Previous Section Back to Table of Contents Lords Hansard Home Page

Industrial Training Levy (Engineering Construction Industry Training Board) Order 2009

Copy of the Order
5th Report from JCSI

Motion to Approve

5.41 pm

Moved By Lord Young of Norwood Green

Motion agreed.

Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) (Amendment) Regulations 2009

Copy of the Order
4th Report from JCSI

Motion to Approve

5.42 pm

Moved By Lord McKenzie of Luton

The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord McKenzie of Luton): My Lords, I start with the formalities. It is a requirement that I confirm to the House that these provisions are compatible with the European Convention on Human Rights and I am happy to do so.

26 Feb 2009 : Column 403

The regulations are being made under the Pneumoconiosis etc. (Workers’ Compensation) Act 1979 and their purpose is to increase the amounts of compensation paid under the Act by 5 per cent to those who first satisfy all the conditions of entitlement on or after 1 April 2009. I am very pleased to introduce the regulations on behalf of the Government.

This compensation scheme stands apart from social security benefits and, as a result, the amounts paid are not increased as part of the overall uprating of benefit rates. In the first 25 years of the scheme’s operation, this meant that the amounts to be paid were not increased on a routine, annual basis. However, following the transfer of responsibility for this work to the Department for Work and Pensions, a commitment was made to increase the rates of payment annually. I am very happy again to honour that commitment. It is important that we continue to do so in the future.

This scheme fulfils an important role in providing compensation where no civil action can be taken against an employer or the person responsible for the exposure to one of the listed agents. Anyone suffering from a dust-related disease as a result of their work can sue their employer. However, the diseases covered by this Act, and asbestos-related diseases in particular, can take a long time to develop; it may be as long as 40 years or more after exposure to the dust. That means that by the time the illness is diagnosed the employer or employers responsible may no longer be trading. In those cases, there is no opportunity for a sufferer or their dependants to sue for compensation.

Improved health and safety procedures have both restricted the use of asbestos and provided a safer environment for its handling. However, we cannot turn back the clock and solve the problems created by the widespread use of asbestos before its effects on people’s health were fully understood. We are now facing the consequences of that common usage. Although we cannot remedy all the problems, we can at the very least ensure that financial compensation is available. This scheme was introduced to meet that purpose and I am pleased that it has done it successfully.

The Act provides for a single lump-sum payment to be made to a sufferer. This lump sum is in addition to any award of industrial injuries disablement benefit. Together the payments constitute a significant financial package. Under this scheme, the maximum amount that can be paid from April 2009 is just over £74,000 for a person aged 37 or under at diagnosis, although the average payments are much lower; the highest amounts are paid for those diagnosed at an early age. In addition, a person diagnosed with mesothelioma is automatically assessed as 100 per cent disabled for the purposes of industrial injuries benefit and, from April 2009, will be paid £143.60 a week.

There are three conditions to be satisfied before any payment can be made. First, the sufferer must be entitled to industrial injuries disablement benefit. Secondly, there must be no relevant employer who can be sued. Thirdly, no court action can have been brought, nor any compensation received, in respect of the disease now being claimed under the Act.

26 Feb 2009 : Column 404

The Act covers five respiratory diseases, most of which are directly related to asbestos exposure. These are mesothelioma, pneumoconiosis, which includes asbestosis, diffuse pleural thickening, primary carcinoma of the lung following exposure to asbestos, and byssinosis. However, mesothelioma is the major reason for a claim. About 80 per cent of claims are being paid because a person is suffering from that disease. Mesothelioma is an extremely severe form of cancer and is invariably terminal within a short timescale. The average life expectancy is only 12 to 18 months from the time that the disease is diagnosed.

Since the Act was introduced, payments totalling £256 million have been made, with payments of just under £26 million made in this year alone. I am pleased that this scheme continues to perform an important role in providing compensation.

Sadly, the number of people being affected by asbestos-related diseases continues to rise. In 1968, only 153 people died from mesothelioma. In contrast, in 2006, there were just over 2,000 deaths. It is estimated that the number of deaths is expected to peak sometime between 2011 and 2015. It is now the most common cause of work-related death.

