Draft Northern Ireland Criminal Injuries Compensation Scheme 2002

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Mr. Browne: That is the estimate of the amount that is likely to go to the legal profession if the status quo is maintained. As a non-practising member of the legal profession, I am not suggesting that those lawyers do not work hard for the money that they receive in helping to process the existing scheme. However, in deciding how to reform the scheme—I have made no bones about this—one consideration was whether the £5 million that is currently spent on legal costs, albeit a very small amount of that is legal costs incurred by the board, would be better used if it were redirected to compensate victims of crime. That is why the scheme has been constructed in such a way.

The hon. Lady invited me to reflect specifically on that figure, and the best response that I can give her is that that is the estimate provided to me by my officials of how much it is anticipated will be spent on legal costs in year 4. Let me give her some other figures—I do so objectively. Applicants' legal costs under the current scheme have increased by 17 per cent., from an average of £574 per award in 1996–97 to £660 per award in 2000–01. In 2000–01, there were 7,175 awards, and applicants' legal costs were £4.7 million, while the agency's were £700,000. In contrast to the 17 per cent. increase in applicants' legal costs over that period, the agency's legal costs fell by 4 per cent., from an average of £100 per award to £96 per award. I offer those figures objectively, and it is for others to draw their own conclusions. The conclusion that I drew was that that £4.7 million would be better directed towards compensating victims. That was a factor, although not the principal factor, in our deciding to pursue the policy that I inherited from my predecessor, who is now the Minister of State for Defence.

I turn now to the role played by loss of earnings and other expenses in determining the quantum for loss and suffering. What needs to be understood is that, as well as a standard amount of compensation for the victim's pain, suffering and loss of amenity, compensation is available for loss of earnings and other special expenses in more serious cases, in which the victim is incapacitated for more than 28 weeks.

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Let me illustrate what that means. An article by the Association of Personal Injury Lawyers in the Belfast Telegraph a few weeks ago alleged that a pilot who lost an eye as a result of a violent crime would receive the same compensation as a retired person who suffered the same injury. The best that I can say about the article is that it misunderstands the scheme. The tariff award for pain and suffering for both unfortunate parties would be the same, and rightly so. The pilot would, however, be awarded additional compensation for any loss of earnings over 28 weeks and for any future loss of earnings as a result of losing his or her career. In other words, the principle of individual assessment for all heads of damage, apart from pain, suffering and loss of amenity, applies under the proposed tariff scheme, just as it does under the current common-law-based arrangements.

I picked that example because the association wrote me a letter only last week. Despite having written in response to the article in the Belfast Telegraph to highlight the misunderstanding, I received a letter that made the same suggestion, albeit in only a couple of sentences.

Lembit Öpik (Montgomeryshire): On a genuine point of clarification, is the Minister saying that a flexible tariff is effectively in operation?

Mr. Browne: I am concerned about the use of the phrase ''flexible tariff''. I would welcome the opportunity to agree with the hon. Gentleman, because I understand his motivation, but I might be misunderstood outside the Committee. The tariff relates to pain and suffering, but what I might describe as consequential losses are also taken into account, as they are in common-law claims. I have dealt with such claims in the civil courts, albeit not in Northern Ireland. When large compensation awards are made, it is often not clear that a significant part of the award reflects consequential losses, such as the continuing loss of earnings or the award of special damages, particularly for long-term care. Unfortunately, the public do not know how the large figures associated with injuries break down, so they associate million-pound claims with the injury, not its consequences.

If the association's contribution to the debate is based on a misunderstanding, that is perhaps forgivable. If it is based on anything else, however, that really concerns me. All else aside, it generates in ordinary people who read the Belfast Telegraph—which is not designed to be read by Members of Parliament or by this Committee—an anxiety about the Government's future approach to compensation, which does not properly reflect the Government's position. I accept that the Government disagree with the Law Society and with the Association of Personal Injury Lawyers about whether the proposal will improve the situation or will be to the detriment of victims, and I have debated it openly and honestly with those organisations. Representations of misunderstandings of the scheme do not help the debate, which is why I am keen to set the record straight.

