House of Commons Trade and Industry Committee

Coal Health Compensation Schemes

Fourteenth Report of Session 2004–05

Oral and Written Evidence

Ordered by The House of Commons to be printed 22 March 2005

HC 375-II Published on 4 May 2005 by authority of the House of Commons London: The Stationery Office Limited £14.50

The Trade and Industry Committee

The Trade and Industry Committee is appointed by the House of Commons to examine the expenditure, administration, and policy of the Department of Trade and Industry.

Current membership Mr Martin O’Neill MP (Labour, Ochil) (Chairman) Mr Roger Berry MP (Labour, Kingswood) Richard Burden MP (Labour, Birmingham Northfield) Mr Michael Clapham MP (Labour, Barnsley West and Penistone) Mr Jonathan Djanogly MP (Conservative, Huntingdon) Mr Nigel Evans MP (Conservative, Ribble Valley) Mr Lindsay Hoyle MP (Labour, Chorley) Miss Julie Kirkbride MP (Conservative, Bromsgrove) Judy Mallaber MP (Labour, Amber Valley) Linda Perham MP (Labour, Ilford North) Sir Robert Smith MP (Liberal Democrat, West Aberdeenshire and Kincardine)

Powers The committee is one of the departmental select committees, the powers of which are set out in House of Commons Standing Orders, principally in SO No 152. These are available on the Internet via www.parliament.uk.

Publications The Reports and evidence of the Committee are published by The Stationery Office by Order of the House. All publications of the Committee (including press notices) are on the Internet at www.parliament.uk/t&icom.

Committee staff The current staff of the Committee is Elizabeth Flood (Clerk), David Lees (Second Clerk), Philip Larkin (Committee Specialist), Grahame Allen (Inquiry Manager), Clare Genis (Committee Assistant) and Joanne Larcombe (Secretary).

Contacts All correspondence should be addressed to the Clerks of the Trade and Industry Committee, House of Commons, 7 Millbank, London SW1P 3JA. The telephone number for general enquiries is 020 7219 5777; the Committee’s email address is [email protected].

Footnotes In the footnotes of this Report, references to oral evidence are indicated by ‘Q’ followed by the question number. References to written evidence are indicated in the form ‘Appendix’ followed by the Appendix number.

Witnesses

Wednesday 23 February 2005 Page

Mr Andrew Tucker, Mr Roger Maddocks, Mr Peter Evans, Mr Gareth Morgan and Mr Lawrence Lumsden, Claimants’ Solicitors’ Groups Ev 1

Tuesday 1 March 2005

Ms Sue Gibson, Dr Colin Wigley and Mr Simon Chipperfield, Atos Origin Medical Services Ev 16

Mr Martin Trainer, Mr Jeff Wilson, Ms Kate Roy and Mr John Tizard, Capita-IRISC Ev 19

Mr Nigel Griffiths MP, Mr Nick French, Ms Ann Taylor CBE and Ms Christine Chamberlain, Department of Trade and Industry Ev 24

List of written evidence

1 Coalfield Communities Campaign Ev 33 2 Department of Trade and Industry Ev 36 3 DTI (supplementary) Ev 64 4 Scottish Ministerial Monitoring Committee Ev 69 5 Claimants’ Solicitors’ Group Ev 70 6 Claimants’ Solicitors’ Group (supplementary) Ev 83 7 Claimants’ Solicitors’ Group (supplementary) Ev 88 8 English Ministerial Monitoring Group Ev 92 9 The Law Society Ev 101 10 Capita-IRISC Ev 101

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Trade and Industry Committee: Evidence Ev 1 Oral evidence

Taken before the Trade and Industry Committee

on Wednesday 23 February 2005

Members present:

Mr Martin O’Neill, in the Chair

Mr Michael Clapham Judy Mallaber Mr Nigel Evans Sir Robert Smith

Witnesses: Mr Andrew Tucker and Mr Roger Maddocks, (Irwin Mitchell), Mr Peter Evans and Mr Gareth Morgan (Hugh James), and Mr Lawrence Lumsden (Thompsons (Scotland)), Claimants’ Solicitors’ Groups, examined.

