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I ask those questions somewhat pointedly because when the Road Traffic (NHS Charges) Act was brought into force in 1999, no competitive tendering was done then either, despite the fact that the Government had previously issued 12 guiding principles for market testing and contracting out. They stated:

Are those guiding principles still applicable today? If so, can the Minister confirm that a review of the performance of the CRU has been carried out and that Ministers have concluded, on the basis of an objective assessment, that the in-house route offers best value for money?

The Government’s conduct in 1999 was particularly reprehensible. For a number of years, the National Road Traffic Accident Claims Centre, NARTRACC, a company run by Mr Frank Adlam, had been collecting fees from motor insurers for the cost of treating victims of road traffic accidents in NHS hospitals under Section 157 of the Road Traffic Act 1988. NARTRACC was engaged by 132 hospitals in the UK to undertake that work and was extremely successful in doing so. In 1996, and again after the election in 1997, Mr Adlam approached the Government to propose that the reimbursement scheme should be rolled out nationally and, through his Member of Parliament, passed extensive amounts of advice to the Department of Health on how that might be achieved to the best advantage of the NHS.

The Government decided to legislate. The legislation passed in 1999 put NARTRACC out of business without a penny of compensation. Its entire workforce was made redundant. Mr Adlam received not so much as a thank you from Ministers who, from that point on, refused to see him. Had NARTRACC lost out after a competitive tender, that would have been one thing, but no tender for the work was ever issued. The collection work was placed in-house. That decision by Mr Frank Dobson, the then Secretary of State, has never satisfactorily been explained.

NARTRACC submitted an indicative quote to the Department of Health which showed that it would be able to collect fees at a much lower cost than the CRU. It was ignored. Mr Adlam has asked for sight of the background papers supplied to the Chancellor of the Exchequer when he made his Budget announcement in 1997 about the national roll-out of NHS charges. He was told, almost unbelievably, that no such papers existed. He has asked the Department

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of Health for sight of policy advice submitted to Mr Dobson when the decision was made not to market test. The department has refused to release the papers on grounds of cost. When Mr Adlam offered to pay the additional cost, he was told that that was not allowed.

Considering that government legislation brought Mr Adlam’s legitimate business to an end, it would not have taken much to provide him with some measure of compensation, in accordance with the spirit of the European Convention on Human Rights. Fur farmers were put out of business by government legislation at very much the same time and provision was made to compensate them. Mr Adlam, whose company provided a public service to the NHS, was kicked out into the cold.

The whole story of NARTRACC has been one of obstructive and, frankly, less than honourable conduct by the Department of Health and, not to put too fine a point on it, mean and shabby behaviour by Ministers. Having followed the saga for the best part of eight years, I will take some persuading that what we see being rolled out in this order represents best value for money for the taxpayer or a well thought through means of achieving the Government’s policy objectives.

The amounts of money collected by the CRU have consistently fallen short of predictions—well short. When the CRU began to implement its responsibilities under 1999 Act, the operation was little short of chaotic. To be sure, it is more efficient now, but I am not sure how much more. In 1999, there was a huge backlog of cases to be followed up. All indications that I have—and I would welcome confirmation or correction—suggest that the bulk of those cases were never pursued. The financial loss to the NHS by reason of that failure by the CRU would have been significant. The scale of the workload entailed by the order will be considerable. The CRU estimated that in 2004-05, more than 77,000 claims were made against employers and that there were nearly 87,000 public liability claims. Doubtless, not all of them involved hospital treatment, but a great many will have done. If the CRU is now to undertake the collection of fees from personal injury cases, I hope that a very close watch will be kept on its efficiency and effectiveness, including cost effectiveness.

I hope that the Minister will be able to furnish me with some satisfactory replies on all these matters, if not today, then in writing. I am, of course, very willing to talk to her further.

Baroness Neuberger: I am very grateful to the Minister for introducing the regulations. I am afraid that I had not heard the story of NARTRACC that the noble Earl, Lord Howe, has just raised. I add my concern to his. If the story is as he has described it, and I imagine that it is, we need some kind of public explanation of why that should have been the case and why someone who, if you like, helped the Government to sort out how the compensation scheme should work should not have either been thanked or compensated.

