§ 4.51 p.m.
§ Lord Hunt of Kings Heath
My Lords, I beg to move that this Bill be now read a second time. When a person receives treatment at a hospital as a result of injuries sustained in a road traffic accident and subsequently makes a successful claim for compensation for personal injury against the holder of a compulsory motor vehicle insurance policy, the hospital can require the compensator to meet some of the costs of the accident victim's treatment.
The principle was first introduced in 1930, 69 years ago. At that time hospitals could recover costs of up to £25 per person. When the figures were last uprated in 1995, this had risen to £295 per person needing out-patient treatment and £2,949 per person needing in-patient treatment.
In 1934 Parliament further decided that motorists should pay a fee towards any immediately necessary treatment—in other words emergency treatment—needed by any person injured as a direct consequence of the driver's use of a motor vehicle on a road. In this case, the hospital's right to the fee did not rest on a requirement that the victim should claim compensation. When the emergency treatment fee was first introduced, 1446 it stood at twelve shillings and sixpence per person—that is about 63 pence in today's money. Today the fee is £21.30.
The continued existence of these charges was most recently confirmed during the passage of the Road Traffic Act 1988. But it was not until the early 1990s that figures were first collected to show what income was actually being generated for hospitals under the provisions. The figures showed that in England hospitals were receiving around £13 million each year. Of course, £13 million is a substantial sum of money; but it is far, far short of the amount which should be recovered. Why should this be?
Although hospitals have been empowered to collect charges and fees, they have been left on their own to do so. It must be difficult enough if you have just been involved in an accident, coping with the shock and the pain. The last thing needed is an insensitive inquiry as to whether you are going to be pursuing a claim against anyone or, worse still, within days of the accident a bill for emergency treatment dropping through your letter-box. On the hospital's part it cannot be a pleasant job to have to question patients or demand payment from drivers. Our staff in accident and emergency departments have enough to do without tasks such as those.
However, the problems do not end there. The hospital still has to track down the person or institution which may pay compensation; it still has to calculate the costs of treatment; and it still has to track the progress of the claim. I understand that the average length of time it takes to process a personal injury compensation claim is around two years, with a significant number taking very much longer. It still has to bill the insurer; and it still has to ensure that the debt is settled.
It is no wonder, when you consider that list, together with the fact that not all patients will have decided whether or not to claim compensation in the immediate aftermath of an accident, that many hospitals have not been able to recoup the amounts to which they have, by law, been entitled. We have therefore decided to act to help hospitals; to simplify the system, thereby helping insurers; and to bring charges into line with actual costs.
The Bill before the House today replaces, for NHS trusts and military hospitals, the provisions concerning hospital charges in the Road Traffic Act 1988. Clause 1 is based on the provisions of the 1988 Act and sets out the circumstances in which NHS charges are due. Those arise where someone has been injured in a road traffic accident, has received treatment in an NHS hospital, and has received compensation for his injuries from a person or institution holding compulsory motor insurance. For the first time, however, the NHS will be able to recoup charges in cases where the driver causing the accident is uninsured or untraceable and the victim receives compensation from the Motor Insurers' Bureau. We intend to make clear in regulations that payments will only be sought from the bureau in respect of accidents which happen after this Act comes into force.
I turn now to Clause 2 of the Bill. On coming to office we realised that the current system of leaving hospitals to pursue charges themselves was not working and we 1447 were faced with identifying an alternative system. Fortunately, the way forward had already been pointed out. In 1996 the Law Commission had produced, as part of a series of papers on the subject of damages, a consultation paper which suggested, among other things, that NHS charges could be collected more efficiently by following the example of a unit set up in 1990 within the Benefits Agency, the compensation recovery unit.
The unit, which is based on Tyneside, exists to recover state benefits where both benefit and a compensation payment have been paid in respect of the same accident, injury, or disease. Compensators are already required to notify the unit of claims for compensation. Therefore, we have decided that it makes sense for the work of collecting NHS charges to fall to the compensation recovery unit. The advantages are many. The unit has a track record of delivering results; it has good relations with the insurance industry, including an accepted administrative procedure for charge recovery; the insurance industry will have one point of contact for NHS charges instead of several hundred; the work can be undertaken at minimal cost; patient information necessary to assess charges remains within government; and hospitals are relieved of the burdens of collection and can concentrate on patient care.
Clause 2 provides the basis for the transfer of the administrative work of collecting NHS charges from hospitals to the compensation recovery unit. In order to extract the highest possible efficiency from this arrangement the clause introduces the concept of a certificate of NHS charges, modelled on the certificates issued for benefit recovery, so that in cases where there is both NHS and benefit recovery the two recoveries can be dealt with together.