Q1 Chairman: Good morning, Mr Tucker. Can I Q3 Chairman: Maybe I can put this in a diVerent welcome you and your colleagues. I was just saying way because although I do not want to flog this to my colleagues that we do not intend to raise with horse I think it is useful. We know that claims are you any specific constituency cases this morning, probably not taking as long as they did originally you will be pleased to hear; we will leave that to and that assessments by the doctors have perhaps later. Perhaps you could introduce your colleagues been dealt with more speedily now, but is it your and we will get started. impression that lessons have been learned over time Mr Tucker: Peter Evans who is from Hugh James; by the DTI and that there have been improvements Roger Maddocks who is from Irwin Mitchell; as or are you still stuck in the grooves that you were am I; Gareth Morgan who is from Hugh James, four or five years ago? and Lawrence Lumsden from Thompsons. There Mr Tucker: I think generally speaking, yes, lessons are two firms of that name; this is the Scottish side have been learned and probably not only by the of the practice. DTI, to be fair. As you can see from our memorandum, there are still issues that concern us now and that we can see going into the Q2 Chairman: Thank you. Pretty early in your immediate future. memorandum you bring to our attention the stability of the membership of the Solicitors’ Groups involved in the coal health schemes Q4 Mr Clapham: Could I take you on to some compared with the high turnover of DTI ministers of the procedures for dealing with certain and personnel. Is it your feeling that the occupational groups with Vibration White Finger. Department’s development and implementation of In your memorandum you criticise Capita-IRISC the schemes has suVered as a consequence of this for the way in which they have implemented the turnover? Is the feeling that you have that every occupational procedure for Group 3 VWF claims. time there is a new minister, there is a new How does the procedural bar which you claim is approach, there is a new initiative, and every time being applied work in practice? How do the actual procedures of Group 3 prevent progress? there is a new senior oYcial responsible that there Mr Maddocks: The Group 3 procedure has been is a change in emphasis? Would that be a caricature dogged by lack of progression of claims within it, of what you are saying or is it something nearly really since the handling arrangement was set up. true? It is important to bear in mind that the original Mr Tucker: I do not think it has been by any means handling arrangement provided for Group 3 claims the most significant issue. Certainly when there and provided the information that would be have been changes of minister, on each occasion necessary to be produced, and that was followed there has been a period of time which it has taken for a period of a couple of years or so after to brief the person concerned and for them to get the handling arrangement was established when up to speed. It is also true to say that there have claims were being submitted and being denied on been diVerent styles as between them. The same has the grounds that they were Group 3. Those denials been true to a diVerent degree when there have been were then being tested and there was no changes of personnel at the DTI. I suppose the mechanism, it appeared, for resolving the claims, main thing that we now notice is that there is for dealing with them. We were told about nobody currently on the DTI team, which extends complaints about lack of uniformity of evidence beyond the oYcials to their legal advisers as well, submitted by claimants. It appeared that IRISC did who was about when either of these agreements not have the resource or the approach developed were actually negotiated, which occasionally causes to enable the claims to be assessed. To try and some dislocation in the exercise of going back to resolve some of these diYculties we negotiated the why we have got to where we are, but, as I say, it occupational group procedure which was intended is not the biggest point. to address a raft of issues related to occupational 3034421001 Page Type [E] 27-04-05 21:25:48 Pag Table: COENEW PPSysB Unit: PAG1