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I will now go back to what I was originally going to say. In principle, the regulations are good. The Merits of Statutory Instruments Committee commented on the fact that two government departments have worked side by side and hand in hand and the silo mentality, unusually, seems to have been in abeyance. We would all celebrate that, and I am delighted by it. It is relatively unusual, and it is great. That is the first thing. There are some issues that need to be addressed. Before that, I seek one clarification. In the report by the Merits of Statutory Instruments Committee, there is the conclusion that it would lead to roughly a 2 per cent all round premium increase for insurance. The Government’s Explanatory Notes, assuming we are going for option 3 rather than option 2, state that the increase will be 1.5 per cent. It would be helpful, given that there is an issue about the cost, to know whether the increase in insurance claims is 1.5 per cent or 2 per cent. I would be very glad to hear that straightforward clarification.

I have two areas of concern, one of which the noble Earl, Lord Howe, has already raised. The concern is whether the employers’ liability compulsory insurance market can cope. Given the number of delays in the introduction of this because of the doubt as to whether that market could cope, what is the evidence that suggests that it can cope now? Why is it okay now, when there was a deliberately delay of a year because clearly there were worries about it? It would be good to see what the evidence might be and to hear from the Minister on that.

In addition, there is the question of whether the CRU itself—irrespective of whether it should have been put out to tender—can cope with what is clearly going to be vastly increased amounts of business. Given the considerable delays in it at the moment, will it be able to tackle what seems to be a vastly increased role? If it will be dealing with all personal injury claims, which is what the regulations seem to suggest, there is a specific question in relation to cases where individuals who are not insured become liable and the extent to which the CRU is genuinely going to pursue them for these payments for the National Health Service. Or should those costs be borne by the public purse? There is a public policy question in relation to cases where the costs will not be picked up by insurers.

My second issue of concern is rather different, and I want some kind of explanation. We are told that there will be indicative tariffs instead of compensation reflecting the actual cost of treatment. Those tariffs look reasonable and a new one is being introduced for ambulance costs of £159 per journey. I have done only a little private research on this, but it looks to me as if that figure is on the low side. How did the department reach that indicative cost? I am not entirely sure that I am convinced by indicative costs. Perhaps we should still look at compensation for the actual cost of the journey to the hospital. I imagine that the explanation is that it is simpler to do it by a tariff scheme, but I would still like to hear how the calculation was done, how the averages were arrived at and whether there will be a differential between different areas of the country. We know that the costs are very different;

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London and the south-east is considerably more expensive than the north-east and the north-west. This tariff scheme bears close examination.

However, apart from those concerns and the serious concern raised by the noble Earl, Lord Howe, I am delighted by the regulations.

Baroness Royall of Blaisdon: I am grateful to the noble Earl, Lord Howe, and the noble Baroness, Lady Neuberger, for their comments and general support, if not enthusiasm.

In relation to the comments from the Merits Committee, I, too, very much welcome the fact that the silo mentality seems to have disappeared and that the Merits Committee noted that. Both noble Lords understandably raised the issue of the employers’ liability compulsory insurance market. The Department of Health and the Department for Work and Pensions have been liaising closely on the introduction of the injury costs recovery scheme and the ELCI market. The Government, as the noble Earl pointed out, agreed to delay the introduction of the scheme until a study had been carried out. The final report was published in December 2003 and recommended that the implementation of the scheme be delayed for a further year.

A further consultation at the end of 2004 raised further concerns about the planned timing for introducing the ICR scheme, as the ELCI market was still considered to be fragile. However, after further discussions with the Department for Work and Pensions, which was developing a programme of work to implement the recommendations of the earlier study, Ministers agreed to a further postponement of the scheme’s implementation until October of this year, to enable the programme of work to bed in. That has now happened and information from the Association of British Insurers is that increases in premiums in 2004 are, on average, between 15 per cent and 20 per cent, compared with between 30 per cent and 50 per cent in 2003. We estimate that the impact of the introduction of the scheme will be to increase premiums by 1.5 per cent, rather than the 2 per cent mentioned by the noble Baroness, and that estimate has been confirmed by the Association of British Insurers. To recap, we have been working closely with ELCI, and it is confident that the scheme will not be an undue burden and can be implemented.

6 pm

The noble Earl, Lord Howe, implied that this is a stealth tax. It is not a stealth tax; rather it removes from the general taxpayer the burden of meeting some of the costs of treatment of the victims of other people’s negligence and places the burden on the wrongdoer. Why should the man or woman in the street have to pay for the medical treatment of someone injured at work because their employer failed to take adequate steps to protect them?

The Department of Health currently pays the compensation recovery unit £2.2 million for administering the road traffic scheme. Under the expanded scheme, it is estimated that the CRU will be handling significantly more claims. Running costs, including staff costs, are expected to be only slightly higher—around £2.4 million—than for the road traffic recovery scheme.

