§ 3. Mr. Illsley
To ask the Secretary of State for Social Security whether he has any proposals to reform the compensation recovery unit.
§ The Parliamentary Under-Secretary of State for Social Security (Mr. Alistair Burt)
The compensation recovery unit was set up in 1990. To date it has recovered more than £32 million from negligent employers and other compensators. We have no plans to reform the unit or the scheme as a whole.
§ Mr. Illsley
Is the Minister aware that the unit is failing to recover the amount projected and that its cost seems by far to outweigh the benefits? Is the Minister further aware that as claimants settle for less than the £2,000 compensation limit, insurance companies are enjoying windfalls because they are not compensating claims at the proper level?
§ Mr. Burt
The scheme was based on well-established Beveridge principles to which successive Governments have subscribed—such as that there should he no double compensation in accident cases—and on the Public Accounts Committee recommendations, which in 1987 criticised previous arrangements. It is the intention not that moneys should be recovered from individual claimants but that compensators' insurance companies live up to their liabilities. I dispute the hon. Gentleman's remarks concerning the unit's cost-effectiveness. By the end of 1991, its running costs were £3.5 million and its receipts were £15.6 million. Receipts will continue to increase, which will benefit taxpayers as a whole, and individual victims of accidents will not be left any worse off.
§ Mr. Wigley
Is the Minister aware that the scheme's clawback operation is hitting some people unacceptably hard? When compensation of between £10,000 and £15,000 is granted after a long run in the courts before settlement is reached, the net benefit to the individual may be only £3,000 or £4,000. Surely that was not the Government's intention when they introduced the rules. Can the Minister arrange for them to be reviewed in the light of experience?
§ Mr. Burt
The hon. Gentleman is correct to say that it was not the intention that the scheme should work in the way that he describes. He and other right hon. and hon. Members do a service in bringing the scheme and its basis to the attention of all involved in personal injury litigation. It is the intention not to recover money from the individual claimant who was the accident victim but to recover it from the insurance company or negligent employer. It is possible for every settlement to take into account the benefits that must be recovered to the state. That is what should occur and if it happens in each and every case, there should be no loss to the individual.