One of the aims of the changes we are introducing is to simplify wherever possible. Rather than having hospitals calculating charges in every case, Clause 3 of the Bill enables a tariff of charges to be introduced. This will mean that for each accident the hospital, the insurer and the compensation recovery unit, which will make the final calculation, will all know from a few simple facts how much the charge will be in any particular case.
The charges will be set out in regulations. The initial calculation for the tariff has been based on average treatment profiles of road traffic accident victims. We have simplified this information to give us two costs. The first is a flat rate fee for those who are less severely injured and do not need to stay in hospital. That will include all patients from those who simply attend accident and emergency through to those who need to return on many future occasions for further treatment or checks. The flat rate fee will be initially set at £354 per patient.
Secondly, there will be a daily rate charge for those patients who need to stay in hospital as a result of their injuries. This will be initially set at £435 per day and includes the cost of any subsequent out-patient treatment which may be necessary after discharge from hospital.
We also intend to move to charges which more closely reflect the actual costs of treatment to the NHS. My right honourable friend the Chancellor of the 1448 Exchequer announced the move to full costs on 2nd July 1997 and my right honourable friend the Secretary of State for Health has agreed with insurers that these new costs will apply to accidents happening on or after that date.
The new scheme will not present insurers with unlimited liability. The tariff set includes a ceiling on the costs in any one case but still ensures that, overall, the amounts raised nationally will be close to the actual cost of treatment. At the outset of the scheme this cap will be set at £3,000 for accidents happening before 2nd July 1997, reflecting the current scale of charges, and £10,000 for accidents happening after that date, reflecting the revised charges representing the actual costs of treatment.
The Bill will also allow charges to be recovered in respect of treatment received at more than one hospital, subject, of course, to the overall cap in any one case. For example, severely injured patients are often transferred between hospitals, or perhaps where the accident has happened far away from their homes patients may be transferred to a more local hospital. In these cases all hospitals will be identified and an appropriate part of the charges returned to the hospitals actually providing care.
Clauses 4 and 5 of the Bill cover the arrangements for payment of the NHS charges due from the compensator to the compensation recovery unit. We have not, as an act of faith with the insurance industry, included any specific penalties for non-compliance with the scheme. The industry's record of compliance with the scheme for benefit recovery is commendable and we fully expect similar co-operation with the NHS scheme.
One benefit of starting afresh is that we are, for the first time, able to build into the system a method of review and appeal. Clause 6 of the Bill provides for a certificate of charges to be reviewed by the compensation recovery unit either as a result of its becoming aware of something being wrong with the certificate or on request by the compensator.
Given that we are opting for a simple scheme and tariff we anticipate that any problems which arise will be sorted out on review. Where, however, problems remain after review, Clause 7 offers a further avenue, that of a formal appeal. Compensators will have the right of appeal, after having paid the charges, if it seems to them that the amount asked for is wrong, the amount is in respect of treatment which was not given as a result of the road traffic accident, or the compensation payment in question is not one to which the scheme applies.
Having allied our scheme with the benefit recovery scheme we also intend, as provided for in Clause 8, that appeals against NHS charges will be heard by the same tribunals which hear appeals in cases of benefit recovery. Appeals in Scotland will, after devolution, fall to be heard by separate tribunals. After the appeal tribunal we do, however, part company with the benefit recovery scheme. Clause 9 provides that any further appeal will lie direct to the courts and not through the social security commissioners.
Clause 10 deals with procedures for payments which may be necessary following appeal.
1449 Clause 11 deals with the provision of information. While the Bill places an obligation on a list of people or bodies which could be involved it is envisaged that in the vast majority of cases the insurer will be able to give the compensation recovery unit sufficient information for the claim to be processed. In the ordinary run of events the only information about the patient's contact with the NHS which will be relevant is whether or not NHS treatment was given and, if the patient needed to stay in hospital, for how many days.
Again, because the new system is simple, no details of the accident victim's condition or treatment need routinely be supplied by the hospital. If, however, an appeal against charges is made on the grounds that part of the treatment received was not as a result of an accident it may be necessary for further information to be sought. Regulations will ensure that such information can only be sought and used in limited circumstances.
I mentioned earlier that we had specifically modelled our scheme on the existing scheme for benefit recovery so that the two schemes could be run together with maximum efficiency both for government and compensators. Clause 12 allows exchange of information further to aid this efficiency. Compensators will benefit by being able to notify the compensation recovery unit of potential cases under both schemes on a single form and the unit will then be able to use that information for the purposes of both schemes.
Clause 13 concerns the transfer of charges received by the compensation recovery unit to the relevant hospitals. We intend—and this will be set out in regulations—that hospitals will receive payment directly into their accounts on a monthly basis. Compensation payments are not always simple affairs. There can be a number of paymants over time, or a payment into court, or perhaps more than one compensator. Clause 14 provides regulation-making powers to provide specifically for these more complex cases.
