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Personal Injuries (NHS Charges) (Amounts) Regulations 2006

Volume 687: debated on Tuesday 5 December 2006

rose to move, That the Grand Committee do report to the House that it has considered the Personal Injuries (NHS Charges) (Amounts) Regulations 2006. 2nd Report from the Statutory Instruments Committee and 2nd Report from the Merits Committee.

The noble Baroness said: For 70 years, hospitals have had the right to recover the costs of treating people injured in road accidents where the victim has been paid injury compensation. The NHS costs are borne by the compensator, rather than by the accident victim or the hospital. The principle is that those responsible for causing injury to others should pay the full cost of their actions or negligence, including the cost of treating the victim’s injuries. Under the existing Road Traffic (NHS Charges) Act 1999, the costs are recovered centrally and then paid back directly to the NHS trusts that provided the treatment.

The road traffic Act scheme has so far paid some £300 million to hospitals in Britain for them to reinvest in front-line patient care. The Health and Social Care (Community Health and Standards) Act 2003 took the powers to extent recovery of NHS costs to cases involving personal injury compensation generally. It does not seem logical that the successful road traffic Act scheme should be restricted to motor accidents. Therefore, it will not be restricted to motor accidents when the new scheme comes into force early in the new year.

When a person receives compensation for an injury, the costs of any NHS hospital treatment and ambulances in connection with the injury will be recoverable from whoever has paid the compensation. The income raised from the new injury cost recovery scheme will be paid straight back to the hospitals that provided the treatment. Those hospitals will be free to use the money to improve patient services as they see fit. In that way, we hope to recover an additional £150 million to be reinvested in front-line patient care.

These regulations make provision concerning the amounts of NHS charges to be recovered under the injury costs recovery scheme from people who pay compensation in cases where an injured person receives NHS hospital treatment or ambulance services. As well as setting the tariffs for outpatient and inpatient treatment, the provision of NHS ambulance services and the maximum amount to be recovered in relation to any one injury, these regulations also set out how the injury costs recovery scheme is to deal with a range of circumstances in which the amounts to be recovered may need to be adjusted.

These regulations are made using for the first time powers under section 153(2) of the Health and Social Care (Community Health and Standards) Act 2003. The Act requires the first regulations made under these powers to be subject to the affirmative resolution procedure. The Act also requires the Secretary of State to consult the National Assembly for Wales before making regulations under Part 3 of the 2003 Act. As these regulations are made under Part 3, consultation has taken place. The noble Lord, Lord Warner, has made the following statement regarding Human Rights:

“In my view the provisions of the Personal Injuries (NHS Charges) (Amounts) Regulations 2006 are compatible with the Convention rights”.

Part 3 of the Health and Social Care (Community Health and Standards) Act 2003 makes provision for the establishment of a scheme to recover the costs of providing treatment to an injured person where that person has made a successful personal injury compensation claim against a third party. The injury costs recovery scheme builds on the existing scheme introduced by the Road Traffic (NHS Charges) Act 1999—the RTA scheme—which allows costs to be recovered in road traffic accident cases only. The new injury costs recovery scheme will come into force on 29 January 2007.

The injury costs recovery scheme will be administered by the Department for Work and Pension’s Compensation Recovery Unit—CRU—on behalf of the Secretary of State for Health. The CRU has operated the current RTA scheme since 1999, and has extensive links with, for example, solicitors and insurers. The person found liable to any extent in respect of the injury will also be liable to pay the relevant NHS charges in respect of NHS hospital treatment and ambulance services, in so far as provided. Compensators will have a legal obligation to inform the CRU of any claim for personal injury compensation.

Under the existing RTA scheme the amounts to be recovered are set using a simple tariff system. The tariff consists of a single one-off payment where hospital treatment is provided without admission, currently £505, or a daily rate, currently £620, for each day or part day of admission to hospital, excluding the day of discharge. There is also a statutory ceiling on how much can be recovered in relation to treatment of injuries resulting from any one incident—currently £37,100, or roughly 60 days’ in-patient treatment. These amounts have been migrated to the injury costs recovery scheme, with the addition of a new element to cover the cost of any ambulance journeys that may be required. This has been set at £159. Regulation 2 of these regulations sets out the amounts of NHS charges payable.

