HC Deb 22 January 1992 vol 202 cc465-72

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Nicholas Baker.]

1.49 am
Mr. John Home Robertson (East Lothian)

I am grateful for this opportunity to debate the pernicious consequences of section 22 of the Social Security Act 1989. In view of the way in which my constituent, Mr. James Murray, has been ripped off by the Department of Social Security, I make absolutely no apology for keeping the Minister and one of her officials here to respond to this debate at this ungodly hour of the morning. Those responsible for administering that legislation cannot possibly sleep easily in their beds at night, so they might as well come and face the music in the House.

Exactly three years ago, in January 1989, the Social Security Bill, which included a new provision to enable the Department of Social Security to raid industrial injury compensation awards, was debated in detail in Standing Committee F. By a cruel irony, while that Committee was at work, James Murray fell through a defective scaffolding platform while carrying out engineering repair work on the coal preparation plant at Bilston Glen colliery, a colliery that has subsequently been closed by British Coal.

Mr. Murray was married and was 30 years old at the time. He had a young family of twins, then aged three, and a five-month-old baby. The family were buying their house, and Mr. Murray had good prospects as a skilled engineer with British Coal. However, while working on that pipework during the night of 30 January 1989, a scaffolding plank gave way under his feet and he fell 20 ft to the ground, suffering permanent damage to several vertebrae, his wrist and his knee, not to mention cracked ribs and associated pain and trauma. That accident has obviously been a disaster for Mr. Murray and his wife and children. I want to challenge the Minister on the way in which the Department's compensation recovery unit has kicked Mr. Murray and his family when they were down.

Mr. Murray had a series of major operations to stabilise his spine, wrist and knee. He may well require painkillers for the rest of his life. He will certainly never be able to undertake physical work again. His engineering days are definitely over.

The family then had to give up the house because they could no longer afford the mortgage repayments. It was fortunate that East Lothian district council could let them another house as a matter of urgency.

For the first six months after the accident, the Murrays had to make do with benefits totalling just £70 a week. They later got advice which secured a range of extra benefits—industrial injuries disablement benefit, reduced earnings allowance, income support, invalidity benefit, mobility allowance and statutory sick pay. And why not? Mr. Murray had paid his national insurance contributions and his taxes for 14 years—ever since he started work at 16. He was fully entitled to those benefits.

Meanwhile, Mr. Murray, supported by his trade union, pursued a claim for industrial injury compensation against his employer, British Coal. The case came to court in November 1990. In fact, it was settled out of court, as virtually all such cases tend to be, on the advice of lawyers.

The agreed settlement was the payment of a capital sum of £50,000 to cover all aspects of the employer's liability for the tragic consequences of that defective scaffolding platform—the pain, suffering, loss of amenity, loss of employment prospects, loss of earnings and everything else. That was not, I suggest, a very generous settlement in the circumstances, but there it was.

By any reasonable analysis, such a compensation award should be seen as a capital sum to help a victim and his family to cope with an injury and to make the best of the rest of his life. It surely is not a total substitute for social security entitlements covered by the same victim's tax and national insurance contributions. But no: it then emerged that the Minister's compensation recovery unit had tallied up literally every penny of benefit that Mr. Murray and his family had received in the 20-odd months after the accident. That amounted to £17,705.98 to be precise, covering industrial injuries disablement benefit, reduced earnings allowance, income support, invalidity benefit, mobility allowance and statutory sick pay. One hundred per cent. of that £17,705.98 was then deducted from his £50,000 settlement, swallowing up 35 per cent. of his compensation, leaving him with a net capital award of £32,294.02 to compensate him and his family for all those serious and permanent injuries.

I cannot resist referring to the fact that this very week Mr. Jason Connery has been awarded £35,000 following a press story that claimed that he was scared of the prospect of conscription during the Gulf war. The alleged hurt feelings of an actor appear to be worth more than the permanent physical injury and pain of someone such as James Murray.

The legislation that provides for the clawback of benefits from industrial accident victims is as perverse as it is pernicious. I appreciate that under the 1948 legislation a compensator could offset a proportion of certain benefits against the award and that there were complications and anomalies, but the Government made things infinitely worse when they enacted what became section 22 of the Social Security Act 1989. The section is entitled Recovery of sums equivalent to benefit from compensation payments in respect of accidents, injuries and diseases. The Hansard report of debates on what is now section 22 makes depressing reading. The Government, who have given such generous tax breaks to the very rich, are, as ever, taking meticulous steps to tighten the screw on less fortunate citizens, including even those who have suffered serious injury at work.

