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Lord Hunt of Kings Heath: As the Committee will be aware, the Chancellor of the Exchequer made clear in his Budget Statement in 1997 that we would move to collect the full costs of treatment following road traffic accidents. We have devised a system under which that will be done by using average treatment profiles to inform a tariff.

It may be worth while to the Committee if I explain how that is arrived at. The daily rate charge covers more than the cost of an in-patient bed. Patients who spend any amount of time in hospital are generally seen for follow-up or check-up in out-patient departments. The daily rate therefore also includes an amount towards the out-patient treatment which an admitted patient would be expected to receive. No subsequent charges would need to be made for the out-patient treatment received by those patients who had been admitted previously.

Setting a tariff is an essential part of having a simple scheme. It allows everyone to know where they stand and means that charges can be calculated with a bare minimum of knowledge. Devising the tariff itself has not been a simple task and we have not pretended that it has been. I refer the Committee to the two-page explanation of how the tariff was set in the published regulatory appraisal.

Department of Health economists looked at the information on road traffic accidents which is available. This pool includes information from the NHS on numbers of patients and their treatment; Department of Transport data, including numbers of accidents and their severity (drawn from police records); and detailed work carried out by the Transport Research Laboratory on the type and costs of treatment given to road traffic accident victims. We also have data from Department of Social Security on the numbers of claims for compensation made each year following motor vehicle accidents and the rate of success of those claims. The latter data come, of course, from the work of the Compensation Recovery Unit.

From that pool the economists produced an average cost to the NHS of both severely and slightly injured people. Multiplied by the total numbers of those people who can be expected to make a successful claim for personal injury we arrive at the total amount which the NHS can expect to receive through charges. This total amount was then used to produce the tariff.

This amendment would specify that average costs for in-patient treatment alone could be used as the daily rate tariff. It does not recognise the complexities of the situation and would limit freedom to introduce any changes which prove necessary.

The tariff is a new venture, as is the whole system we are introducing. We are pledged to look at how the new arrangements, including the tariff, are working after

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around six months of operation. I suggest that that is the stage at which any fine tuning should take place: once we can see how things are working and can change them if necessary thanks to the flexibility of the Bill before us--the flexibility which this amendment would restrict.

I understand the point made by the noble Lord, Lord Clement-Jones, about the variations in costs of NHS treatment. I spent many years trying to puzzle out a defence of that in my previous incarnation. It is a matter which the Department of Health takes very seriously and we are addressing it through various initiatives such as the publication of reference costs. That will be challenging to NHS trusts which find that their costs are out of line with what may be considered to be reasonable.

However, action to deal with that issue is best taken by the NHS through appropriate NHS management processes, in close discussion with clinicians. This Bill is about the better collection of existing charges. On that basis, as well as on the basis of the tariff which I described earlier, I ask the noble Lord to withdraw the amendment.

Lord Clement-Jones: I thank the Minister for that very helpful reply, not only in terms of explaining the complexity of the calculation but also in explaining the steps being taken on the question of costs, which are important.

I have some concerns about the very complexity of the calculation itself. I do not believe that I could replay back to the Minister off the top of my head precisely how that calculation comes into being. It is clearly a complex process. I need some time to read Hansard in order to reflect on the issue.

We all want a situation in which it is clearly understood how those charges are made up, in whatever form. Of course, the scheme will need some bedding down in the due course of time. However, there may be a case for some further pointers in the Bill as to how those calculations are arrived at. That should not be too complex but should indicate, for example, that out-patient charges are taken into account and so on which is not clear on the face of the Bill. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 17 and 18 not moved.]

Earl Howe moved Amendment No. 19:

Page 4, line 3, at end insert--
("( ) Regulations under this section, other than the first such regulations, may not be made--
(a) until after consultation with such bodies representing the insurance industry as the Secretary of State shall determine; and
(b) unless one calendar month's notice of the content of such regulations has been given to those bodies.").

The noble Earl said: In moving Amendment No. 19 I shall speak also to Amendment No. 29. The intention behind Amendment No. 19 is to ensure that, when charges are uprated, the insurance industry has at least a minimum period of notice of the Government's intentions and can also voice its views before the new

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tariff is fixed in stone. Naturally, I hope that the Minister will tell me in his reply that the amendment is unnecessary, as I should like to think that the Government intend to proceed in the way I propose as a matter of course.

Adequate notice has been given of the initial level of charges though, in passing, perhaps the Minister can tell me whether the draft regulations have yet been published. On the whole, I believe that the industry has been kept informed up to now but I trust that the Department of Health will repeat this consultative process on subsequent occasions in the future.

Amendment No. 29 is designed simply to ask the Minister whether and to what extent the insurance industry has been consulted over the appeals process and if it is content with what is proposed. I beg to move.

Lord Hunt of Kings Heath: I hope that I can reassure the noble Earl on that matter. We would all accept that it is not unusual to consult the relevant bodies on regulations which affect them. Indeed, we consulted with the insurance industry throughout on the details of this scheme. We recently began to consult it on the draft regulations in which it has an interest. We cannot conceive of circumstances in which we would not consult the industry about changes that affected it. I hope that reassures the noble Earl and that he now feels able to withdraw his amendment.

Earl Howe: I am grateful to the Minister. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Earl Howe moved Amendment No. 20:

Page 4, line 6, at end insert--
("( ) No amount specified in a certificate shall anticipate either in whole or in part NHS treatment at a health service hospital which post-dates that certificate.").

The noble Earl said: I shall be grateful if the Minister will shed a little more light on the way in which the system of certification will work. As it stands, Clause 3 appears to be drawn sufficiently widely as to cover the recovery of charges that have yet to be incurred by the NHS--that is to say, the cost of future treatment. First, is that reading correct? Secondly, in practice will the system work in a way which allows the hospital or the CRU to anticipate treatment that has not yet been given?

The Minister may tell me that the point is theoretical only. But if the practice of anticipating charges were to occur, it is difficult to see how costs could be quantified accurately. More than that, it would not be compatible with the practice adopted when benefits are clawed back. As I understand it, when benefits are recovered from accident victims the recovery is limited to past benefits and may not include benefits that have yet to be received. I beg to move.

Lord Hunt of Kings Heath: Again I hope to reassure the noble Earl, Lord Howe. The amendment aims to exclude the possibility of charges being anticipated on certificates. As I understand it, the benefit recovery

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scheme includes provision for the Department of Social Security to anticipate future benefits on certificates issued before a compensation payment is made. However, the NHS scheme will not allow any anticipation of charges. Clause 1 of the Bill makes it clear that charges are only in respect of treatment which has already been received.

Earl Howe: I am grateful to the noble Lord and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 3 agreed to.

Clause 4 [Payment of NHS charges]:

[Amendment No. 21 not moved.]

Clause 4 agreed to.

Clause 5 [Recovery of NHS charges]:

[Amendment No. 22 not moved.]

5.15 p.m.

Earl Howe moved Amendment No. 23:

Page 4, line 36, leave out ("immediately") and insert ("within three months").

The noble Earl said: In moving Amendment No. 23, I shall speak also to Amendment No. 24. One of the striking features of the Bill is that there do not appear to be any sanctions on insurers who, for whatever reason, pay their bills late. Nor does there seem to be any sort of offence created by late payment.

The amendments are designed to put that right by allowing the Secretary of State to charge a penalty in severe cases of non-payment--I emphasise the word "severe". The precise scale of the penalty might vary with the degree of delay and could be established in regulations. The point of the provision is not so much to bring additional money into the NHS as to deter insurers from dragging their heels unnecessarily once a certificate has been issued. I beg to move.

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