This scheme continues to be very successful but some people suffering from mesothelioma are not entitled to any payment under the 1979 Act because they were not exposed to asbestos in the workplace. This was recognised as a weakness in the provision of compensation. I am pleased to note that new legislation, taking effect last October, has remedied the matter. For the first time, from 1 October 2008, compensation has been provided to people suffering from mesothelioma whose exposure did not occur at work or where the source of the exposure cannot be identified. This scheme largely mirrors the provisions of the 1979 Act in providing a single lump-sum payment and should ensure that everybody suffering from mesothelioma is paid compensation, either from the Government or through the courts.

My officials estimated that in the first year of the new scheme we would expect about 1,200 claims, with about 600 a year after that, the higher numbers in the first year resulting from the number of people who were already suffering from the disease when the new scheme was introduced. The number of claims in the first four months is slightly lower than we expected, at just under 300. In total, compensation of approximately £4 million has been paid.

I am certain that we all agree that no amount of money will ever compensate these sufferers or their families. However, these regulations help to ensure that the compensation provided for in the original Act maintains its value. I commend the uprating of the payment scales to noble Lords and ask their approval to implement them.

Lord Skelmersdale: My Lords, I am grateful to the Minister for explaining the regulations and the background to them so fully. We will spend some time, although at this late hour I hope not too long, discussing welfare payments of various shapes and sizes.

We start with an annual uprating for these perfectly horrible dust-borne diseases, leading in many cases to cancer of the lung and, ultimately, death, resulting

26 Feb 2009 : Column 405

from employment in principally, but not necessarily, the mining industry. Former employees of firms contracting to remove asbestos, especially blue asbestos, from buildings, even building sites, will also be included. These employees and their dependants can claim on this state scheme only when their former employer has gone out of business and no insurance cover exists. This is particularly the case, as the Minister almost said, given that many years ago asbestos, in particular, was not known to be a particular hazard of the industries in question and so was not insured against. By law, however, insurance companies have to keep records for 60 years, so insurance money can be payable long after a firm ceases to trade, as long as an insurance contract was in force for the employees in question at the time they were employed and it is accepted that one of these prescribed diseases originated at the time of employment.

The problem is that the disease in question may take a long time to show itself and, in the past, and indeed again today, Ministers have used the timescale of 40 years as a guide. My first question, therefore, is: has the Minister any idea how many new insurance payouts there have been in the last year, compared with the new payouts under the scheme? I suspect that that is a slightly devious question and that he will have to write to me on that, which of course I would accept.

I thought that we knew, because we have been told often enough in past discussions, that the claims on the scheme were expected to peak in 2011, but we have just heard from the Minister that that has been extended to 2015. What evidence is there for that claim? Does he expect 2015 to be the date for a few years, or can we expect Ministers in future to put back the time when payments will peak? This is an important point. At a time when government expenditure, of which I shall have more to say later this afternoon, is under more stringent scrutiny than at any time I can remember in my time in this House, it is important to know exactly when expenditure on pneumoconiosis and the other diseases is expected to peak.

On the point of insurance cover, I note that the Explanatory Memorandum states that a full impact assessment has not been produced for this instrument, as no impact on the private, public or voluntary sectors is foreseen. The words “private” and “sector” taken together must surely include insurance companies. Is not it at least likely that insurance companies will base their awards on those payable under this scheme and that, consequently, there will be an effect on them, or will the Minister tell me that I am barking up the wrong tree with this supposition?

My next interest arises from paragraph 12.2 of the Explanatory Memorandum, which states:

“An internal review will be conducted on 1st April to ensure the uprating has been successfully implemented”.

There are two points. First, these regulations do not come into effect until 1 April. Is not it a bit previous to review them on the very day that they come into force? Secondly, thanks to the Government’s former welfare adviser, David Freud, the whole realm of social security benefits is coming under review, although as far as I know he has not looked at this scheme. Given the

26 Feb 2009 : Column 406

plethora of Green and White Papers, to say nothing of reports on the subject of welfare reform, will it be possible to see the results of this review?

There are still an awful lot of people with these compensable diseases who would like to know whether the scheme is working properly. Indeed, I had an e-mail some time ago saying that, once assessment had been made, it sometimes took a very long time for the payment to come through.

