Select Committee on Defence Minutes of Evidence


Examination of Witnesses (Questions 200 - 219)

WEDNESDAY 13 MARCH 2002

RT HON ADAM INGRAM AND MR BARRY MILLER

  200. But, Minister, we have to be clear about this. It either has to be cost neutral as an aim or not. If what you are saying is the aim that it should be cost neutral but, in the light of operational circumstances and if the historical data is not correct if you postulate it into the future then cost neutrality goes out of the window, I understand that. Is that what you are saying?
  (Mr Miller) The words you were quoting there were a description of the effect of our proposals. We did not, when looking at the Compensation Review, do so against an objective of cost neutrality.

  201. So there is—and, again, we have to get this right—absolutely no ceiling on the resources which would come under the budget of compensation arrangements if circumstances dictated that that should be so?
  (Mr Miller) We would not be faced by any budgetary constraint in terms of implementing any scheme, whether it is the scheme we have or, indeed, the scheme we propose, because clearly the issue would be demand-related, and it would depend on the number and type of claims that we get.

  202. But just so we strip away all the ifs and the buts and the maybes and so on, you are making a clear statement there is no upper limit to the budget in these circumstances, given that I have the Review document in front of me here? I just worry about what it says in section 2, where under the words of "affordability" it says, "The arrangements should be cost effective, affordable and also fair to the taxpayer". I understand "fair to the taxpayer" but it has the smack about it of you trying to limit your liability.
  (Mr Miller) I said that we did not conduct the Compensation Review with the objective of producing a scheme which was cost neutral in its effect, and we have not. The point is made that we expect additional cost in the early stages. The schemes that it would replace we would expect to pay if the demand was there. If cases were advanced we would not expect to be constrained by our budget, and that would apply to the new scheme equally. If individuals are entitled, they will be paid.

  203. Chairman, I will leave it there but I want to make it clear that we will look at what you have said when we see it in print with great care because this Committee has to be clear that you as a employer are not trying to limit your future liabilities in some way or another.
  (Mr Ingram) I think we have given a clear statement on that—

  204. I do not think you have.
  (Mr Ingram) That becomes a debatable point. If further information is required in clarification terms, then clearly we will assist the Committee on that.

  Chairman: It would be helpful if you clarified this. I am not having a general debate now.

Mr Jones

  205. I accept what the Minister says, which is that the cost depends on how many claims you get, but the actual claims you get depend on the rules of the scheme or what system you put in place, so you can affect the cost by limiting on what grounds you claim. For example, travelling from home to work. Would that be covered under the scheme? If it is not then that is out and, therefore, there is no cost. If you put it in, there is a cost, so you have to look very carefully at the rules around this scheme, because there is going to be cost involved.
  (Mr Ingram) There must be a cost involved in this. This is something which, as Barry said, is demand-led—

  206. But it is also dependent on what the rules of the actual scheme are.
  (Mr Ingram) Yes. The rules of the scheme define what then can be claimable from it, but that will be assessed on the basis of what is sensible and the way in which we are now approaching the new structure of the scheme. Does it sit within that? Is it something which can then be evaluated and, therefore, is there a liability for us within that?

  207. But if you want to limit your costs then the way you do it is by changing the rules.
  (Mr Ingram) That is one way of looking at it but it is not the way we are looking at it. I am giving that clear statement. There is no capping because of the demand-led aspect to it, and that is not the approach we are taking to this particular scheme. It is not being driven by that consideration.

Mr Hancock

  208. The difference surely is that, under the old scheme, the war pensions scheme was administered by the Department of Social Security and it then transferred the responsibility over to the Ministry of Defence. Was the understanding that the Treasury would fund that at the same level within the Ministry of Defence budget, or is it contained within the capping limit that is on your budget as a whole? This is the specific question which covers all of the points that are being made. Under the old scheme, there could be as many claims as you like with an infinite budget and it just went on being paid. If the claims were agreed, it had to be paid, and it was absorbed nationally out of that budget. In your case, is it that all new claims have to be absorbed within the MoD budget, or is there a specific ring-fenced allowance within the Treasury to cover it?
  (Mr Miller) The expenditure on war pensions was what was known as annually managed expenditure—in other words, it is demand-related and not capped and it remains so even under the Ministry of Defence. Although the—how can I put it—structural position may change, we do not expect the amounts that we pay to be capped by any budgetary limit under the new scheme.

  209. But would it mean if you had an excessive number of claims to settle, or an increasing number, that would have an adverse effect on the MoD budget as a whole so there is a motive within your system to make it more difficult for people to claim?
  (Mr Miller) No, we would not expect that.