Ev 2 Trade and Industry Committee: Evidence

23 February 2005 Claimants’ Solicitors’ Groups groups but one of its major purposes was to quite troubling that that should be put down in a address the issue of Group 3 claims and provide a statement by somebody whose job it is to look into standardised form for their presentation. The these claims. underlying thinking was if the claims were presented in a form that fulfilled the requirements then subject to the absence of evidence to the Q5 Mr Clapham: On that, the insurers use adjudicators or people with mining expertise. From contrary, provided on its face the evidence stacked your experience, would it seem that the people that up and made mining sense, that the claim would be are used tend not to use “mining sense” but rather accepted and would go through. It was not to operate to the book? envisaged that this would mean that IRISC would Mr Morgan: I would not like to say that because refuse to consider the merits of other claims but of my lack of involvement. My concern was about merely this procedure would be a vehicle, if you the view of somebody whose job it was to look into like, for providing smooth passage for claims that these expressing the opinion that you cannot rely met those requirements. Then following on from on what the miners are saying. that there have been other procedural hurdles that Mr Lumsden: There are concerns, to answer your have evolved that claimants have had to overcome. question Mr Clapham, that adjusters operate to the IRISC will not consider claims that do not meet the book then the book that they are using should be requirements of the OGP unless they pass the accurate. There are concerns that the guidelines quality audit that they devise, and part of that they may have used in the past to assess the quality audit is checking that you have got Group 3 claims have not accurately described what the right number of statements in from miners have done in particular jobs, so that is a appropriate witnesses. In circumstances where continuing concern. those requirements are not met they will only Mr Maddocks: I think it is fair to say that there have consider a claim if a request is made for discretion been long-standing concerns about the approach of which requires the claimant to demonstrate that the adjusters as to the way that they approach the there are some exceptional circumstances and to set investigation and adjudication of the claims and also out in detail the steps that they have taken to trace and separately, concerns about the rate at which the witnesses, so there are other hurdles that have those claims are being carried out and the rate of to be overcome. It is fair to point out that requests progress there. I would be happy to develop either of for discretion are largely accepted but it is an those points if you wish. additional step that the claimants have to go through. It is fair to point out that the DTI have accepted that where claimants are elderly or in Q6 Mr Clapham: Before I go any further could I for posthumous claims then that satisfies the criteria the record declare an interest. I am a member of the for ‘exceptional’, but nonetheless there is a series of English Monitoring Group. Just coming back to the steps that has to be gone over and at various points way in which the adjudicators are used, is it your along the way people have dropped out of the view that the adjudicators are used in a way to process. It is of particular concern that in October minimise settlements? 2002 a cut-oV date was put in place whereby all Mr Tucker: We do not know what their terms and evidence that complied with the occupational conditions are, so to speak, or precisely how they are group was to be submitted if the claims were to go instructed by the Department. I think anyone forward and where that step was not taken the observing it could be forgiven for coming to that position was the claims would not be considered. conclusion over the period that Group 3 claims have That was before we had in place a witness database been assessed. We give some figures in our report which has only been developed within the last that show how decisions that have been taken in the 12 months which facilitates claimants to identify first instance, so to speak, have been subsequently witnesses and produce those in support of the changed and claims have been recategorised as they claim. The concern is that there are over 10,000 move through the process of assessment and then cases where an intention had been intimated to through the disputes process. I think the main contest the denial. They were never actually concern has been about the application of what is contested by the deadline and the concern is that called in the procedure “mining sense”, which is in a proportion of those cases that would be really expert opinion about the operation of coal because the claimants felt that they could not find mines at the particular time that the individual the witnesses; there was in place at that time no concerned was at work, and in that sense the witness database. adjusters are almost acting as judge and jury because Mr Morgan: Could I make an observation please they are giving an expert view which then determines on the Group 3 claims and the VWF. I do not deal whether they accept the case or not. It is fair to say that it is subject to the right of challenge and personally with the VWF claims but I was at a ultimately the right to go to court but that has been Welsh Monitoring Group when a statement was the main area of concern. submitted to it dealing with VWF. The statement was submitted by Mr Glyn Moss and he investigates disputed Group 3 claims for Capita Q7 Mr Clapham: Given that the court made its and the statement included this: “My opinion is decision regarding the issue of negligence, given that that many claimants’ and witnesses’ statements are you negotiated the various group procedures, do not to be replied upon.” I must say we found that you feel that the use of adjusters is in a way once 3034421001 Page Type [O] 27-04-05 21:25:48 Pag Table: COENEW PPSysB Unit: PAG1