That being said, I congratulate the Government. I am well aware that Ministers and their advisers frequently find my remarks carping. However, I cannot remember an occasion when I have not recognised when credit is due, and it is with these regulations. The Government have lived up to the promise that they made in 2004 to uprate the payments under this scheme by what this Explanatory Memorandum calls,

However, I am not sure what the word “agreed” means in this context. For many years it has been the norm that most benefits should be uprated by the inflation recorded in the previous September. This, as we all know, was 5 per cent, a figure that will be spoken of quite a lot this afternoon. Therefore, these regulations increase the lump sums awardable by that amount. As a part-time horticulturalist, I call that DDT, which stands for “doing the decent thing”. Many new claimants will be grateful to the Government, as I believe we in Parliament should be—just how many, time will tell, but given the fact that the numbers are expected to peak sometime in 2011, the Minister must have some idea. Will he let us into the secret?

Lord Kirkwood of Kirkhope: My Lords, I am grateful to the Minister and to the noble Lord, Lord Skelmersdale, for their helpful remarks. Like the noble Lord, Lord Skelmersdale, I have no intention of doing anything other than taxing the Government about the details of the scheme because the regulations are an extremely sensible continuation of the Government’s valuable work. I concur with the remarks made by the noble Lord, Lord Skelmersdale, in that regard. I encourage him to keep recognising the Government’s good work, as he does. At least I take note of that, if that is any consolation to him, although I do not know whether the Government do.

This annual debate is useful. The Government have inflicted an annual debate on themselves because they refuse to index the benefit, which I think is slightly daft. I understand that the department think that the benefit will peak in 2011 or 2015, or perhaps even in 2020—we do not really know that yet—and therefore it is not necessary to put it into the 1992 uprating Act to give the 5 per cent uplift, which would also have the result that this debate would not need to take place every year. From where I am sitting, it would be much more sensible for the Government to wrap this in with the other uprating order provisions. However, since we have this debate, the noble Lord, Lord Skelmersdale, and I are perfectly entitled to make the best use of the time to apply pressure on the Government with regard to this matter. Some of the questions that I wish to pose are detailed and may involve an exchange of letters. I should also like to pursue some of the ideas that the noble Lord, Lord Skelmersdale, has raised.

26 Feb 2009 : Column 407

The administrative pressure continues in this regard. The small dedicated unit does valuable work but I think that it comprises only about eight or 10 people to clear this work. I do not know what their target date is to clear the casework, but I fear that the administrative budget will come under pressure, as I think the noble Lord, Lord Skelmersdale, hinted. Delays in paying some of the compensatory lump sums is of critical interest to the relevant families and claimants. I hope that we can be given further reassurance on that. The Minister did his best to put on the record the fact that he was confident that the job was being done properly and that no one was being subjected to intolerable delays of any kind. However, I would like to be given that reassurance again if he feels able to give it.

The Minister was kind enough to list some of the trends and the average payments, but how is the funding of the scheme bearing up? It is still in its early days; it was introduced only 12 months or so ago. There was an understanding—certainly on my part—that reclaimed amounts would come back into the system where civil actions resulted in compensation that the benefits system sought to claim back. It may be too early to obtain any sensible data on that but noble Lords are interested in the totality of the funds coming in and the funds going out and want to know how the scheme is progressing. If the Government are able to reclaim money from payments made in civil cases, there may be more scope for encouraging the Minister in future years to look beyond the 5 per cent uprating figure and be a little more generous if more money is coming in than was originally anticipated when the scheme was put together.

My next point may be more suitably dealt with in a letter than in an immediate response. Medical science and technology change with regard to the way in which these diseases are understood, treated and predicted in terms of diagnosis and prognosis. I should be very interested to know whether there is any new medical thinking on these diseases. Mesothelioma is being scrutinised to see if better treatments can be devised for it. If there is anything in the offing that the department knows about that would affect the scheme and claimants, noble Lords would like to know about it.

6 pm

Finally, the Minister will know that the industrial injuries disablement benefit scheme integrates into these regulations. Perhaps he can confirm one thing that has changed in the past 12 months. When we last discussed these regulations, I was pretty confident that the department was doing a full-scale review of the scheme. The noble Lord, Lord Skelmersdale, alluded to this. The consultation was launched with some fanfare in 2007; indeed, there was publication of a reprise and analysis of the extensive responses that the consultation provoked. All that was very useful and it looked as if the Government were on a path that had some momentum towards reviewing how they would deal with the future of this benefit.