Section 22, which was clause 18 of what was the Social Security Bill, was vigorously opposed by the Labour Opposition in Committee and on the Floor of the House. The debate in Committee filled no fewer than 107 columns of Hansard. Labour Members, who were led by my hon. Friends the Members for Derby, South (Mrs. Beckett) and for Newport, West (Mr. Flynn), tried again and again to restrict the scope for clawing back a victim's compensation. The Minister of State, the right hon. Member for Chelsea (Mr. Scott), was having none of it. He tried to justify the Government's mean measure by saying that to combine benefit entitlement with other compensation would be to pay a victim twice for the same thing. He even tried to claim support by quoting the Beveridge report of 1942, which was the foundation of the national insurance scheme. The right hon. Gentleman quoted paragraph 260 of the report, which states: An injured person should not have the same need. met twice over. He should get benefit at once without prejudice to any alternative remedy, but if the alternative remedy proves in fact to be available, he should not in the end get more from two sources together than he would have got from one alone. I understand that principle and I do not necessarily dissent from its fair application, but I submit that we have another and worse form of double jeopardy, where the victim and his employer are both paying for the state benefits through tax and national insurance and the employer is also paying for the compensation, probably through an employer's liability insurance premium. At the same time the Department of Social Security is having its cake and eating it by accepting national insurance contributions and clawing back benefit from compensation claimants, as in Mr. Murray's case.

The other serious flaw in the Government's case for filching compensation from people such as Mr. Murray is the fact that on one hand not all of the compensation relates to claims covered by benefits while on the other not all of the benefits are reflected by any part of the compensation award. For example, compensation awards cover such considerations as pain, suffering, loss of amenity and loss of employment prospects. Not everything is earmarked, especially in out-of-court settlements, but it is clear that the bulk of the award has nothing to do with considerations covered by social security benefits. It is rank nonsense to talk of double compensation in that context.

Equally, a benefit such as mobility allowance, which is also subject to the clawback, has nothing to do with loss of income, injury at work or even being out of work. It is supposed to be a free-standing benefit for those with mobility problems. Indeed, Mr. Murray is still receiving mobility allowance, and he is likely to continue to do so. It is because of the wretched section 22 of the 1989 Act that he has had, in effect, to pay back £2,191.40 of his mobility allowance in respect of payments received between his original claim and the court settlement in October 1990.

This is daylight robbery on the part of the Department. It gives new significance to delays in processing compensation claims in court. In Mr. Murray's case, the process took 20 months to complete, and all the benefit paid during that period was clawed back. Thereafter, of course, the benefit could continue without the threat of clawback. That illustrates the idiocy of the nasty provision that has been put in force by the Government. The delay cost almost £18,000, which is bad enough, but it is not impossible that, in similar circumstances, a complicated case could drag on for up to the maximum five years prescribed in section 22. If that were to happen, it would be possible for the total compensation payment to be swallowed up by the 100 per cent. DSS clawback. I do not know whether that has happened yet, but it could happen and the Minister should recognise that.

The clawback mechanism is spectacularly inconsistent because no similar provision applies to other forms of compensation, such as criminal injuries compensation. Why not? If the Government want to apply that sort of rule, why not apply it across the board? I would prefer that they did not, but at least they would be consistent.

I understand that, by a bizarre twist of the regulations, the clawback can be offset where a reward is reduced to take account of contributory negligence by the victim. Mr. Murray was in no way responsible for any part of his accident, so he could not take advantage of that. He did exercise his right to appeal against the clawback of his mobility allowance, on the undeniable grounds that mobility allowance should be completely detached from other considerations and that it is supposed to be isolated and protected from this sort of erosion. His appeal was rejected on the grounds of section 22 and the associated regulations.

Ministers have been warned about the dangers inherent in this fundamentally unjust legislation. My hon. Friend the Member for Derby, South said in Committee: As I see it, the Government are setting a time bomb for themselves, because it can only be a matter of time before a judgment is made, under the combination of the existing damages system and clause 18, in which someone who, in the judgment of ordinary people, should receive damages, perhaps even substantial damages, yet will have those damages severely cut and perhaps almost wiped out by the prior claims of the Department. Little did my hon. Friend know that at the very time that she was speaking that time bomb had been set in motion only four weeks earlier when Mr. Murray had his tragic accident. As my hon. Friend was speaking, Mr. Murray was already in hospital. The legislation has slashed his well-deserved compensation by 35 per cent. Any reasonable person would recognise that this is a monstrous injustice.