Trade and Industry Committee: Evidence Ev 3

23 February 2005 Claimants’ Solicitors’ Groups again giving British Coal, so to speak, a second bite Mr Maddocks: In relation to the VWF Services of the cherry because the case has already been Agreement we are happy with the terms of the decided in court? agreement which was intended to facilitate speedy Mr Tucker: I think we accept that it is necessary to resolution of a lot of claims. There have been a lot of show that the claimant concerned was exposed to concerns about its implementation and there seemed tools that vibrate in the workplace, so we accept that to be diYculties in the early days at IRISC in that that is necessary for the majority of jobs that fall into there appeared to be a lack of understanding really this category. I think our main concern really is that as to the basis for the services claim, a lack of the Group 3 adjusters appear to have been left understanding about the impact of the symptoms of largely to their own devices to set their own VWF, the vascular on the one hand and the evidential standards, which has been most recently sensorineural on the other. So there have been lots evidenced by the issue of so-called guidelines that of issues that have arisen in relation to those sorts of they operate to that the English Monitoring Group, matters generally and then specifically in relation to as you know, found out about and called for cases in which there is a suggestion that the disclosure of and were eventually provided with only claimant’s employment in some way suggests that he to be subsequently told that they were of no material should be ineligible to recover for the costs of use to the adjusters. assistance with services tasked and a failure to understand that the Services Agreement is intended to compensate where assistance is required not only Q8 Mr Clapham: Given that you have raised the in situations where there may be a complete inability guidance notes and bearing in mind that as the to do the task and a failure to understand that for Claimants’ Group of Solicitors you liaise down employment to be a bar then you would really need the line with solicitors, represent solicitors in to demonstrate that the employment indicated that negotiations with the DTI, have you at all been the claimant was capable of doing all aspects of the involved in negotiating the notes of guidance that task for which he claimed assistance. So there have are used by the adjudicators in these cases? been a lot of those sorts of issues and training has Mr Maddocks: The notes of guidance are a DTI been a problem and continues to be a problem. Some document of instruction. We have seen drafts of time into the implementation of the Services them and been invited to comment on them and we Agreement and because of the diYculties, we were have taken that up; we have commented and some invited to go down and assist IRISC with some of our comments have been adopted. We were very training and, in fact, it was something that I concerned about the guidance notes because of our did personally. In the discussion involved in the concerns about the way that the adjusters were training it was quite clear there was a real lack of approaching the task of investigating. There were understanding about the basis of the Services issues not only as to their application of mining Agreement and how it was proposed it should sense, which has been questioned, but also the improve. It has improved but there continue to be relative weight that they were giving to diVerent diYculties. The early stages were also dogged with types and diVerent elements of evidence and this has lots of inquiries from IRISC, the relevance of which been a major concern here, where it has appeared in was not immediately apparent or if it appeared that a number of cases they have given disproportionate it might have been relevant, it was hard to see how it weight to documentary evidence which is not could really have been determinative of the issue. pertinent to the issue of vibration exposure but may Lots of inquiries at an early stage are for tenancy be relevant to the issue of what job the claimant agreements and documents to prove ownership of was doing on the one hand when on the other there vehicles and things like that. That sort of problem may be evidence from the claimant and his has persisted to date. We still have lots of queries questionnaires, who will include oYcials, that generated and when you look at a query it is hard to completely contradict that. There have been all understand why that question has been asked. One those sorts of issues about the approach to the of the most bizarre recent ones was an inquiry for weighing of the evidence, the investigation of the details of the claimant’s involvement in his hobby in claims, that those guidelines were attempting to keeping tropical fish. You just wonder what is going address. Although we have had input, they have on. In broad terms we are happy with the agreement. been shared with us, we have commented and some Our concerns are about implementation. Training is of the comments have been adopted, there has a big issue on the way that the claims are handled, remained a concern about the extent to which they and also I think it is clear that there is a lot of are followed in practice. When you look at the investigation being conducted by IRISC some of individual cases coming through there are clearly which we question the relevance of, which when you issues there. look at the text of the Services Agreement itself you think the agreement made it clear that it was set up in the way it was with a view to limiting the factual Q9 Mr Evans: Am I right in believing that you are investigation and yet at the same time we have got quite content with the services agreement between this huge amount of activity going on investigating yourselves and the DTI but you are unhappy at the claims, lots of claims stuck at the investigation stage, way it is being implemented in practice? I am just and one is left wondering why. We do not know the wondering if you could give us some practical terms of the arrangement between IRISC and DTI examples of where Capita-IRISC are doing things so we do not know whether the answer is to be which you are really unhappy about. found there. 3034421001 Page Type [E] 27-04-05 21:25:48 Pag Table: COENEW PPSysB Unit: PAG1