However, that seems to have fizzled out, because the recent White Paper said, “Well, we think things are all right, really”. Subsequently, a Written Answer to a

26 Feb 2009 : Column 408

PQ in another place stated, “We think that the scheme is okay”. Is that the Government’s position? Certainly the people to whom I talked who had responded to the consultation thought that the scheme was a good thing; they thought that it should not be abolished or made substantially different, but that it needed reform. One of the main reforms suggested in the consultation was that the scheme should provide more help for people to get through rehabilitation and back into work, which would seem to fit the Government’s agenda. Yet the review of the scheme seems to have hit the buffers. I may be misreading that, and the noble Lord, Lord Skelmersdale, had some questions in that area.

It would be helpful if the Minister could clarify the departmental view of the scope that there may be for the review of this important disablement benefit. Perhaps if he cannot do that today, he could do that at another time. The benefit is a weekly payment, which, as he knows, involves a qualifying eligibility requirement: you do not get the compensatory payments covered by these regulations unless you are entitled under the scheme. If there is another way of helping people who are suffering from these terrible illnesses—I agree with the noble Lord, Lord Skelmersdale, that they are horrible and life-threatening—with an update and modernisation of the industrial injuries disablement scheme, as well as through the benefit of these welcome regulations, that would be a very good thing.

Lord McKenzie of Luton: My Lords, I thank the noble Lords, Lord Skelmersdale and Lord Kirkwood, for what I take to be their support for this order, but, quite rightly, they used the opportunity of the debate to raise a number of detailed questions, which I shall try to answer.

The noble Lord, Lord Skelmersdale, asked an interesting question about new insurance payments. I do not have that data, but if it is available I shall certainly seek to write to the noble Lord. He also raised a point about whether the impact of these provisions would feed back to insurance company payouts. That was an interesting point, but we would not expect the rates paid under the Act to impact on how much is paid for damages in civil law. However, we are happy to check that point and revert to the noble Lord. He asked about extending the peak to 2015. The noble Lord, Lord Kirkwood, would understand that this is not a precise science and even beyond the peak there will clearly be a long tail to these instances. These are just the current best estimates, because at one stage, for example, it was thought that 20 years was the period during which mesothelioma would present itself. Now, as we have discussed, that period could approach 40 years and beyond. That has led to the peak increasing.

Lord Skelmersdale: My Lords, can the noble Lord explain something? Since these are one-off payments, there must be a rising acceptance of the incidence of these diseases before the peak is reached and then falls away. How does what he has just said fit in with that?

Lord McKenzie of Luton: My Lords, unless I misunderstand the noble Lord, it is not inconsistent. We are saying that, yes, a peak is expected: we are dealing with problems from the past.

26 Feb 2009 : Column 409

Lord Skelmersdale: My Lords, I think that the Minister has misunderstood my question. He is quite right to say that, in the old days—as, indeed, when I was introducing orders under this scheme many years ago—there was thought to be a 20-year operation before the peak, and that it would then fall away. However, does it make much difference whether it is 20 or 40 years?

Lord McKenzie of Luton: I would have thought, my Lords, that it does. The longer the latency period, the more cases we will get coming through that we would earlier have assumed would not present themselves, because of there being a 20-year horizon. The longer that period is recognised to exist, the longer we have to wait for potential cases to come through. It may be that I still misunderstood the noble Lord’s point. If so, I am happy to discuss it outside with him. On inflation, the agreed rate is that which we are using in all social security benefits—the RPI, which, as the noble Lord noted, we shall be talking about a little later.

The noble Lord, Lord Kirkwood, asked how the financing is progressing. For these purposes, we need to differentiate the government-funded 1979 Act provisions from those in the 2008 Act. The recoveries from both provisions were going to fund the 2008 Act scheme, and it is obviously early days for that scheme. We are financing it by recoveries from the 1979 and 2008 Acts, and paying people for the first 18 months of the 2008 Act scheme at the same reduced level, because we will not have recovered sufficient funds to pay at the higher 1979 Act levels. However, we have said that we would increase payments to those of the 1979 Act by the third year, and hope to be able to do so by April 2010. It would be good if we were indeed able to do so.

The noble Lords, Lord Kirkwood and Lord Skelmersdale, both asked about administration and payment times in particular. My information is that under the 1979 Act provisions and the current arrangements—the period from 2008 through to January 2009—the average payment time is 56 days. It is much quicker under the 2008 Act, because there is no need to establish the connection with employment, and the average time for payment is within three weeks. I understand that the small team dealing with those payments, based in Barrow, are currently dealing with those payments faster.

Next Section Back to Table of Contents Lords Hansard Home Page