The tariff system means, of course, that frequently the amounts recovered do not match exactly the costs of providing treatment in any specific case. The tariffs represent average treatment costs; all these amounts have been established by calculating the average cost of treatment for injuries typically suffered in accidents and, for ambulance journeys, the average costs of providing ambulance services. These amounts are not intended to provide exact reimbursement.

Under the RTA scheme the tariffs are uprated annually on 1 April in line with NHS inflation. The increase is calculated using an average amount based on the three most recent years for which figures are known. The intention is to retain the annual uprating exercise but the tariff will not be uprated on 1 April 2007, given that the scheme will only recently have been introduced.

These regulations also set out how the ICR scheme is to deal with a range of circumstances where the amounts to be recovered may need to be adjusted. For example, the regulations make provision for where more than one person is liable to pay the NHS charges in respect of the same injury. Regulation 5 provides for the liability to pay the charges to be apportioned by the Secretary of State between two or more compensators. Naturally, there has to be adjustment for cross-border cases. Regulation 6 covers the adjustment of a certificate of NHS charges where the Secretary of State and Scottish Ministers both issue certificates. This could apply, for example, when an injured person has received treatment in both a hospital in England and a hospital in Scotland.

If the amount specified in the certificates when aggregated exceeds the maximum amount—currently £37,100—the Secretary of State may adjust any amount specified in the certificate issued by her. Regulations 7 to 10 make provision for the repayment of overpayments of charges and the recovery of underpayment of charges, including provision requiring the Secretary of State to send out statements showing the amount of overpayment or underpayment and the action required. If, as a result of a redetermination, adjustment, review or repeal, it appears that the amount of NHS charges paid by any person is more than the amount that ought to have been paid, the Secretary of State will either pay the difference to the person who paid the NHS charges, or instruct the trust or body to pay the difference to the person who paid the NHS charges.

Where the Secretary of State pays the difference, she will instruct the relevant NHS body to pay the difference to her or deduct it from future payments to that NHS body. If it appears that the amount of NHS charges paid by any person is less than the amount that ought to have been paid, the person who paid the relevant NHS charges will pay the difference to the Secretary of State, who will then pay that difference to the relevant NHS body. Where an underpayment or overpayment occurs, the Secretary of State will send a statement to the person paying NHS charges and the relevant NHS body, setting out the details, including details of the revised amount of NHS charges.

In summary, these regulations extend the scheme that allows the NHS to recoup the cost of treating the victims of road traffic accidents to include all cases where an injured person has made a successful claim for personal injury compensation. I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the Personal Injuries (NHS Charges) (Amounts) Regulations 2006. 2nd Report from the Statutory Instruments Committee and 2nd Report from the Merits Committee.—(Baroness Royall of Blaisdon.)

I thank the Minister for introducing the regulations. The regulations look routine and rather dull, but they are not. They are the latest manifestation of the Government’s push to levy indirect taxes on the public through the medium of higher insurance premiums and, in so doing, effectively to introduce new charges for NHS treatment, which they have consistently denied that they would ever do. They have done so twice, as the Minister explained. Provision was made in the Health and Social Care (Community Health and Standards) Act 2003 for NHS hospitals to receive reimbursement for the cost of treating those people who have suffered a personal injury and have been compensated under an insurance policy. That measure represented an extension of the scheme introduced by the Road Traffic (NHS Charges) Act 1999, under which all hospitals treating victims of road accidents would be reimbursed by motor insurers for the cost of doing so.

It has taken some time for the Government to lay regulations to implement the extended scheme. The reason was apparently the concern expressed during the consultation exercise about whether the employers’ liability compulsory insurance market was sufficiently robust to cope with the additional demands to be made on it. The Government undertook not to put the scheme in place until they had carried out a study of the ELCI market. The study was published in late 2003, and it recommended that the new injury cost recovery scheme be postponed for a year.

A year later, there was another public consultation, which again excited concerns about the fragility of the ELCI market. Therefore, the first issue on which I should appreciate reassurance from the Minister is whether her department is absolutely satisfied that the ELCI market is now stable and strong enough to sustain the impact of the new ICR scheme. If it is so satisfied, I should be grateful to know the grounds on which it has reached that conclusion. What sums of money do the Government believe that the NHS will recover from the scheme once it is fully operational, if one excludes the amounts to be collected from motor insurers under the existing scheme? What will be the costs of collection?

