My Lords, the amendments in this relatively large group are intended to enable us to probe the Government on their intentions behind the recovery of social security benefits and lump-sum payments made by the scheme. I also offer some suggestions as to how a relatively lenient recovery regime might reasonably be applied to payments from the scheme.
Schedule 1 deals with these matters, but it is a prime candidate for the plain English prize for legislative opacity. It was beyond my wit to amend it for the purposes I had in mind. Therefore, I tabled the amendments to Clause 4 to establish some principles to constrain and guide the Secretary of State—and, in the case of Amendment 26, to provide him with an opportunity not to take away too much with one hand while he, or rather the insurance industry, gives with the other. I emphasise, as is the nature of amendments to the Bill, that we are talking only of the application of these proposed measures to the diffuse mesothelioma payments scheme or other schemes that might be set
up under this legislation. I am not, needless to say, seeking to rewrite social security law; the Minister need not fear that that the ground will give way under his feet if he is willing to take an accommodating view of some of these amendments. It is an opportunity for the Minister to explain—relatively fully, I hope—what the spirit and practice will be of his department’s approach to recovery of benefits and lump-sum payments in these circumstances.
There is one principle, at any rate, that we all—I believe I can include the Minister—want to apply: the rules and the practice where the social security benefit arrangements and the scheme interact ought to be as generous as possible. That is more particularly the case in the situation in which the full, insured entitlements which a claimant ought to have have proved impossible to obtain because the documents are not there: a situation in which claimants have had to fight and wait for financial relief; and in which, when that relief then comes, it is discounted by 30% from the payments they might have secured from a civil court action. Of course, that discount of 30% might become less if Parliament in due course agrees with every noble Lord who spoke in our debate last week on Amendments 15 and 18 on whether the 70% measure should be raised.
The Minister might say that there is a deficit. He will not quite put it like this: that the further the Chancellor’s financial strategy goes astray, the more imperative it is that no opportunity is lost to reduce the deficit between what the Government raise and what they spend. In response, I say that, of all members of society, mesothelioma sufferers and their families should least be required to shoulder the burden of deficit reduction. On any reasonable scale of values, they surely should have priority for relatively generous treatment—before, for example, affluent individuals who can still get top-rate tax relief at 40% on their pension contributions.
However, the Minister might say that we must have regard for the interests of the generality of taxpayers. To that, I say that the British people are kindly and sympathetic. I believe that 99.9% would be positively glad to think that some minuscule part of the taxes they pay was going to help their exceptionally unfortunate fellow citizens who are mesothelioma sufferers or their dependants.
The principle that should govern the specifics of benefits recovery that are provided in the Bill should be that the DWP should be as generous and lenient as it can be. What, in particular, ought the Bill to provide? Amendments 20 to 22 and 27A offer alternative ways in which we might exempt recovery payments from the scheme made on account of pain and suffering. This goes with the grain of DWP practice; indeed, it might even be in the law that the compensation recovery unit does not recover the element of an award made by a court that is in respect of pain and suffering, in contrast to the elements of a court award that are made on account of loss of earnings or costs of care where recovery occurs.
If it is going with the grain of existing DWP practice, the Minister might say that these amendments are unnecessary. To me, however, it is not clear that the
rules that the DWP and the compensation recovery unit apply where court cases are concerned can simply be transposed to the scheme. The Minister at Second Reading was at pains to say with the utmost clarity:
“The scheme is not intended to be an alternative to civil damages, nor is it a compensation scheme”.—[Official Report, 20/5/12; col. 689.]
However, he then went on blithely to say that,
“an eligible applicant will receive a scheme payment after the deduction of relevant social security benefits and lump-sum payments, which the scheme administrator will repay to my department through its compensation recovery unit”.—[Official Report, 20/5/13; cols. 691-92.]
Setting aside the palpable contradiction there, the Committee ought to probe the significance of the Minister’s insistence that payments from the scheme are not compensation. I wonder whether what is going on here is that the DWP wants to be able to decree that no part of a payment from the scheme should be taken as compensation for pain and suffering, and therefore that the capital will, or should, apply to the whole of the payment, and that the compensation recovery unit, which henceforth should be better known as the MPR—the Mesothelioma Payments Raider—would be able to help itself to a vastly larger proportion of a payment made by the scheme.