Clause 15 of the Bill enables regulations to be made to allow those military hospitals which also provide services for their local civilian population to benefit from the new administrative arrangements. Provision for regulations and orders and the interpretation of terms within the Bill are covered in Clauses 16 and 17.
Clause 18 amends the Road Traffic Act 1988. One important issue which results is the removal from NHS trusts of the right to collect the emergency treatment fee. As I said, we consider it unacceptable that hard pressed hospital staff should spend time collecting the fee. At its current rate of £21.30 it must also be open to question as to whether it costs more to collect than it generates in income. We have, however, chosen to leave the fee on the statute book where it has been for more than 60 years as any doctor, be he GP, off-duty surgeon, or perhaps retired, attending the scene of an accident has the right to seek payment. It is not our intention to remove existing rights from individuals.
Clause 19 provides for any necessary financial expenditure as a result of the Bill. By coincidence the new scheme and its appeal provisions will come into force as the social security appeals system undergoes 1450 change. The provisions for appeal in Clauses 7 and 8 assume that these changes have taken place. Clause 20 providas for transitional arrangements so that any appeals falling from the NHS recovery scheme can be heard under the current appeals system, if necessary.
Clause 21 brings us to the Short Title and the end of the Bill. This is a measure which will bring a long-standing system up to date by simplifying what had become a muddle. It represents no new principles. The idea that compensators should meet hospital costs has been accepted since 1930. What we are doing is making sure that our hospitals actually receive income to which they have had a long-established right.
The Bill will simplify the system of recoveries for hospitals and insurers. It will provide for easier collection of substantial sums, well over £100 million. This money will be returned to hospitals for use in patient care. I commend the Bill to the House.
§ Moved, That the Bill be now read a second time.—(Lord Hunt of Kings Heath.)
§ 5.8 p.m.
My Lords, the House will be grateful to the Minister for introducing the Bill in his customary clear and concise way. As he said, this is a measure whose underlying principle has been enshrined in law for nearly 70 years, the principle being that hospitals of all kinds should be able to recover from private insurance companies the cost of treating road accident victims. It is a principle that has been endorsed over the years by successive governments, most notably the previous Conservative administration when they introduced what became the Road Traffic Act 1988. With this aspect of the Bill therefore I have absolutely no quarrel. However, listening to the Minister's speech one might be forgiven for thinking that that was all there was to it. It has been presented as a fairly straightforward administrative re-arrangement designed to streamline and improve the existing scheme to recover hospital costs. In my opinion that is a false impression. To my mind, for reasons I shall explain, this is a strange and rather revealing little Bill. It is also a Bill which raises some interesting questions which I shall discuss in a moment.
The Minister indicated that one reason for introducing the Bill is that the present arrangements for collecting hospital charges do not work properly. I certainly agree that, across the country as a whole, the sums of money recovered for the NHS are relatively small. Last year they amounted to approximately £16 million. Why this should be so is difficult to determine. There is a perception in some quarters that the current system is bureaucratic and complex.
However, it rather depends on who you talk to. While a good many hospital trusts recover nothing at all from insurance companies, others succeed in recovering significant sums. For example, in 1996–97 the Leicester Royal Infirmary raised £365,000; this compares to a figure of nil at Derby City Hospital. On the face of it, it is perfectly possible—if you have a mind to do so—to follow the procedures laid down under the present system and generate a useful contribution to hospital 1451 costs. Indeed, a Department of Health circular has advised NHS trusts to look more carefully at how they might pursue claims under the Road Traffic Act 1988 with more vigour. It will be interesting to know from the Minister the results so far of that initiative.
However, under the Bill the system is to be changed. It is proposed to use the good offices of the compensation recovery unit of the Benefits Agency to recover charges on behalf of hospitals, and to place a duty on insurance companies to initiate that process whenever a claim for compensation is made under a motor insurance policy. I have no information which leads me to doubt that the CRU is capable of undertaking this responsibility. But can the Minister say whether the Government considered any alternative mechanisms and, if so, what they were? Is this the most cost-effective way of remedying what the Government perceive as the defects in the current system? If so, on what information do the Government base that opinion?
I have described the Bill as strange but revealing. I admit that I was casting about for some mild adjectives; I could have used slightly stronger ones. The Bill is extraordinary for what it tells us about the Government's sense of priorities. With all the legislation competing for parliamentary time, it is a Bill to rejig the system of recovering hospital charges which rises to the surface. Why? An obvious reason is that the Government look upon private insurance companies as a cow whose milk has not up to now been sufficiently squeezed out of the udders. The Government have identified what appears to them a politically painless way of generating a lot more money for the health service. How could one possibly object to that?