Mr Jones

  210. I think the unique nature of the Armed Forces has already been mentioned, and one unique part of the existing scheme is the fact that personnel are allowed to claim against the MoD in their own time limits after they have left the Service, whichever Service they are in. What is being proposed is that you are going to put a three-year time limit for injuries and, also a one-year time limit once disease is diagnosed that could be linked possibly to service in the Armed Forces. We took evidence from the Royal British Legion who are clearly not very happy about the introduction of those time limits. Is this not an example of where you try to limit the liabilities of the MoD?
  (Mr Ingram) Not at all. There is an accepted list as well. If medical science changed or medical knowledge changes then we are obliged to revisit our previous consideration. There are unknowns in all of this. We hope to put in place a coherent, structured system which is hopefully better and more easily understood so that there is then an obligation on people to bring forward their claims and an easier means of evaluation and rights of appeal, and so on, for fair purposes. We believe that is the right approach, it is a cleaner and more efficient system, not driven by a financial consideration.

  211. It is a cheaper system for you, is it not?
  (Mr Ingram) There is no certainty in that.

  212. Surely there is, because you have a situation whereby there is going to be a cut off date after three years, whereby people are not able to bring claims. I would imagine that from my knowledge of industrial injuries—where a lot of people failed to put their claims in because they missed the time limits—that is clearly going to happen here and this is a way of limiting the number of claims you are going to get?
  (Mr Ingram) That perhaps could happen in certain circumstances.

  213. I say it will happen
  (Mr Ingram) I do not know whether we have historical data on this in terms of the period of claim, I do not know whether that is immediately available, if not we can seek to make it available. We are approaching this on the basis of trying to get a clean, coherent structure and not driven by the philosophy which you are alluding to—

  214. I am not alluding to it, I am saying it.
  (Mr Ingram)—to try and ensure that it is structured in such a way to encourage people to claim within a reasonable time scale. Undoubtedly it is different from what exists at present. We are changing the culture of that approach because we believe it is a better way of doing it, rather than going through the civil burden of proof and rather than having it open-ended in terms of the claim structure at the present time. We believe it is more sensible in terms of best use of all resources and in the way in which we can then, I think, assist our serving personnel to claim their entitlement. That is our philosophy. That is our approach. It is not driven by cost neutrality or saving money out of the system.

  215. Would you also agree that one of the key issues in industrial injuries cases is the fact that people do not know their rights in terms of the time limits, clearly under this system there are going to be a lot of people who are going to miss the deadline and are not going to have access to any justice at all, are they?
  (Mr Ingram) Okay. Mr Chairman, what I can say is, and it is repeating the point, we are still in the receive mode, we have not closed down on this. This is something which we have tried to set out and tried to define. We will certainly take into account the representations which have been made by the British Legion and any representations also made by your Committee. Again, if it stacks up, if it is an issue which has a justifiable point then we will revisit it in a positive way.

  216. I welcome that. Can we have an assurance that costs will not be a reason for not changing this?
  (Mr Ingram) The answer is yes to that.

Mr Hancock

  217. Can I, first of all, apologise for not being here at the start, I was chairing a Bill Committee and I sadly missed the beginning. I would not deliberately have wanted to miss Mr Howarth's contradiction of some of the things you said. I am interested in the whole concept of the statement that the MoD made when they published your original document, that the current War Pension Scheme was both unusual and generous. I would like you, if you would, to elaborate on what allows you to suggest that it is both unusual and generous, because many of the recipients do not believe that?
  (Mr Ingram) Are you talking about the compensation scheme here or the pension scheme?

  218. Both. Both the way in which the War Pension Scheme operates and also the on-going situation regarding the pension scheme?
  (Mr Ingram) This is on the burden of proof point and the shift in the direction on this. Clearly people will think that the current system is, in one sense, preferable because it is open-ended. What we are saying is to try and bring some structure to it and to put measures of evaluation into this and to try and enhance the payments for attributable injuries and having a lump sum payment being made for pain and suffering and then a guaranteed income stream alongside. That, it seems to me, to be a more desirable approach on this. If the view of the Committee is that we should have no change in this I think we would be losing a lot of enhancements in terms of the restructuring that we are trying to put in place here.

  219. How can you explain the situation that one of the changes will be that you will shift the burden of proof on to the claimant? How on earth can you justify that when you yourselves in the Ministry of Defence in answer to Parliamentary questions and in letters have said that your records are not all they ought to be - that is what you said—particularly in relation to Gulf War vets who are trying to make a claim? You said there were not meticulous records kept and they have now gone astray or they were never kept. If you were really cynical and you were a veteran who had an illness which he is trying to prove if you want to make these changes you simply rule out that whole raft of people from making legitimate claims?
  (Mr Ingram) If it is an old claim it is set against the old scheme. The new scheme relates from the point of implementation.


 
previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2002
Prepared 9 April 2002