The Minister responded to my hon. Friend: I stand by the principles underlying the clause. My hon. Friends should have no reservations about voting for the clause and having their names associated with those principles.[Official Report, Standing Committee F; c. 857-910.] Of course, Tory Members did vote for the clause and their names are certainly associated with it, to their eternal shame. We live in hope that the injustice may yet be remedied either by this House or elsewhere.

James Murray is not alone in his predicament. I understand that the Minister's compensation recovery unit and its staff of 136 civil servants has extracted more than £17 million from unfortunate people like Mr. Murray since the legislation was brought into effect retrospectively from January 1989. I suggest that people who have suffered that injustice should contact each other to co-ordinate pressure in Parliament and on the Government to get the legislation changed. I know that my hon. Friend the Member for Barnsley, Central (Mr. Illsley) has been active in pursuing this issue on behalf of a number of people from the mining industry.

It has become a bit of a cliche to talk about adding insult to injury, but that is precisely what the Government are doing to people like James Murray. He has been cruelly physically injured and he and his family have suffered as a consequence. Now, the DSS is adding to that injury by using downright insolent statutory powers to dock the compensation that he has secured.

However, we live in hope that sinners may repent. The Under-Secretary, the hon. Member for Fylde (Mr. Jack), sent me a letter on 23 July last year which concluded: However, in common with other aspects of the new arrangements the Department is keeping the situation under review. I hope so. I have got nowhere in my correspondence with Departments on behalf of Mr. Murray. His appeal in writing direct to the Prime Minister led only to a rather complacent reply from one of his officials.

This injustice cannot be allowed to stand or to continue. The incoming Labour Government will have to review the position, but principles of justice really should be above politics. That is why I make this final further appeal to the Minister to recognise that, under the circumstances, the 100 per cent. clawback of all those benefits is irrational, unjustifiable and demonstrably unfair. It may be 2.4 am but it is still not too late for the Minister to put things right for Mr. Murray and the other victims of industrial injuries.

2.5 am

The Parliamentary Under-Secretary of State for Social Security (Miss Ann Widdecombe)

I congratulate the hon. Member for East Lothian (Mr. Home Robertson) on obtaining the Adjournment debate. The issues that he raised give me the opportunity to explain what actually happened in the case of his constituent, Mr. Murray. They also enable me to remind the House why the compensation recovery scheme was introduced, and to outline how it works.

I shall deal first with the background to the scheme. The principle of recovering the value of social security benefits from personal injury compensation awards is not new. The hon. Gentleman quoted the relevant paragraph from the Beveridge report on which we have always based our belief that double provision should not be made from public funds. That principle is the basis of our policy today, and is implemented by section 22 of the Social Security Act 1989.

The Act addressed inconsistencies in the operation of the general principle which had developed since it was first reflected in legislation in the Law Reform (Personal Injuries) Act 1948. Under that Act, compensators—the negligent parties—could reduce compensation by an amount equal to half the benefits specifically covered by the Act—for example, sickness benefit, invalidity benefit and disablement benefit. However, the deduction had to be applied to five years' benefit following the date of the accident, no matter how quickly compensation was settled. That meant that future benefit entitlement often had to be estimated. Clawback was based not merely on what had been paid and was readily verifiable but on what could be paid in the future. The hon. Gentleman may be mistaken therefore when he says that his constituent's benefit was slashed because of the new Act. In fact, under the new Act, because of the time in which the compensation was settled, his constituent may well have been better off. We estimate that 80 per cent. of people affected are no worse off than they would have been under the old Act, and those whose compensation is settled more quickly, and so not subject to clawback based on the future, are better off.

Many benefits, however, were not covered by the 1948 legislation—for example, income support, statutory sick pay, unemployment benefit, mobility allowance and attendance allowance. In the course of awarding damages for injuries, the court therefore considered the question of adjusting the award to reflect the amount of those benefits received from the state. In those cases, courts reduced the compensation by the whole of the benefit so that the injured person was not compensated from two sources. In some cases, the judgment was that no future benefit should be taken into account; in others, that more than five years' entitlement should be deducted. Moreover, and regardless of whether the reduction was made under the 1948 legislation or under later case law, the compensator was permitted to keep the amount deducted. That meant that he did not pay out the full amount for which he was liable. The cost instead fell as an extra burden on the national insurance fund and on the taxpayer.

The hon. Gentleman said that, as both employer and employee contribute to the national insurance fund, he did not see why there should be any clawback. Contributions to the national insurance fund is not done on the basis of covering negligence, which can be arranged through employer's liability insurance, but goes towards other benefits that Mr. Murray and others would expect to enjoy, such as the retirement pension and benefits that are paid for on the basis of national insurance contributions.