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Concern has also been expressed that the proposed new scheme does not compensate for loss of earnings for the first 28 weeks after injury. That concern is accurate in so far as a separate head of damage is not available. However, all tariff awards include an amount towards pecuniary loss for that period, as they do in Great Britain. In Northern Ireland, the figures have been inflated by 1.85 per cent. to reflect the percentage of the total compensation expenditure under the current scheme for pecuniary loss. Those who were present when we debated the matter in Committee previously will know that I went into great detail as to how that was done. The period of 28 weeks follows precisely the arrangements in Great Britain, and coincides with the period that attracts statutory sick pay for which many employers, particularly in the public sector, continue to pay full salary to their employees.

The proposed new scheme has also been criticised for the way in which it takes account of other payments made in respect of the same injury, yet there is only minor change to the current arrangements. Compensation from a state-funded scheme must, in fairness to the taxpayer, take account of payments to the victim from all other sources as a result of the same circumstances. It would be wrong to ignore social security benefits, successful civil damages, occupational pensions or employer-funded insurance arrangements when calculating compensation. Similarly—this is the change to the current arrangements—I believe that it is wrong to use taxpayers' money to provide an award of special expenses for health requirements when a private health insurance policy has already paid out to meet a specific health need. The new scheme removes that anomaly, aligning the Great Britain and Northern Ireland schemes. Conservatives now oppose the change for Northern Ireland—perhaps they have forgotten that they introduced it for the rest of the UK.

I shall move on to describe in detail, as I promised to do in the debate on the order, the provisions of the new scheme that broaden the eligibility base and so bring more victims of violent crime within the ambit of the arrangements, starting with the aftermath of serious incidents of criminal violence. When a death has occurred and a dependency has been established, the assessment of compensation follows what has already been described for financial loss, except that the loss is calculated from the date of the person's death—the 28-week period does not apply in that situation. That is no different from current arrangements. However, the order determines that the new scheme must include a bereavement support payment in recognition of grief and of the loss of that person's care, guidance and society.

Under the current scheme, a bereavement award is payable only to a marriage partner or to the parent of an unmarried child under the age of 18. That award has often been criticised as desultory and insulting, as it is frequently interpreted as representing the value of the life of a loved one. The new bereavement support payment was recommended by the independent review team in an attempt to clarify the basis of the award, and to increase the number of people eligible to apply.

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It will be available to spouses; cohabiting partners—opposite or same sex—of two years' duration; parents of children of any age; and children of the deceased. The value of the award has also increased from a total of £7,500 for each case to £12,000 for each qualifying applicant. We have heard some criticism of the qualifying period of two years for cohabiting partners, but I am content that the condition is necessary to protect against inappropriate claims, and that it does not breach human rights or equality commitments.

Another recommendation of the review team, which will extend eligibility, and which is being implemented in full in the proposed scheme, is a change to how liability is established in cases in which the victim suffers no physical injury but is damaged psychologically. In the course of the review, Sir Kenneth and his team heard much concern from victims, particularly victims of the troubles, that they had been denied compensation for mental trauma because they were secondary victims, not physically present at the incident in which their loved ones were killed or injured. I am sure that hon. Members who do not have a specific connection with Northern Ireland will be aware that that has been a significant issue in the Hillsborough tragedy.

To rectify that situation, Sir Kenneth recommended that compensation should be made available to secondary victims on the basis of their relationship with the primary victim, and after proper diagnosis of the psychological damage that stemmed from the incident. The new scheme therefore admits applications from those who had a close relationship of love and affection at the time that that person sustained physical or mental injury, and who suffered a disabling mental illness as a result.

The new scheme also follows the review team's recommendation that eligibility should be extended to those who become involved in a non-professional capacity in helping in the aftermath of an incident, and to those who in the normal course of their professional rescue work find themselves in exceptional danger or fear that someone with whom they have a close relationship of love and affection has been killed or seriously injured. That recommended change flows from the aftermath of incidents such as the Omagh bombing.

Further relaxation of eligibility conditions will permit cases to be reopened in circumstances in which the medical prognosis was clearly wrong and the applicant's condition as a consequence of the injury has materially changed from that on which the compensation award was based. Time limits for making claims will be made flexible to allow for applications to be accepted after the normal two-year limit, which applies only once the applicant has reached 18, and when it is considered that the circumstances of the case demand an extension in the interests of justice.

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Prepared 22 April 2002