But in order to judge this Bill in the round, one needs to understand who will suffer from it—the motorist. Since being elected to office, this Government have hardly disguised their antipathy to the private motorist. Fuel duty has been raised by 20 per cent; vehicle excise duty has also gone up. Powers are now in place to impose a registration tax on new vehicles. It is forecast that by the end of the current Parliament motorists will have paid more than £9 billion in additional taxation to the Exchequer. Here in this Bill is yet another cost they will have to bear—additional insurance premiums to finance the new and higher charges levied by NHS hospitals.
The position of the Government is that these are not new charges and that the cost of hospital treatment—or most of it—is already factored into existing insurance premiums. That would be a perfectly respectable position if it did not conflict with some inconvenient facts. The first inconvenient fact is that if the NHS is to recover 10 times as much in charges from insurance companies as before, then it is not just a question of creating a more effective collection system. The charges will have to go up by a very great deal. That is exactly what the Government are now proposing. For in-patient treatment, the ceiling on an individual charge is, we understand, to go up from £2,949 to £10,000. That sort of money does not come from thin air; someone has to fund it. The Association of British Insurers estimates that the provisions of the Bill will cost the average motorist between £6 and £9 more per annum on his 1452 insurance premium. That of course applies to the average motorist. Some will no doubt pay very little or even nothing extra; others, particularly those in higher risk categories, will pay perhaps £20 or so more.
What then are we looking at here? I find it difficult, when you strip away the wrapping paper, to see the proposals as anything other than a straightforward hike in indirect taxation—a hike aimed, quite deliberately, at one particular group in society, namely vehicle owners. Not only does this tell us a lot about the Government's attitude to vehicle owners; it is also extremely revealing about their attitude to the NHS. After years and years of arguing against levying charges on users of the health service, a newly elected Labour Government have used scarce legislative space to do what? Not to scrap a charge that was yielding very little money, but to buttress and boost it so as to make it yield substantial sums. It is perfectly clear that, contrary to all their rhetoric on the subject, Labour has conveniently put aside its supposedly principled objections to charging patients. Simultaneously, it has overtly endorsed the principle of using insurance as a means of spreading the burden of the costs of healthcare. Those two things speak volumes for new Labour. I should be most interested to hear what the Minister has to say about them. In particular, I would welcome the Minister's assurance that the charges to be prescribed in regulations will not—either now or in the future—be unfairly loaded and will be kept, in real terms, within the limits that the Government have announced.
There is a danger, if substantial sums are raised from the scheme as revised, that income from charges will slowly and imperceptibly become a substitute for Treasury funding. That would not only he undesirable in itself but would accentuate the reliance being placed on the private motorist for funding the health service. It could also disadvantage certain hospitals which, through no fault of their own, deal very little or not at all with road accident victims. I should be grateful if the Minister would comment on that point in his reply.
Another feature of the Bill of which your Lordships need to be aware is the way that it proposes to deal with hospital charges arising from accidents where the driver is uninsured. At the moment, any claim for compensation against an uninsured driver is met by the Motor Insurers' Bureau, the MIB, which is essentially a statutory pooled fund maintained on behalf of the motor insurance industry. That arrangement represents a necessary safety net to ensure that nobody injured by an uninsured driver is unable to secure compensation for his injury. However, the MIB cannot at present be used to reclaim the costs of NHS hospital treatment.
Under the Bill, that situation will change. For the first time, the NHS will be able to collect charges from the MIB where the claim for compensation is against a driver who is uninsured or untraceable. That means that law-abiding motorists with insurance will be paying for NHS hospital treatment in three ways: first, as ordinary taxpayers; secondly, through their insurance premiums for potential claims against themselves; and now, in a third way, again through their insurance, for any accident at all where there is a claim against an uninsured driver.
1453 The Government owe us an explanation of why they are proposing to take this step. It seems to me a step too far. The test of a new provision such as this should be one of natural justice. I do not believe that it passes that test. Indeed, it has all the appearance of a rather sneaky piece of opportunism—a nice, easy way of raising yet more money for the health service from motorists.
The more one puts up insurance premiums, the more one is bound to increase the number of drivers who do not insure. It is estimated that there are already approximately 1.5 million drivers who are uninsured and who simultaneously dodge paying the annual road fund licence at a cost to the Treasury of £170 million. The Government should be looking for ways to reduce the numbers of uninsured drivers and tax dodgers, not doing things to encourage them. I give the Minister notice that I shall be raising this issue in Committee, but it would be very helpful if he could say something in his reply which might shed a more respectable light on the rationale of this part of the Bill.
There are a number of other issues which we shall be pursuing in Committee: the retrospective elements of the Bill, which I believe are quite unnecessary and patently unfair to the insurance industry; the order-making powers; the Scottish dimension; and the practical arrangements for the Bill's implementation. There is, however, one matter I should like to cover today. As I said, the very existence of this Bill sheds a revealing light on the Government's sense of priorities. The fact that we are now considering a measure to beef up a system which involves funding the NHS from the pockets of those who are insured begs the question of where this is leading and whether there is more of the same still to come.
