,[1] the Committee examined the Department for Business, Enterprise and Regulatory Reform on its management of the two compensation schemes.
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