At present, claims against motor insurers are collected on behalf of NHS trusts by the Compensation Recovery Unit in the Department for Work and Pensions. Can the Minister confirm that the CRU will also be charged with the work entailed by this order? I believe that she said that that was the case. If I am correct about that, can she tell me why the contract has not been put out to competitive tender? Why have the Government not sought to achieve best value? If they believe that the CRU represents best value, how do they know?

I ask those questions somewhat pointedly because when the Road Traffic (NHS Charges) Act was brought into force in 1999, no competitive tendering was done then either, despite the fact that the Government had previously issued 12 guiding principles for market testing and contracting out. They stated:

“The choice of the means to deliver best value for money, should be based on a robust assessment of the options in each set of circumstances ... Departments should regularly and systematically review what services they provide and how they are delivered to ensure better quality services at optimal cost”.

Are those guiding principles still applicable today? If so, can the Minister confirm that a review of the performance of the CRU has been carried out and that Ministers have concluded, on the basis of an objective assessment, that the in-house route offers best value for money?

The Government’s conduct in 1999 was particularly reprehensible. For a number of years, the National Road Traffic Accident Claims Centre, NARTRACC, a company run by Mr Frank Adlam, had been collecting fees from motor insurers for the cost of treating victims of road traffic accidents in NHS hospitals under Section 157 of the Road Traffic Act 1988. NARTRACC was engaged by 132 hospitals in the UK to undertake that work and was extremely successful in doing so. In 1996, and again after the election in 1997, Mr Adlam approached the Government to propose that the reimbursement scheme should be rolled out nationally and, through his Member of Parliament, passed extensive amounts of advice to the Department of Health on how that might be achieved to the best advantage of the NHS.

The Government decided to legislate. The legislation passed in 1999 put NARTRACC out of business without a penny of compensation. Its entire workforce was made redundant. Mr Adlam received not so much as a thank you from Ministers who, from that point on, refused to see him. Had NARTRACC lost out after a competitive tender, that would have been one thing, but no tender for the work was ever issued. The collection work was placed in-house. That decision by Mr Frank Dobson, the then Secretary of State, has never satisfactorily been explained.

NARTRACC submitted an indicative quote to the Department of Health which showed that it would be able to collect fees at a much lower cost than the CRU. It was ignored. Mr Adlam has asked for sight of the background papers supplied to the Chancellor of the Exchequer when he made his Budget announcement in 1997 about the national roll-out of NHS charges. He was told, almost unbelievably, that no such papers existed. He has asked the Department of Health for sight of policy advice submitted to Mr Dobson when the decision was made not to market test. The department has refused to release the papers on grounds of cost. When Mr Adlam offered to pay the additional cost, he was told that that was not allowed.

Considering that government legislation brought Mr Adlam’s legitimate business to an end, it would not have taken much to provide him with some measure of compensation, in accordance with the spirit of the European Convention on Human Rights. Fur farmers were put out of business by government legislation at very much the same time and provision was made to compensate them. Mr Adlam, whose company provided a public service to the NHS, was kicked out into the cold.

The whole story of NARTRACC has been one of obstructive and, frankly, less than honourable conduct by the Department of Health and, not to put too fine a point on it, mean and shabby behaviour by Ministers. Having followed the saga for the best part of eight years, I will take some persuading that what we see being rolled out in this order represents best value for money for the taxpayer or a well thought through means of achieving the Government’s policy objectives.

The amounts of money collected by the CRU have consistently fallen short of predictions—well short. When the CRU began to implement its responsibilities under 1999 Act, the operation was little short of chaotic. To be sure, it is more efficient now, but I am not sure how much more. In 1999, there was a huge backlog of cases to be followed up. All indications that I have—and I would welcome confirmation or correction—suggest that the bulk of those cases were never pursued. The financial loss to the NHS by reason of that failure by the CRU would have been significant. The scale of the workload entailed by the order will be considerable. The CRU estimated that in 2004-05, more than 77,000 claims were made against employers and that there were nearly 87,000 public liability claims. Doubtless, not all of them involved hospital treatment, but a great many will have done. If the CRU is now to undertake the collection of fees from personal injury cases, I hope that a very close watch will be kept on its efficiency and effectiveness, including cost effectiveness.