The motorist in this context is a sitting duck. The reason he is a sitting duck is that the insurance that he carries is compulsory. I must ask: do the Government have any intention of extending the principle underpinning the Bill to other groups of people who are obliged by law to insure themselves? Local authorities, for example, are compulsorily insured for public liability. There is no difference in principle between the hospital treatment of someone who breaks a leg tripping over an uneven pavement and who then claims compensation and the treatment of someone who makes a claim after being in a road accident. One could think of numerous other examples. So I ask: to what extent do the Government regard private insurance as a legitimate means of defraying the cost of running the NHS? As they say in a certain magazine, I think we should be told. If the principle of the Bill is to be extended, resulting in a shift in where the costs of the NHS are to lie, then it really does merit a proper public debate with the full involvement of those affected.
This Bill contains features that are roundly to be deplored as well as much that is unobjectionable. Its particular interest lies in the fact that it comes from a new Labour Government whose ideas and intentions, when they emerge, have a habit of belying their previous utterances. By the end of the passage of the Bill, I trust that the House will have shed some useful light on some of those intentions to the benefit of us all.
§ 5.21 p.m.
§ Lord Clement-Jones
My Lords, I join in thanking the Minister for his clear exposition of the contents of the Bill. For a short Bill, it has generated a great deal of heat and not a great deal of light in the other place. On their own, we could welcome on these Benches certain aspects of the Bill such as the reduction in the bureaucracy involved for hospitals, the fact that there will be no further function for debt collectors, the more centralised system of collection through the compensation recovery unit, the new rights of appeal and also more money for the National Health Service, provided it comes into the National Health Service.
However, my party voted against the Bill at Second Reading and Third Reading in the other place on the grounds that we could not basically tell whether this was the thin end of a thin wedge or the thin end of a thick wedge. Indeed, throughout the debates in the other place, the Government refused to state whether there was an over-arching principle behind the Bill, whether indeed any wedge was involved at all, and also whether it could be extended in future. They refused even to engage in debate on these issues which could potentially have very far reaching consequences for the insured, insurance companies and the whole principle of the NHS.
The basis of the debate and the speed with which the Bill was passed through seemed to reflect rather some kind of budgetary urgency. Ministers allege that this is simply updating a system that derives from the 1930s. But there is a new dimension. It is estimated that the new charging system will collect £160 million rather than £16 million, a tenfold increase. I am by no means against increasing the finance for the health service as long as it is absolutely clear that this is additional funding and would not be clawed back by the Treasury. But if this is right for motor insurance, why is it not right for other forms of compulsory insurance, such as employers' liability insurance, product liability insurance and occupiers' liability insurance.
Let us take, for instance, the employee who suffers damage at work and who is cared for by the NHS; or the consumer who suffers damage when using a product, such as a faulty electrical piece of equipment. All these issues were looked at by the Law Commission which reported in December 1996. It looked at the whole issue of recovery of hospital charges. Will the Government be extending this scheme if it is treated as a pilot under the Bill? What kind of animal are we dealing with here? Is this a limited measure or something potentially much wider in its consequences?
In this debate we can of course distinguish the case of compulsory insurances, such as those I have mentioned, from those situations involving travel insurance where a person injured in a skiing accident claims under his own travel insurance policy. But the Government's approach to the Bill throughout adds up to a lack of a coherent framework for the Bill going forward. No wonder the debate in the other place was not very constructive. On these Benches we hope for better in this House.
1455 Perhaps I may tackle a number of other issues in the Bill. The first is the question of retrospection. Why has 2nd July 1997 been chosen? We were told that this was the Labour Budget date and that this was the key date for when the new charges would apply because the Chancellor announced then that the new system would come into effect. But insurance companies did not know until the Bill was introduced the level of charges that were contemplated. The Bill will no doubt pass in some shape in March or April. Would that not be the correct date to choose? Otherwise, motorists and insurance companies will in effect be paying a retrospective charge.
The second issue is the question of limitation on the amount of charges. There should be proper scrutiny of those charges. A large increase was mentioned during the debate. Perhaps one way of ensuring that the charges are kept in proportion would be to specify in the Bill that the tariff should reflect the average cost within the National Health Service of a particular treatment. That would encourage hospitals with higher costs to work towards the average. It would also reward the more efficient ones.
On these Benches we do not have a great brief for the motorist in this context. We have always believed that they should bear the true cost of their activities. But the impact of the Bill on premiums will bear down disproportionately on young people. In addition, as the noble Earl mentioned, the Motor Insurers' Bureau will be charged for the first time and the cost of this will also be borne by the premium payer and the insurance industry.
