My Lords, I thank the noble Lord for these amendments. Clearly, the general intention behind them is to place restrictions on the ability of the Secretary of State to recover both social security benefits and existing lump-sum payments made in accordance with the 1979 and 2008 Acts. This would then prevent the scheme administrator from reducing scheme payments to offset the cost of repaying recoverable benefits and lump sums to the Secretary of State. Actually, it may be the case that two of the amendments would restrict the scheme administrator from seeking repayment where sums were paid incorrectly due to error, mistake, misrepresentation or fraud. Clearly, where a scheme payment is falsely claimed it is only right that it should be repaid. Broadly, we think—as the noble Lord pointed out in his cogent remarks—that the amendments are aimed at restricting the recovery of benefits from scheme payments.
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Can I just deal with the issue of compensation, which reminds me of my classes in Wittgenstein and the meaning of words? The payments scheme is not a
compensation scheme in the sense that the Government are not accepting any liability for the damage caused and it is not replacing civil litigation. However, one uses the expression that one gets something for or in compensation, in a non-legal sense, for having had this dreadful disease. So I do not think it is helpful to play with the words under the recovery of benefits legislation. Where a person makes any payment to or in respect of another in consequence of any accident, injury or disease, he is required to pay the Secretary of State any recoverable social benefit and lump-sum payments. That recovery would apply if the person made a goodwill payment to another after an accident.
The other clarification that it might be worth making upfront concerns the point touched on by the noble Lord, Lord McKenzie. Treating a payment as being made on account of pain and suffering will not have the effect that I believe the noble Lord, Lord Howarth, looked to achieve. Payments determined as such are still subject to recovery of the 1979 and 2008 schemes. That payment would be exempt from the recovery of other benefits such as CSA but, bluntly, these payments are generally much smaller. The relatively larger proportion of the payments to be recovered—in other words, the scheme payments—would still be recoverable. So I do not think this is a particularly fruitful route for the noble Lord to pursue.
I will have to write to him on the relative sizes of the schemes. Clearly, it is by much the larger amount and, given the regrettably short life expectancy of victims, it becomes even more the case that the amount received by the actual victim is likely to be predominantly in that category, but I will write with better figures.
I am not making here a point about the position of the country and the deficit and all that. That is not relevant here. The point about this is that a person should not receive money twice in respect of the same injury or disease, for example once by the benefits system and secondly through civil compensation. That is a long-standing point. It dates back at least as far as the pre-1948 workers’ compensation system, where injured workers had to elect either to sue their employer in tort or claim workers’ compensation: they could not receive both. That principle was carried forward and evolved into legislation after 1948, creating a benefit recovery mechanism which is the basis for what we have today in the 1997 Act.
We believe the same should apply to scheme payments because, if the scheme administrator was not required to repay recoverable social security benefits and lump sums when they made a scheme payment, this would mean that others, who paid compensation or made similar but perhaps lower payments in respect of personal injuries, were treated less favourably. Clearly that would be unjust.
Under compensation recovery legislation, a person who makes a payment, whether that is compensation or any other form of payment made in cash—for instance, goodwill—to or in respect of another, in consequence of any accident, injury or disease suffered by the other, is required to pay the Secretary of State any recoverable social benefits and lump-sum payments. He is required to pay the Secretary of State, whether or not he can deduct the full amount of the benefits
and lump-sum payments from the payment made to the injured party. It cannot matter how the scheme payment is defined, it is still a payment made by one person to another in respect of a disease suffered by the other so compensation recovery legislation applies. Similarly, if the payment was paid out of a trust then a payment would still have to be made and so compensation recovery legislation would apply.
Accordingly, in relation to scheme payments, if the scheme administrator does not have the opportunity to reduce the scheme payment to offset any amounts they are required to repay the Secretary of State, in the same way as others who make personal injury payments may do so, this would mean the costs to the scheme’s funds would be increased correspondingly. This is because the scheme administrator would have to not only pay the full value of a scheme payment but also repay the Secretary of State an amount equivalent to any monies the applicant had received for their mesothelioma by way of recoverable state benefits and lump sums.
Unlike compensation, scheme payments will not be made up of an amount for pain and suffering and an amount for pecuniary losses. The payments will be set according to a fixed tariff and paid at a flat rate based on the age of the person with mesothelioma. If scheme payments were to be made by calculating specific heads of damages in each individual case, it would add to the complexity of administering the scheme both for individual applicants, who would have to go to the trouble and expense of proving the extent of their actual loss, and for the scheme administrator. This would clearly delay payments to people when they are most needed. As the scheme payment is tariff based, the whole amount is available for compensation recovery.
Even if a proportion of the scheme payment was to be ring-fenced for pain and suffering, as suggested in Amendments 22 and 27A, the remaining portion could still be reduced to take into account the benefit recovery. I have already talked about the fact that various payments are not differentiated on the basis of whether they are made in respect of pain and suffering.
The noble Lord, Lord Howarth, asked whether a person’s scheme payments could be completely wiped out by the recovery process. The average amount that a person is scheduled to receive under the scheme, on the initial estimates, is £87,000, according to the impact assessment, with the assumption of an average benefit recovery of £20,000. When we look at all the recoveries recorded between 2009 and 2012, for all payments, if people had received a scheme payment, it would have been at least £15,000 higher than the benefits and lump-sum payments actually recovered.