Under new Section 8A(2)(b), in paragraph 3 of Schedule 1, it is contemplated that the gross amount of the compensation payment—that is, the payment that the Minister said, in terms, on Second Reading, was not a compensation payment—
“is to be reduced to nil in any case where the amount of the recoverable benefit is equal to or greater than the gross amount of the compensation payment”.
There we have it. We need to amend the Bill to protect mesothelioma sufferers and their families from the compensation recovery unit predators. The law should not enable the Government to take away from an award made by the scheme that element of the award that, if it were a court award, would be designated as being made on account of pain and suffering and which the CRU therefore could not touch. The scheme is already unfair, with payments 30% less than they would be from the court. If the compensation recovery unit is to be let loose untrammelled on scheme payments, it will be even more unfair. The draft rules of the scheme, with which the Minister has provided us, make no mention of any of this. They say nothing about whether any part of payments from the scheme would be on account of pain and suffering, loss of earnings or costs of care. The rules say simply that payment must be made in a lump sum.
Amendments 20 and 21 would provide that the whole payment by the scheme would be regarded as being made on account of pain and suffering, and that the Secretary of State could not recover payment made on account of pain and suffering. In that way, the whole payment would be secured from the grasping fingers of the CRU. If the Committee thinks that is going too far, Amendment 22 would limit the protection on account of pain and suffering to the first £75,000 of a payment made by the scheme. Amendment 27A is more moderate still, and would provide that:
“The first £50,000 or 50% of any payment by the scheme, whichever is the larger amount”,
should be protected. I hope the Committee will look seriously at that proposition.
I will be brief on the other amendments, which are intended to probe the Minister’s intentions with regard to the recovery of means-tested benefits and non-means-tested benefits, recovery from the person diagnosed, carers and dependants, and of social security benefits paid before the grant of an award by the scheme and of benefits or lump sums paid after such an award has been granted.
The May 2013 impact assessment dealt with these matters on page 18, and anticipated that over 10 years the department would recover £71 million in social security benefits and lump sum payments. It would be helpful if the Minister would break down that £71 million as between social security benefits and lump sum payments. The £71 million would be reduced by £2 million of administrative costs and another £17 million for the smoothing costs over the first four years of the scheme, leaving a net £52 million going back to the department.
Paragraph 90 on page 23 of the impact assessment states that,
“under the Universal Credit … rules being developed, if a person suffering from mesothelioma received civil compensation or a payment from the scheme, it would not affect their means-tested benefits for at least a year (and would be ignored indefinitely for Pension Credit). If they put the compensation or scheme payment into a trust within that year, the value of the trust and any income from it would continue to be ignored”.
The paragraph goes on to note that bereaved relatives would not be so protected.
Amendment 25 would extend that period of ignoring from one to two years. Tragically, at the end of two years it may be anticipated that nobody who has been diagnosed with mesothelioma will still be alive, so they will not see benefits or lump sums taken from them.
Amendment 27B suggests an alternative route to protecting these payments via trust law. It would be extremely good if the Minister could look at this, having regard to the situation of the terribly vulnerable households, one of whose members has been diagnosed with mesothelioma. In effect, the amendment would protect social security benefits and lump-sum payments beyond that first year by deeming that the payments from the scheme had been made as payments from trust and should therefore be ignored. Of course, it deems that the money held by the scheme is held in trust for claimants.
An alternative way to approach this might be to have another amendment stating that the scheme should make all payments into trust on behalf of its beneficiaries. I am well aware that trust law is immensely complex, but I suggest that there might be a route that could reasonably be pursued by the Committee and by the Government through the use of trusts to protect recipients of payments in that second year.
Amendment 27 would protect lump sums altogether from recovery. In the normal course of events, I would endorse the principle that nobody should be compensated twice for the same thing. Indeed, my amendment is still consistent with that principle for two reasons. First, the Minister said that these payments were not compensation, so he cannot argue that people would
be compensated twice. Secondly, as the payments are to be discounted by 30% from what the court would award, we can very properly take it that the lump-sum payments will fall into the 30% that will not be paid and therefore cannot be reclaimed.
I hope the Minister will explain very precisely his intentions in regard to the recovery of social security payments and lump-sum payments, and that he will seize some practical hints that I have offered as a way forward, so that he can protect mesothelioma sufferers from his own compensation recovery unit. I beg to move.
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