The policy was not dreamed up by a hard-hearted Department of Social Security, as the hon. Gentleman would have us believe. In 1987, a report to Parliament by the Comptroller and Auditor General examined the history of personal injury compensation and the overlap between social security benefits and damages. The Public Accounts Committee considered the report, and concluded that a compensation recovery scheme should be established without delay. The Government agreed to that.

As I said, the scheme was enacted in section 22 of the Social Security Act 1989. It came into operation in September 1990, and applies to compensation awarded after that date for injuries sustained on or after 1 January 1989.

Mr. Home Robertson

The Minister is trying to pass responsibility on to other advisory bodies. Did the PAC report, and the other reports to which she referred, specifically state that 100 per cent. of all benefits, including mobility allowance, should be clawed back in such circumstances?

Miss Widdecombe

There is no question of passing on responsibility. What I am saying is that there was general recognition that the law as it stood was deficient and should be remedied, and that that was what the Act attempted to address.

Mr. Home Robertson

It made matters worse.

Miss Widdecombe

I dispute that; five years' projected benefits are not now clawed back.

Let me now turn to the case of Mr. James Murray. The unfortunate injuries that Mr. Murray sustained at work on 30 January 1989 led him to claim various social security benefits: industrial injuries disablement benefit, reduced earnings allowance, income support, statutory sick pay, invalidity benefit and mobility allowance. He also claimed compensation from British Coal. Settlement of the size of the compensation award was reached in November 1990, and British Coal deducted over £17,000. That was the figure prescribed on the certificate of total benefit issued by the compensation recovery unit.

I should perhaps say in passing that the hon. Gentleman was wrong to suggest that, if criminal injuries compensation had been involved rather than employer's liability compensation, no deductions would have been made, because criminal injuries legislation itself prescribes that deductions in respect of benefit may be made. It should be understood that Mr. Murray would not have been better off if he had been mugged or run down in a car accident, as he has recently claimed in the local press.

Let me emphasise that there is no further claim under the Act against the award in respect of future payments. Invalidity benefit, mobility allowance and disablement benefit continued to be paid to Mr. Murray beyond November 1990. Had the old arrangements still been in place, the compensators could have made deductions on the basis of benefits that Mr. Murray might have received for five years from the date of his accident.

When the compensation recovery scheme was designed, the Government recognised that in some instances victims, compensators or their representatives might disagree with the sum quoted on the certificate of total benefit—or, indeed, might wish to challenge the claim that all the benefits had been paid as a direct result of the accident involved. We therefore ensured that the legislation contained a right first to ask the compensation recovery unit to review its decision, and then to appeal to an independent tribunal.

As the hon. Gentleman said, Mr. Murray exercised his right of appeal. The basis of his submission to the tribunal was that mobility allowance should not have been included in the certificate of total benefit. He argued that the benefit had nothing to do with loss of income or injury at work, or even with being out of work. The appeal was considered by a tribunal in September 1990, and the chairman and members decided unaminously that, because mobility allowance is defined as a relevant benefit in the regulations, the decision of the compensation recovery unit should be upheld.

I should explain to the hon. Gentleman that mobility allowance was included as a relevant benefit because the Government took the view that, if the benefit was awarded as a consequence of the claimant's injuries, it should be recouped. Had there been no injury and no accident, the benefit would not have been paid; but it was the accident that led to the payment, and the benefit is therefore relevant. We believe that to be in line both with Sir William Beveridge's principle and with the previous case law stating that attendance and mobility allowances should be deducted in full, as they were to be regarded as available to meet the cost of care resulting from the accident generally.

I have every sympathy with Mr. Murray and his family, and I am saddened by the effects that the injury has had on them. Despite the sad cause, I am glad that the benefit system was able to give him immediate practical help without waiting for the outcome of his claim against his employer. However, I am unable to agree with the hon. Gentleman when he suggests that the legislation should not be permitted to impact in the way that it does. Parliament has accepted that the principles set out by Beveridge 50 years ago should be applied. This means that an injured person should not be compensated twice. I believe that in applying this principle the compensation recovery scheme represents a considerable practical improvement over the old and inconsistent arrangements.

I thank the hon. Gentleman again for raising this case and for giving me the opportunity to explain the position. He said that he got no joy whatsoever from his representations to the Department. Parts of his speech revealed some misunderstanding—other parts of it were based on plain disagreement—of the way that the law works. If he so wishes, I invite the hon. Gentleman to meet me to discuss the principles that underlie the rules and their application. I should have been very willing to do that at any time in the course of his representations to the Department.

Question put and agreed to.

Adjourned accordingly at fifteen minutes past Two o'clock.

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