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I noted the concern expressed about the Compensation Recovery Unit, and I assure noble Lords that the implementation of the income contingent repayment scheme will be carefully monitored from the outset. Its success in terms of achieving policy objectives will be reviewed by the Department of Health not less than two years after implementation. It is likely to be at least that long, possibly longer, before the scheme is fully embedded so that its success can reasonably be assessed.

We believe that the CRU offers the best value for money in recovering central government moneys from compensators. It has a proven track record, electronic communications with all NHS trusts and, increasingly, with compensators. As part of central government, it has tight financial and information security requirements. There are no plans to put that work out for tender. I should add that the CRU’s IT system is very good. Quite astonishingly for a government department, it recently received a prize for its technological output and the service it gives to those using it.

I note the deep concern expressed by the noble Earl and the noble Baroness about NARTRACC. I do not have any details that I can give the noble Earl today, but shall write to him at the earliest opportunity and will copy the letter to the noble Baroness.

A question was asked about how we calculate the charges. We have used a simple tariff based on the average costs of people needing treatment for traumatic injuries, as with the existing scheme. The flat-rate charge for treatment without admission will include an amount towards the cost of any repeat attendances. A single one-off payment where hospital treatment is provided without admission will be £505. The daily rate for treatment with admission also includes an element towards follow-up appointments. Ambulance costs will be levied on a one-off payment per journey basis. I note the comments of the noble Baroness about the £159, but that is an average cost for traumatic injuries, not for all ambulance injuries. We are using a tariff rather than calculating each treatment, because it makes the scheme simpler and more economical to run.

Will householders have to pay if someone is injured on their premises? Any person who pays compensation to an individual, including private citizens, will become liable for repaying any associated NHS hospital and ambulance costs. However, if the person does not or cannot pay compensation, the NHS costs cannot be recovered. Many householders may find that they have some public liability insurance cover as it is often included in home buildings and contents insurance polices.

I think I have dealt with most of the questions raised, apart from that on NARTRACC, which I will write to the noble Earl about. If I have missed anything, or there is anything further noble Lords would like, I shall try to respond. If not, I will respond in writing.

Baroness Neuberger: I would like to test the tendering issue a little further. In a climate where patient choice requires a considerable amount of tendering of health services, not to tender this scheme seems a little eccentric. At the not-less-than-two-year point at which the

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regulations are looked at again, perhaps the Minister could look into the possibility of this work being tendered. It is appropriate that it should be.

Earl Howe: I endorse that comment. The Minister said that it was the belief of her department that the CRU offered best value for money in delivering the services that it does, but it did not seem from what she said that that belief was based on any hard evidence, because her department simply had not tested any alternatives. She said that there were no plans to put the work out to tender, but if the rules which were published in 1997 by the Chancellor of the Duchy of Lancaster still apply, I am not quite sure why that decision was taken. I would be grateful if the Minister came back to me and the noble Baroness on that issue.

Baroness Royall of Blaisdon: I shall certainly do so. Within the two-year envelope of time, when the review is taking place, there may be an opportunity to look at those issues, but I shall write to noble Lords in the mean time. I thank noble Lords for their support, and I commend the regulations to the Committee.

On Question, Motion agreed to.

Animal Health and Welfare (Scotland) Act 2006 (Consequential Provisions) (England and Wales) Order 2006

6.07 pm

Lord Evans of Temple Guiting rose to move, That the Grand Committee do report to the House that it has considered the Animal Health and Welfare (Scotland) Act 2006 (Consequential Provisions) (England and Wales) Order 2006. First Report from the Statutory Instruments Committee.

The noble Lord said: I thank the Committee for agreeing to take together these two orders being made under Scotland Act powers. This is well-established practice and continues to make the best use of parliamentary time.

The two orders are made under different sections of the Scotland Act. The order concerning animal health is made under Section 104, which allows for necessary or expedient changes in consequence of an Act of the Scottish Parliament.

The order relating to the transfer of functions—in this instance, functions concerning the Healthy Start scheme and recent climate change legislation—is made using the powers in Section 63 of the Scotland Act. The power is commonly referred to as an executive devolution order and allows for the transfer to Scottish Ministers of functions that they can then exercise in or as regards Scotland.

I hope that it will be helpful to Committee members to give a brief explanation of both orders. The Animal Health and Welfare (Scotland) Act 2006 (Consequential Provisions) (England and Wales) Order 2006 is made in consequence of the Animal Health and Welfare (Scotland) Act 2006, which received Royal Assent on

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11 July and is an Act of the Scottish Parliament. The 2006 Act introduces in Scotland a duty of care for all those who are responsible for animals to ensure that their welfare needs are met.

