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Earl Howe moved Amendment No. 8:

Page 2, line 31, leave out ("may") and insert ("shall").

The noble Earl said: In moving Amendment No. 8, I shall speak also to Amendment No. 10. These amendments are designed to alter the duty created by the Bill to apply for a certificate by increasing the onus of responsibility on an insurer to do so before he is allowed to make a compensation payment. This is a subtle shift but I believe it to be entirely in keeping with the spirit and thrust of the Bill.

If it is the Government's policy that drivers who cause accidents should contribute to the cost of NHS treatment, there is no good reason why that contribution should not be made before, or at least simultaneously with, the payment of damages to the injured party or, in a fatal case, to his relatives. On the other hand, I recognise that it would be wrong to force a delay on the payment of damages or compensation where those are due. My suggestion is that there should merely be

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an obligation on an insurer to apply for a certificate--not necessarily to be in possession of one--before compensation is paid. Under the Bill as it stands, an insurer does not have to do so, and that seems odd. I beg to move.

Lord Hunt of Kings Heath: The obligation to pay NHS charges arises only when a compensation payment is made. The amount to be paid will be the amount which is due on the day when compensation is paid. In subsection (8) of Clause 2 the Bill places an obligation on a compensator to apply for a certificate of charges within 14 days of making a payment of compensation.

One of the many benefits of using the Compensation Recovery Unit to undertake the work of NHS recovery is that the unit already has an existing, efficient relationship with the insurance industry for the purposes of recovery of state benefits. We are anxious that the advantages of running our two systems together both to help the Government and the insurance industry are fully realised.

But one of the differences between our two schemes is that in cases involving benefit recovery, payments of compensation to victims may be delayed while the benefit recovery is calculated. This is not so in the case of NHS charge recovery as the compensation paid to the victim is completely separate from the NHS charges. Indeed, the NHS charge does not become payable until the compensation has actually been paid. In order, however, to help the two systems run together we have included in NHS charges recovery an option for the insurer to apply for an NHS certificate in advance of paying compensation. This will enable insurers to cover both recoveries at the same time and, where a case includes both benefit and NHS recovery, even to pay both amounts with one single cheque. The amendment fails to recognise that the obligation to pay NHS charges is triggered only when compensation is paid. It makes compulsory the option to apply for a certificate earlier than is strictly necessary and therefore fails to recognise that the insurer has no obligation to apply unless and until he makes a payment of compensation. On that basis I ask the noble Earl to withdraw his amendment.

Earl Howe: I am grateful to the Minister. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Earl Howe moved Amendment No. 9:

Page 2, line 33, after ("State") insert ("or a person providing services to him").

The noble Earl said: Amendment No. 9 is in part a probing amendment but it also raises a drafting point. The Minister explained at Second Reading that the Government intended the compensation recovery unit in the Benefits Agency to act as agent for the Secretary of State in the collection of NHS charges from insurers. I should be grateful if the Minister can elaborate on the practical aspects of that arrangement. First, are all insurers ready to operate the system? Secondly, have all NHS hospitals been notified appropriately? Thirdly, what provisions have been made to ensure that the

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transition between the old and new systems is a smooth one? For example, presumably it will be necessary to transfer certain information to the CRU from hospital records about traffic casualties who are receiving NHS treatment at the time that the new system comes into operation and about those cases in which a claim for charges could be made but has not yet been made in relation to accident victims treated since 2nd July 1997. Have all those kinds of practical aspects been thought through thoroughly?

I turn to an entirely different aspect. Can the Minister inform the Committee whether the record of the CRU in the area of benefit recovery has been problem free? I am aware that overall the performance of the unit has been satisfactory, but can the Minister confirm that the new work in collecting NHS charges will closely replicate established procedures that are familiar to the insurance industry? Is he confident that there will be no practical difficulties associated with the expansion of the unit's remit in terms of the procedures that it will follow?