I hope that the Minister will be able to furnish me with some satisfactory replies on all these matters, if not today, then in writing. I am, of course, very willing to talk to her further.

I am very grateful to the Minister for introducing the regulations. I am afraid that I had not heard the story of NARTRACC that the noble Earl, Lord Howe, has just raised. I add my concern to his. If the story is as he has described it, and I imagine that it is, we need some kind of public explanation of why that should have been the case and why someone who, if you like, helped the Government to sort out how the compensation scheme should work should not have either been thanked or compensated.

I will now go back to what I was originally going to say. In principle, the regulations are good. The Merits of Statutory Instruments Committee commented on the fact that two government departments have worked side by side and hand in hand and the silo mentality, unusually, seems to have been in abeyance. We would all celebrate that, and I am delighted by it. It is relatively unusual, and it is great. That is the first thing. There are some issues that need to be addressed. Before that, I seek one clarification. In the report by the Merits of Statutory Instruments Committee, there is the conclusion that it would lead to roughly a 2 per cent all round premium increase for insurance. The Government’s Explanatory Notes, assuming we are going for option 3 rather than option 2, state that the increase will be 1.5 per cent. It would be helpful, given that there is an issue about the cost, to know whether the increase in insurance claims is 1.5 per cent or 2 per cent. I would be very glad to hear that straightforward clarification.

I have two areas of concern, one of which the noble Earl, Lord Howe, has already raised. The concern is whether the employers’ liability compulsory insurance market can cope. Given the number of delays in the introduction of this because of the doubt as to whether that market could cope, what is the evidence that suggests that it can cope now? Why is it okay now, when there was a deliberately delay of a year because clearly there were worries about it? It would be good to see what the evidence might be and to hear from the Minister on that.

In addition, there is the question of whether the CRU itself—irrespective of whether it should have been put out to tender—can cope with what is clearly going to be vastly increased amounts of business. Given the considerable delays in it at the moment, will it be able to tackle what seems to be a vastly increased role? If it will be dealing with all personal injury claims, which is what the regulations seem to suggest, there is a specific question in relation to cases where individuals who are not insured become liable and the extent to which the CRU is genuinely going to pursue them for these payments for the National Health Service. Or should those costs be borne by the public purse? There is a public policy question in relation to cases where the costs will not be picked up by insurers.

My second issue of concern is rather different, and I want some kind of explanation. We are told that there will be indicative tariffs instead of compensation reflecting the actual cost of treatment. Those tariffs look reasonable and a new one is being introduced for ambulance costs of £159 per journey. I have done only a little private research on this, but it looks to me as if that figure is on the low side. How did the department reach that indicative cost? I am not entirely sure that I am convinced by indicative costs. Perhaps we should still look at compensation for the actual cost of the journey to the hospital. I imagine that the explanation is that it is simpler to do it by a tariff scheme, but I would still like to hear how the calculation was done, how the averages were arrived at and whether there will be a differential between different areas of the country. We know that the costs are very different; London and the south-east is considerably more expensive than the north-east and the north-west. This tariff scheme bears close examination.

However, apart from those concerns and the serious concern raised by the noble Earl, Lord Howe, I am delighted by the regulations.

I am grateful to the noble Earl, Lord Howe, and the noble Baroness, Lady Neuberger, for their comments and general support, if not enthusiasm.

In relation to the comments from the Merits Committee, I, too, very much welcome the fact that the silo mentality seems to have disappeared and that the Merits Committee noted that. Both noble Lords understandably raised the issue of the employers’ liability compulsory insurance market. The Department of Health and the Department for Work and Pensions have been liaising closely on the introduction of the injury costs recovery scheme and the ELCI market. The Government, as the noble Earl pointed out, agreed to delay the introduction of the scheme until a study had been carried out. The final report was published in December 2003 and recommended that the implementation of the scheme be delayed for a further year.