A number of aspects of the Bill relate to devolution. We note that under the Bill there is in Scotland the absolute right of appeal. In England, however, there is only the possibility that the right of appeal to the courts will be provided by regulation. The Bill also goes counter to all the devolution legislation passed in the previous Session. Throughout the Bill the Secretary of State is assumed to be the English Secretary of State for Health. Whatever happened to devolution? If the health service could be devolved to four separate national health services, why not the collection of revenue? The compensation recovery unit is appropriate for England and perhaps Wales, but we urge the Government to consider other options for Scotland.
The amendments we put down in Committee will reflect the comments I have made at Second Reading and some other aspects but we hope that during the Committee and Report stages the Government will engage in a much more constructive debate on the contents of the Bill than they have hitherto.
§ 5.28 p.m.
§ Lord Brooke of Alverthorpe
My Lords, I rise to support the Bill and in doing so I take the opportunity publicly to express my appreciation of and heartfelt gratitude to the National Health Service and its staff for the way in which they cared for me over the past few months while I was ill. I have now returned in fitness to the House.
1456 I support the Bill because I believe it is a long overdue update and amendment of existing provisions. The current rules have not been properly or uniformly applied. Therefore, in practice they have increasingly proved to be unfair—and unfair to the motorist. There have been variations in the way they have been applied in different parts of the country and there have been variations within specific areas—even between one health trust and another hospital trust close by. So it is high time that the Government turned their attention to the matter and followed through on the promises made by the previous administration.
It is understandable that many of the trusts have not put too many resources into this area. The administration burdens on hard-pressed hospitals are significant under the existing rules. Yet there has been relatively little financial return for those trusts that have expended effort in attempting to comply with the present rules. That has been the case especially in relation to the £21.30 emergency treatment fee. It has been particularly unpopular with the public, because it has had to be paid by the vehicle driver involved in an accident, whether or not that individual has caused the accident. I welcome its departure. I am pleased that, in updating these provisions, the Government have used this opportunity to abolish this much disliked hospital emergency treatment fee.
I also welcome the transfer out of hospitals of most of the recovery administration. We look forward to the Benefits Agency compensation recovery unit effecting speedy and efficient delivery of the revised charges to hospitals. The funds are badly needed, notwithstanding the extra £21 billion that the Chancellor has committed to the NHS.
noted in the Explanatory Notes to the Bill, in the Summary of the Regulatory Impact Assessment, that four options were considered in relation to future collection. I thought them somewhat limited for a modernising Government, and I tend to he marginally critical in this regard. We could perhaps have sought, as a fifth option, a public/private initiative, possibly on similar lines to the American approach, where it is possible to factor the debts. That would have given the trusts an immediate cash flow advantage. Instead, under the present arrangements we shall continue with a system under which recovery of costs will be delayed by the amount of time it takes for successful personal injury claim settlements. I know that those who have examined the American arrangements have understandable concerns about some of the hard-nosed business approaches adopted in the recovery of insurance money. However, our approach is different. We could have written contract specifications without compromising the trusts' integrity or our patient support culture, which we are anxious to maintain in order to ensure that patients are not subjected to hard business pressure. Had we been prepared to explore such a partnership, it could have presented a great opportunity for extending public service employee involvement and motivation opportunities. When we come to review the working arrangements further down the line, I hope the Government may return to a consideration of possible alternatives if the proposed arrangements are not 1457 working as effectively as we would wish. I emphasise, however, that I support the new arrangements. They are certainly a great improvement on matters as they stand.
I recognise that in an effort to simplify and reduce administrative costs under this scheme the Bill must of necessity introduce a tariff of charges on a daily and a flat rate basis. The Association of British Insurers advises that its members support this approach, "provided that these are calculated fairly and in a transparent way". I support that view and can understand why the association has lent its backing. The reality is that its members will still not be paying the full rate of treatment costs incurred through road traffic accidents. That must be the case if a cap is being introduced—admittedly, a revised cap. A cap of £10,000 on a single charge will mean that in many instances the full amount will not be taken into account in devising the tariff. It is still difficult within the NHS to ascertain the true cost of all patient treatment, not only in this area but in many others. Those in private sector medical care are wizard at working out these charges, and have been wizard at putting in their compensation returns. Within the NHS we do not perform in the same way. As the Minister knows, I believe that there should be more openness and transparency in relation to NHS costs. Such an approach is needed in order to raise public awareness and provide for a better understanding and appreciation of the value of the care that is being delivered by the NHS. A knowledge of costs helps to strengthen the links between rights and responsibilities. That applies equally to motorists. Their right is to free NHS services at the point of access, but responsibilities fall to them in a way that they do not fall to the non-motoring public. That must be responded to appropriately with money. Raised awareness of the link between rights and responsibilities is increasingly necessary for patients. It is also necessary in order to enable management and staff to increase efficiency and continue to drive out waste.