My final question relates to the CRU as an agency acting for Scotland as well as England and Wales. Of course the Scottish Parliament will have responsibility for health matters in Scotland, but Scottish hospitals will be recovering charges through an agency that acts on behalf of the United Kingdom Secretary of State. From a practical standpoint I see nothing wrong with that. But would it not be wise to spell out at this stage in the Bill, as the amendment seeks to do, that applications for certificates may be directed to the Secretary of State's agents as well as to the Secretary of State himself? The Minister may reply that that is not necessary because the scheme is not reserved under the Scotland Act and Scottish Ministers will take on the Secretary of State's powers after devolution. If that is the case perhaps I may ask about the costs of running the proposed system. If the CRU is funded by the Benefits Agency, which in turn is an offshoot of the Department of Social Security, to what extent will the cost of running the new system be borne by the Scottish health budget? I beg to move.

Lord Hunt of Kings Heath: The noble Earl raises a number of interesting points relating to the compensation recovery unit to which I shall try to respond. The fact that the Secretary of State has decided to place the work of NHS charge recovery with the Department of Social Security's compensation recovery unit does not need to be reflected on the face of the Bill. However, details of how the charges will be collected on behalf of the Secretary of State will rightly appear in the regulations.

The noble Earl, Lord Howe, both today and at Second Reading asked a number of questions about the CRU. The main and obvious factor in favour of the compensation recovery unit is its track record of recovering state benefits from compensators. This includes a well-established relationship with the insurance industry that is not just efficient and appreciated by the insurers but has been developing and changing in tune with the times. For example, discussions are currently under way with the major companies to develop electronic data interchange links

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between them and the compensation recovery unit. It is hoped that this will provide an even quicker and more cost-efficient procedure than now. The track record of the CRU has been widely acknowledged. For example, it prompted the Law Commission to recommend in a paper published in 1996 that the Government should consider using the unit to recover NHS charges.

Not only is the unit a known and appreciated quantity but it is within the government family, as the noble Earl pointed out, and deals daily with information that is both highly personal and confidential. We all appreciate that members of the public might be worried if information about their claims for compensation, including details of their injuries, was spread any wider than absolutely necessary.

The noble Earl, Lord Howe, asked about costs. In the regulatory appraisal we have published information on costing. In the first year we have budgeted for a cost of about £1.4 million but that includes a contribution to the development of a new computer system that will aid the recovery of both NHS charges and state benefits. In later years we expect this cost to fall. We are looking at a cost of about or less than 1 per cent. of the amounts that are recouped. My understanding is that the Scottish NHS will pay its share towards those costs.

I believe that the decision to use the CRU will benefit the insurance industry. Clearly, as the noble Earl suggests, there has been concern on the part of insurers about the impact on insurance premiums. One way in which we believe we can help the insurance industry is that by using the compensation recovery unit we can keep the administrative burden for insurers to a minimum. Insurers will be able to report relevant claims to the CRU using existing returns that have to be completed for benefit recovery anyway. They will be able to request certificates of recovery simultaneously, and they will even be able to settle both benefit and NHS recovery with one cheque in one envelope. I understand that the ABI supports the choice of the CRU to undertake this work.

The noble Earl asked whether both insurers and hospitals would be ready for the start of the scheme. We are confident that they are. Our understanding is that all hospitals have appointed liaison officers to work with the CRU and the unit has notified insurers of the new system and the practical details of it.

None of this means that the decision to use the CRU is set in stone. We believe that the CRU is the best possible option at this point. That view is based on an assessment of the burdens on the insurer, the concerns of the claimants and the fact that the CRU is a body engaged in a very similar type of work and has already proved what it can do. It does remain open for the Secretary of State, however, and indeed, in answer to the noble Earl, Lord Howe, the Scottish First Minister to decide that the work could be better placed elsewhere. If that decision was ever taken, then the Bill, and indeed the existing legislation, already allows the flexibility to specify exactly how collection would take place through regulations.

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On that basis I would invite the noble Earl to withdraw his amendment.

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