Ev 4 Trade and Industry Committee: Evidence

23 February 2005 Claimants’ Solicitors’ Groups

Q10 Mr Evans: Have you got communications with anomalies in evidence that is submitted there have the DTI in as much as the points you have raised just been significant savings by the Department and by now are quite appalling? I thought the Services the claim handlers in relation to the value of these Agreement was there to speed things up in order that claims and it may be said that the procedure is these cases can be dealt with expeditiously and get designed to flush out exaggeration, whether it is the money through to the people who are rightfully deliberately contrived at or unintentional. The claiming it. You have mentioned training. The fact problem is, as we see it, that many people who have that they do not even understand the basic tenets of been in this process for years simply become what they are doing seems to be hugely alarming. scunnered with the time it is taking to get to the end What recommendations would you now make at of it all and some of them undoubtedly will simply this stage that could be made in order to speed things accept what is on oVer on the table now rather than up and make it expeditious? wait another several months for it all to be resolved. Mr Maddocks: Two points. I stand by everything That is not to say that there are not claims where the that I have said. I think things have improved. I evidence may not hang together or that there is not think there is scope for significant further a case to be made for looking at the claims closely, it improvement. I think that there needs to be better is simply to make the point that if you do not do this training by the adjusters who are dealing with the on a proper basis then you may well find that you get claims at IRISC so they have got a better basic a lot of people simply getting disenchanted with the understanding of the fundamental issue, the time it is taking. premises upon which the agreement is intended to operate and then there needs to be a radical look at the way IRISC investigates cases to see whether or Q14 Mr Evans: There may be some people out there not that could be streamlined because the impression who may exaggerate simply to get more money but that one is left with is that there is a lot of activity, a in your estimation there are other cases where lot of queries raised where the relevance of a lot of through the ‘harassment’ of parts of their claims, the inquiries is at best marginal and there is which have got nothing to do with the claim significant scope for streamlining the process. basically in the way that IRISC is operating, claimants are being cheated out of money that is Q11 Mr Evans: They do not seem to be complying rightfully theirs because they have just given in? with the spirit of the agreement. Some of these Mr Lumsden: I do not say there are necessarily questions, particularly the tropical fish one which is people out there deliberately exaggerating. I think it a practical example you have given, seem to me to be is a complicated process. You may have a claim ludicrous. Are you able to get that back to the DTI where part of the evidence is quite good for five years to say they are not complying with the spirit of the of the period for which you are claiming but it is not agreement that you have come up with? so good for two years of the period for which you are Mr Maddocks: We have a regular dialogue with the claiming. It may be that you are made an oVer on the DTI. We meet them on a cycle of meetings every basis of the five years and not seven years. The month or six weeks to discuss service claims in claimant may simply get to the end of his tether and particular. We have raised these examples. Where think, “I may as well accept this because it has been the examples are raised they are taken back and a going on long enough,” rather than hold out for the specific example is usually addressed and if it is like extra two years. That is not to say he does not have the example I have given it is acknowledged that it is a good claim for the two years. It is just that the not relevant. The concern is that whilst the specific evidence may be a bit indiVerent. The witness does examples are identified, the wider message is not fed not remember all the facts that he requires to back. What may have been identified as a training remember in terms of these processes. need with a particular adjuster is not then addressed so that there is further training for adjusters more widely. Q15 Mr Evans: But is there a sense of harassment and delay which then leads to people being cheated Q12 Mr Evans: Is there a big changeover in staV out of money that should rightfully be theirs? there with new people coming in? Mr Lumsden: Inevitably that pressure is there on Mr Maddocks: There is. We are led to understand people to accept things because they think they have that there is a significant problem with staYng at reached the end of the road and they wonder how IRISC. In connection with some discussions we much longer is it all going to take. were having with them about the stalled claims Mr Evans: Chairman, there can be little or no doubt procedure, we were told they had had a that there is a group of claimants who simply 25% turnover of staV in the last year, and that become worn out by the process, particularly if they obviously will create its own diYculties. are asked for information that they find diYcult to see the relevance of, but if they are properly advised Q13 Mr Evans: That is enormously worrying, I have will recognise it is part of the process and give that got to say. information, but when they are asked for more Mr Lumsden: Can I add a point to what Roger has information again in six months’ time and again they just said which is it may be said by the Department are wondering about the relevance of it and that that by asking the claim handlers to go through these happens a third and a fourth time, they begin to get questionnaires and to pick out discrepancies and the perception that the dice is loaded against them. 3034421001 Page Type [O] 27-04-05 21:25:48 Pag Table: COENEW PPSysB Unit: PAG1