The power of courts to disqualify a person who has been convicted of an animal welfare offence from certain activities such as owning or keeping animals, which was previously contained in the Protection of Animals (Amendment) Act 1954, is retained and strengthened in the 2006 Act. By “strengthened”, I mean that the 1954 legislation contained powers that could be used to disqualify people “for having custody of” any animal. The 2006 Act widens the scope of disqualification to catch owning, keeping, arranging to keep, dealing in or controlling animals, whether directly or indirectly.

The specific purpose of the order is to maintain reciprocal arrangements on the enforcement of disqualification orders made by the Scottish courts in England and Wales. As was the case with disqualification orders made under the 1954 Act, the order also ensures that a person subject to a Scottish disqualification order made under the 2006 Act is unable to obtain a licence in England and Wales to keep an animal boarding, riding or dog-breeding establishment. That is consistent with the Animal Welfare Act, which was also given Royal Assent this year. It contains provisions—agreed to by the Scottish Parliament in December 2005—allowing recognition in Scotland of disqualification orders made by a court in England or Wales; effectively the mirror image of the order we are discussing today.

The Government and Scottish Executive believe that there should be co-operation to ensure that there is no scope for the exploitation of gaps between the animal welfare regimes north and south of the border. Both Administrations support the maintenance of the established principle of reciprocal recognition of court orders. This ensures that those convicted of serious cruelty to animals, and consequently disqualified from keeping animals in one jurisdiction, cannot escape the effect of that disqualification simply by crossing the border into another jurisdiction.

The second order before us is the Scotland Act 1998 (Transfer of Functions to the Scottish Ministers etc.) (No.3) Order 2006. It allows for the transfer to Scottish Ministers of functions in two distinct policy areas. First, the Healthy Start scheme is the replacement for the current Welfare Food Scheme, introduced in Britain to combat food shortages during the Second World War. Latterly, the scheme offered milk and infant formula to low income families. Following a Department of Health review of that scheme, Section 13 of the Social Security Act 1988 was substituted by the Health and Social Care (Community Health and Standards) Act 2003, among other things to enable the Welfare Food Scheme to be replaced by Healthy Start.

The new scheme offers vouchers that can be exchanged for milk, fresh fruit and vegetables, and infant formula to pregnant women and children under the age of four in certain low income families. The vouchers can be used in a wide range of participating shops and pharmacies. Under the Welfare Food Scheme, tokens

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could only be exchanged for milk and infant formula, but the new scheme offers much more flexibility and choice.

Although, like the Welfare Food Scheme, Healthy Start is primarily based upon social security benefits, and is therefore reserved, the range of foods and matters relevant to the NHS link closely to devolved health policy. The draft order therefore transfers to Scottish Ministers the functions of prescribing the description of foods to be made available under Healthy Start in Scotland in the future and issuing directions to the health boards that will be administering parts of the scheme in Scotland.

The Scottish Ministers will deal directly with reimbursement in relation to Healthy Start vitamins. As with the Welfare Food Scheme, the intention is that contractors for the Department of Health will carry out day-to-day reimbursement functions for Healthy Start food. When dealing with reimbursement of suppliers and beneficiaries in Scotland, the Department of Health will be acting as an agent of the Scottish Ministers. This arrangement will enable the Scottish Ministers to take advantage of economies of scale and will be made possible by a further order under Section 93 of the Scotland Act. It will be made at the same time as this order. It will be subject to the negative resolution procedure and will go before the UK and Scottish Parliaments.

6.15 pm

The draft order before us today also provides for the transfer to Scottish Ministers of payment and reimbursement functions in relation to Healthy Start food vouchers and Healthy Start vitamins provided to beneficiaries in Scotland. These functions are similar to those currently carried out by Scottish Ministers in terms of Welfare Food scheme reimbursement.

The second order transfers to Scottish Ministers functions in Sections 32, 32A and 32B of the Electricity Act 1989 as amended by Sections 23 and 24 of the Climate Change and Sustainable Energy Act 2006. The sections of the 1989 Act were previously executively devolved to Scottish Ministers and relate to functions allowing for the delivery of renewables obligations (Scotland), or ROS. The ROS is a key driver in increasing renewable generating capacity in Scotland. It works by imposing an obligation on licensed electricity suppliers in Scotland to provide an increasing proportion of the electricity that they supply from qualifying renewable sources, essentially sources of energy other than nuclear or fossil fuels, such as wind, wave power, solar and biomass.

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