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Baroness Turner of Camden: I shall study very carefully what the Minister said. But again I return to the point that I made in moving the amendment. The Minister's amendment says:
- "The period is--... the prescribed period".
- "or ... if there is no prescribed period, the period of four weeks".
I cannot understand why the noble Lord objects to the amendment that I moved. I cannot believe that the problem of double certification is insuperable, as the noble Earl, Lord Russell, said. If there is ambiguity in legislation--for example, the definition of a "prescribed period", lack of clarity and so on--it can lead to difficulties in the future. I am not terribly happy with what the Minister said. I am willing to look at it, but I am quite certain--
Lord Mackay of Ardbrecknish: When I studied this particular problem, I myself had some difficulty in working out how the gaps occurred and so on. The certificate itself can be seamless in that when the first certificate (if I may so call it) comes to the end of its day--say, for the sake of discussion, the end of November--the next certificate, although it may not be issued on 1st December, may well run from 1st December. But I see the problem of the gap. In fact we had a discussion about it this morning.
I know that the noble Baroness will not press the point. She will think about what I have said and I equally will think about the points that have been made, especially about the possibility of a court perhaps meeting after a certificate has gone and without a new one. I can quite see that point.
On Question, amendment agreed to.
Clause 4, as amended, agreed to.
Clause 6 [Liability to pay Secretary of State amount of benefits]:
Baroness Turner of Camden moved Amendment No. 18:
The noble Baroness said: The amendment before the Committee under Clause 6 deals with the rather difficult question of interim payments. Admittedly, this matter can sometimes be rather complicated. As those who have dealt with industrial injury cases are aware, it is very common, in a case which could be lengthy
The present practice is for insurers to require the interim payment to be allocated to special rather than general damages. Interest rates on special damages are higher than on general damages. Thus, by making an interim payment allocated to special damages, the insurer potentially saves money on the final settlement. The original recoupment provisions added a complication to interim payments in that any interim payment had not only to deal with the needs of the accident victim but also any recoupment incurred to date. That meant that an interim payment often had to be applied for in a much larger sum than might at that time be needed and could push towards the final value of the claim.
In smaller cases that was not so much of a problem because of the small payments limit of £2,500. In bigger cases, however, the impact on recoupment could dramatically cut back on the interim payment, often eating into the final compensation. We believe that some thought should be given to the problem of interim payments and that is what our amendment is intended to do. It makes clear that subsection (2) should not apply to an interim payment made before the final settlement of the claim which is below, or in the case of a second or subsequent interim payments are below, an amount or amounts specified in regulations to be made pursuant to this section.
We say essentially that this needs to be looked at; hence the suggestion that we have made about regulations. We no longer have the small payments limit of £2,500 in the Bill. This amendment makes provision for the Secretary of State to specify how much recoupment can be deferred to protect a small interim payment. The kind of payments likely to be involved are those relating to partial earnings loss to be made up by an interim payment. I hope that the Minister will be prepared to agree that there is something quite serious to talk about here and that he will be prepared to accept what we have to say. I beg to move.
Lord Mackay of Ardbrecknish: The noble Baroness is quite right in saying that this is a rather complicated issue. I hope that what I have to say can allay her concerns, which I understand, about this matter. I also understand that under the old system these matters sometimes did turn out in the way that she suggested.
The noble Baroness's amendment would exempt interim payments from benefit recovery, where their total fell below a prescribed limit.
I understand that the amendment is in response to a genuine concern that, after recovery is made from an interim payment, the victims may not, in the short term, be left with the funds that they need, for whatever reason the interim payment was being granted. I think that the suggested amendment is unnecessary. It would probably introduce a potential loophole into the reformed scheme, although I understand the problem as it occurred in the old scheme.
Under the reformed benefit recovery scheme, although we propose to continue the present arrangements that benefits may be recovered in respect of interim payments, the rules of the new scheme will only allow the victim's compensation to be reduced pound for pound in respect of benefits already paid to meet a corresponding need. So it should not be possible for benefit recovery to lead to a reduction in an interim payment that has been made, say, for private medical expenses.
That is because benefits are not paid to meet such expenses. If an interim payment is made for the purpose described, it could not be reduced on account of any benefit repayment that the compensator was obliged to make at that time.
However, if an interim payment would fall to be reduced under the provisions of Clause 8, it is up to the victim's representative to negotiate a payment with that reduction in mind. Under the present scheme, we have no evidence that the courts ignore the effects of recoupment when they award interim payments.
An attempt has been made by the noble Baroness to limit the extent to which the amended clause could be used to avoid benefit recovery by making provision for a limit below which recovery would not be triggered. Our knowledge of the way in which the small payments limit has been manipulated under the present scheme makes me fear that the taxpayer's interest, if we introduced a similar limit and applied it to interim payments, might not be protected. Of course, it might be possible to introduce a limit at such a low level that manipulation was almost impossible. However, this would make an interim payment made within such a limit all but worthless to the victim.
I appreciate that victims' representatives would rather not have to negotiate an interim payment with benefit recovery in mind; but I do not see any alternative if the taxpayer is to be properly protected. I hope that my pointing out that the reform scheme is different from the old scheme and that payments given for other than benefit will not be recoverable against, reassures the noble Baroness that the kind of scenario she painted (which definitely could arise under the old scheme) is not likely to arise under the new one. I appreciate that these are complicated issues. However, I hope the noble Baroness can withdraw her amendment. I appreciate that she may wish to consider the issue. If she wants to come back to me in writing, I shall be happy to respond to her.
Earl Russell: I am grateful to the Minister for his last assurance to the noble Baroness. I take the points that he is making. However, he did not say anything to meet the point about the difference between the treatment of general and special damages. If the noble Lord does not want to meet that issue by way of the amendment, perhaps he will consider some other way of meeting it. Indeed, before the next stage of the Bill he may want to consult his noble and learned clansman on the matter.
Baroness Turner of Camden: I am obliged to the Minister for his explanation. As he rightly said, this is a complicated matter. However, there are still issues of concern to be resolved for those of us on this side of the
I am well aware that the taxpayer needs to be protected. On the other hand, we are also concerned with the interests of the person who suffered the injury. Therefore, as the Minister rightly assumed, I will look carefully at what he said. It may be a good idea to revisit the whole issue at Report stage. I am not happy about what he said this afternoon. However, the matter is complicated and we need to give it a great deal of consideration. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 7 [Recovery of payments due under Section 6]:
Page 3, line 35, at end insert--
("( ) Subsection (2) shall not apply to an interim payment or payments paid before the final settlement of the claim which is or, where more than one interim payment has been made, are in total below an amount or amounts specified in regulations made pursuant to this subsection.").
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