Major IT investment plans have recently been announced. I hope that one of the outputs from that programme will be the availability of more information on costs. Will the Minister say when we can expect to see more progress on that front, particularly as the Bill, at least temporarily, moves in the opposite direction?
Overall, I very much welcome this long-overdue measure. It offers the prospect of additional, badly needed resources for the NHS. It provides a possible model for increasing the flow of National Health Service funds from other compulsory insurance. I believe that the Government probably do not intend to embrace that approach, but the topic is rightly on the agenda and should be debated. The Bill also provides a possible model to be applied over wider fronts, even beyond the field of compulsory insurance. Those views are entirely personal; however, I believe that we shall need increasingly to examine these issues. I believe that the bulk of National Health Service funds will continue to come from taxation. But as we become wealthier, and as expectations and health demands continue to grow, and as the population ages, there will be an increasing need to explore with an open minded, commonsense, 1458 pragmatic approach all NHS income streams that are open to us. I hope that we may look increasingly to a more consensual approach in these areas. I believe that among the great British public there is an increasing recognition that we get the health service that we pay for. More and more people are coming to the view that we are not paying sufficient for the kind of services that we justly seek. We must therefore look not only to taxation, but to all the opportunities that may open up to us to ensure the stream of income for an even better health service in the future.
§ 5.38 p.m.
§ Lord Hunt of Kings Heath
My Lords, this has proved an extremely interesting debate. It has not been over-endowed with speakers; however, that does not indicate any lack of importance attaching to the Bill's contents. I have no doubt that in Committee we shall return to many of the issues raised. I shall take this opportunity to touch on a number of key points.
First, I wish to emphasise that the Bill is designed to give support to a principle that has existed and been accepted for more than 60 years. In response to the charges made by both the noble Earl, Lord Howe, and the noble Lord, Lord Clement-Jones, let me emphasise the point that these are not new charges. The Bill does not introduce a charge for the use of the NHS. Road traffic accident victims receive hospital treatment free of charge. There is no question that they will ever be presented with a bill. This is a method of raising income for hospitals that should have been theirs for many years but which has been lost for want of administrative support. The principle is as it always has been: road users are required to insure against third-party risks which includes the compensator reimbursing hospitals for the cost of third-party treatment.
The noble Earl, Lord Howe, inquired about problems to do with the existing scheme and asked why the NHS had not been more successful in collecting money as a result of the charges. I have already explained some of the problems: hard-pressed staff of A&E departments who have to question patients or demand payment from drivers; the difficulty of tracking down the person or the institution who must pay the compensation; and ensuring that the debt is settled. As the noble Earl points out, we are aware that some hospitals have been more successful than others. This depends very much on local circumstances and the attitude of staff and management. Anyone who has been involved in the NHS for many years, as I have, will be aware that there is always a difference in priorities from hospital to hospital. Despite enunciations in circulars by the Department of Health year after year, these matters will be dealt with differently. Further, even when hospitals make a considerable effort to collect the charges they often fail to pick up all of the potential cases. For example, there is reluctance on the part of the public to inform hospitals when a claim is made. The whole history of this issue is that exhortations to the NHS to do better do not work in the long term. I believe that the proposals will both simplify the procedures and, very importantly, bring more money into the health service.
1459 In response to the noble Earl, Lord Howe, I assure him that this will be real additional money on top of the normal NHS allocation. Although, as the noble Earl says, the amount of money received by each hospital will necessarily be different, the fact is that this money will go into the NHS as a whole. Therefore, the NHS as a whole will benefit. The noble Earl also asked questions about the future revision of charges. Clearly, this will need to occur from time to time but no particular interval has been set. That is consistent with the practice that applies to other charges within the NHS.
The noble Lord, Lord Clement-Jones, perhaps repeating arguments in another place, objected to the whole principle of the Bill. I have always believed that the NHS draws considerable strength from the provision of services to the whole of the public which is mostly free at the point of delivery, but I reiterate that no new principle is involved in the Bill now before the House. The Bill simply ensures that the NHS receives what is rightfully owed to it and in a way that simplifies the current administrative burdens. In addition, this must be seen in the context of the comprehensive spending review that underpins the Government's commitment to the service and its underlying principles.
Both the noble Earl, Lord Howe, and the noble Lord, Lord Clement-Jones, asked whether the scheme might be extended to other potential insurance areas. One example was sportsmen and women. The primary purpose of the few compulsory insurance schemes in this country, such as motor vehicle insurance, is to protect innocent third parties. We have no plans to make individuals self-insure. It can be argued that that is counter-productive as it may dampen efforts to improve health and safety consciousness. The noble Lord, Lord Clement-Jones, asked whether the NHS might recoup its costs in cases where personal injury compensation was paid. The Bill we are debating today is about the provision of a better functioning system to support existing rights. The Bill does not provide a mechanism to extend those rights by stealth.