A further consultation at the end of 2004 raised further concerns about the planned timing for introducing the ICR scheme, as the ELCI market was still considered to be fragile. However, after further discussions with the Department for Work and Pensions, which was developing a programme of work to implement the recommendations of the earlier study, Ministers agreed to a further postponement of the scheme’s implementation until October of this year, to enable the programme of work to bed in. That has now happened and information from the Association of British Insurers is that increases in premiums in 2004 are, on average, between 15 per cent and 20 per cent, compared with between 30 per cent and 50 per cent in 2003. We estimate that the impact of the introduction of the scheme will be to increase premiums by 1.5 per cent, rather than the 2 per cent mentioned by the noble Baroness, and that estimate has been confirmed by the Association of British Insurers. To recap, we have been working closely with ELCI, and it is confident that the scheme will not be an undue burden and can be implemented.

The noble Earl, Lord Howe, implied that this is a stealth tax. It is not a stealth tax; rather it removes from the general taxpayer the burden of meeting some of the costs of treatment of the victims of other people’s negligence and places the burden on the wrongdoer. Why should the man or woman in the street have to pay for the medical treatment of someone injured at work because their employer failed to take adequate steps to protect them?

The Department of Health currently pays the compensation recovery unit £2.2 million for administering the road traffic scheme. Under the expanded scheme, it is estimated that the CRU will be handling significantly more claims. Running costs, including staff costs, are expected to be only slightly higher—around £2.4 million—than for the road traffic recovery scheme.

I noted the concern expressed about the Compensation Recovery Unit, and I assure noble Lords that the implementation of the income contingent repayment scheme will be carefully monitored from the outset. Its success in terms of achieving policy objectives will be reviewed by the Department of Health not less than two years after implementation. It is likely to be at least that long, possibly longer, before the scheme is fully embedded so that its success can reasonably be assessed.

We believe that the CRU offers the best value for money in recovering central government moneys from compensators. It has a proven track record, electronic communications with all NHS trusts and, increasingly, with compensators. As part of central government, it has tight financial and information security requirements. There are no plans to put that work out for tender. I should add that the CRU’s IT system is very good. Quite astonishingly for a government department, it recently received a prize for its technological output and the service it gives to those using it.

I note the deep concern expressed by the noble Earl and the noble Baroness about NARTRACC. I do not have any details that I can give the noble Earl today, but shall write to him at the earliest opportunity and will copy the letter to the noble Baroness.

A question was asked about how we calculate the charges. We have used a simple tariff based on the average costs of people needing treatment for traumatic injuries, as with the existing scheme. The flat-rate charge for treatment without admission will include an amount towards the cost of any repeat attendances. A single one-off payment where hospital treatment is provided without admission will be £505. The daily rate for treatment with admission also includes an element towards follow-up appointments. Ambulance costs will be levied on a one-off payment per journey basis. I note the comments of the noble Baroness about the £159, but that is an average cost for traumatic injuries, not for all ambulance injuries. We are using a tariff rather than calculating each treatment, because it makes the scheme simpler and more economical to run.

Will householders have to pay if someone is injured on their premises? Any person who pays compensation to an individual, including private citizens, will become liable for repaying any associated NHS hospital and ambulance costs. However, if the person does not or cannot pay compensation, the NHS costs cannot be recovered. Many householders may find that they have some public liability insurance cover as it is often included in home buildings and contents insurance polices.

I think I have dealt with most of the questions raised, apart from that on NARTRACC, which I will write to the noble Earl about. If I have missed anything, or there is anything further noble Lords would like, I shall try to respond. If not, I will respond in writing.

I would like to test the tendering issue a little further. In a climate where patient choice requires a considerable amount of tendering of health services, not to tender this scheme seems a little eccentric. At the not-less-than-two-year point at which the regulations are looked at again, perhaps the Minister could look into the possibility of this work being tendered. It is appropriate that it should be.

I endorse that comment. The Minister said that it was the belief of her department that the CRU offered best value for money in delivering the services that it does, but it did not seem from what she said that that belief was based on any hard evidence, because her department simply had not tested any alternatives. She said that there were no plans to put the work out to tender, but if the rules which were published in 1997 by the Chancellor of the Duchy of Lancaster still apply, I am not quite sure why that decision was taken. I would be grateful if the Minister came back to me and the noble Baroness on that issue.

I shall certainly do so. Within the two-year envelope of time, when the review is taking place, there may be an opportunity to look at those issues, but I shall write to noble Lords in the mean time. I thank noble Lords for their support, and I commend the regulations to the Committee.

On Question, Motion agreed to.