The noble Earl, Lord Howe, asked about the Motor Insurers' Bureau. Clearly, the recoupment of NHS charges predates the setting up of the Motor Insurers' Bureau, but as the MIB makes compensation payments in respect of road traffic accidents as a matter of general principle we believe that it should also meet NHS costs as do other insurers. That is the reason why we intend to bring it into the scheme in line with the recovery of benefits legislation.
A number of points were raised relating to the compensation recovery unit by both the noble Earl, Lord Howe, and by my noble friend Lord Brooke of Alverthorpe. It is a particular pleasure to see my noble friend in his place today looking so well. The CRU has established a very good track record in dealing with similar work on a national scale. It has good relations with the insurance industry, including an accepted method of recovery. Insurers have welcomed the decision to use the CRU. We believe that it can accommodate NHS work in addition to its role in benefit recovery work at minimum additional cost. It also keeps patient information within the government family and 1460 enables us to move with speed. We shall keep the matter under review, but we believe that the CRU is the best option at present.
The noble Lord, Lord Clement-Jones, made reference to devolution and Scotland in particular. The scheme is not reserved in the Scotland Act and therefore post-devolution Scotland will do as it may wish. The powers of the Secretary of State will be transferred to Scottish Ministers on devolution. The noble Lord also asked about the tariff. To establish full cost our economists looked at detailed work undertaken by the Transport and Road Research Laboratory in which treatment profiles following road traffic accidents were produced. Those profiles were costed and, using information from the police and compensation recovery unit as to the number of accidents and the success rate of compensation claims, we arrived at the total sum that the NHS should recover. It is from that total sum that we have been able to develop the tariff.
My noble friend Lord Brooke of Alverthorpe referred correctly to the issue of rights and responsibilities generally in relation to NHS patients. He asked specifically about the availability of information in relation to the cost of treatment. I echo his concern that the information available is as accurate as possible. The more information we have the more we can compare it and the more effective the NHS can be. There is no doubt that as a whole the NHS is becoming more sophisticated in the information that is becoming available to it. The impact of all of the Government's changes which we shall debate in your Lordships' House very shortly—the development of health improvement programmes, the new role of health authorities, the development of primary care groups and trusts and the initiatives that we are taking to improve the capability and use of IT—will provide better information on which to make the judgments in the health service about priorities and whether or not treatments are cost-effective.
Much has been said about the impact of the Bill on the motorist. I believe that this has been somewhat exaggerated. The Bill means that the NHS will recover charges in all cases where compensation is paid. We are changing the amounts raised so that the NHS receives something closer to the actual costs of treatment, but the effect on the motorist will be minimal. We have estimated that if the amount that the NHS receives from this measure is averaged out across all motorists who hold compulsory insurance the effect will be to raise the average premium by between 2 and 3 per cent. or, as the noble Earl pointed out, between £6 and £9. I emphasise that the Government are not anti-motorist or anti-car. We recognise that for many people and for some journeys the car is the most sensible way to get about. We are not against people owning cars. The United Kingdom has a lower percentage of people with cars than many other European countries, although cars tend to be used less in those countries. Our integrated transport White Paper offers many comforts for motorists. We need to reflect on that before suggesting that the Bill is a gross attack on the motorist.
1461 The noble Lord, Lord Clement-Jones, raised the issue of retrospection. We have clearly come under some criticism for seeking to increase the charges to something like the full cost for treatment following any accident which happened on or after 2nd July 1997. That is the date of the Chancellor's Budget speech. I fully understand the position of insurers. No one would expect them to be happy to have to meet those costs. But despite what the insurers have said in the public arena, in face to face meetings with my right honourable friend the Secretary of State for Health they have acknowledged that raising charges from 2nd July 1997 is reasonable. We believe that our decision is fair. The NHS has undeniably lost out for many years because of poor compliance with the existing statutory provisions. We should remember that NHS charges fall due when, and only when, compensation is paid. The average time taken to settle claims is around two years. Insurers knew from 2nd July 1997 that costs would increase but that it would be only from April 1999—nearly two years down the track—that full costs would start to be recouped.
My noble friend Lord Brooke of Alverthorpe asked about the general review of the system. I can confirm that we are committed to reviewing the system after about six months in operation and that the results of the review will be made public.
The Bill will simplify arrangements for all parties. Best of all, patients will benefit as the money raised will be sent back to the hospitals which need it and which can use it in whichever way they think best. NHS care is, and will remain, free to all those who need it. No one will be denied care or prevented from seeking it as a result of the Bill. The Bill puts right something that has been wrong for nearly 60 years. I commend it to your Lordships.
On Question, Bill read a second time, and committed to a Committee of the Whole House.