Trade and Industry Committee: Evidence Ev 5

23 February 2005 Claimants’ Solicitors’ Groups

In those circumstances an oVer is made, and a lot of where there was a leaked report in The Guardian them think, “I do not think it is right but I have had about attempts to use technology to pick up people enough of this,” and they bail out. making misleading comments on the telephone. Throughout the period there has been this idea that Q16 Mr Evans: Do you think this approach is there are vast numbers of people from the mining intentional or unintentional? communities out to make fraudulent claims. This Mr Evans: I have got no doubt that in the early part has coloured a lot of what the DTI’s thinking is of these proceedings there was a determination to about. It is simply not right. pay the proper amount of compensation as was due. Chairman: You must excuse us, Mr Morgan. We However, as the process has got very complicated have just been taking evidence from the Export and has taken a long time, it is much more diYcult Credits Guarantee Department concerning bribery to have confidence that the root desire is to pay these and corruption regulations in which the ‘tender men as opposed to making sure that it is right. If flowers’ of British business have felt that they were there is a doubt as to whether it is too much or too being trampled on by civil servants who were asking little, I suspect it usually goes one way. them far more polite questions with far less requirement of evidence and the loss of evidence coming into play than they ask elderly men who have Q17 Chairman: You have said that people get tired. been broken by a life of very hard work and are The other side of the coin is that of course they die. being treated rather more rigorously by some parts Mr Evans: Yes. of the DTI than by others. It is just an observation to make. We are not intending for a moment to be Q18 Chairman: We are talking about people who are rude here. It is just there were wry grins coming over by definition ill or they would not be able to our faces when you were giving important evidence. complain and because of the nature of the coal Many of us were just setting one bit of evidence industry we are talking about men who are getting against the other. old and a lot of them are into their 70s now. Certainly from my experience amongst the most distressing is when you get cases of dementia setting Q19 Mr Evans: Following what you said, Mr in over and above the other things and the family Morgan and following what you said, Mr Lumsden just say, “We want to draw a line under it.” You just which is that a lot of these cases can be somewhat wonder if people are rather cynically observing the complicated and we are talking about people who deterioration in condition and saying, “If we wait are ill or very aged, have you got any evidence that long enough, they will be dead”? the frighteners are being put on claimants that they Mr Evans: I think we have all had the experience of ought not be claiming for things that are theirs people saying, “They are just waiting for me to die.” because they are frightened perhaps that they will be They are wrong because it costs the Department accused of fraud and could end up in prison or with more if that happens. They are wrong but that a fine or indeed losing their entire claim? does not prevent the perception being there in Mr Morgan: I think the most distressing aspect of communities and, sadly, there are now families this was when widows and elderly men were asked where not just the miner but perhaps the miner’s for proof of employment. A lot of British Coal dependents have died. Even now we think about records were destroyed. They were destroyed when some of these claims being brought by miners’ this litigation was going on but they were destroyed. children, and I always think of them as being young So you had men who may have spent 50 years people. In fact, they are often people in their 60s now working underground or the widow of a husband and, sadly, there is no doubt that that is happening who had spent 50 years underground being asked for again. proof of employment. This caused a great deal of Mr Morgan: I would also like to add that distress because the implication to those people was throughout this process there has been a feeling by that they were not being believed. That system was some in the DTI that a lot of people are trying to changed and after a lot of argument it became make fraudulent claims and there has been a distrust agreed that that evidence would be accepted but of the mining community. Right at the beginning there was a time when people were being asked for this was evidenced by the DTI wanting to introduce proof of employment. Proof was being given in of a declaration on the claim form that included the things such as a long service award signed by the phrase “if errors are made deliberately it may lead to Chairman of British Coal. That caused a great deal arrest and imprisonment”. There were tremendous of resentment in the community because those eVorts to get that onto the claim form. How many people saw this as their word not being accepted. elderly miners or widows would have signed such a form? It was very diYcult to get them to back oV Q20 Mr Clapham: Could I go on to the issue of from that. Then when the medical assessment minimum payments because when the COPD came process was being discussed, the DTI were very, very in in 1999 the DTI at the time was reluctant to accept concerned that there should be physical tests for the idea of minimum payments and, as I understand these elderly miners to go through. We had to get it, the judge who presides over the case was also of medical evidence to the eVect that these tests would the view that minimum payments were not the way actually kill some of these men. It was only with that forward. Since then the CSG has suggested to the evidence that that was backed oV from. The final DTI a revised procedure for minimum payments in stage of it is probably Appendix 6 to our report which you would be making a contribution. Have 3034421001 Page Type [E] 27-04-05 21:25:48 Pag Table: COENEW PPSysB Unit: PAG1

Ev 6 Trade and Industry Committee: Evidence

23 February 2005 Claimants’ Solicitors’ Groups you got the support of your members and the wanted a direct payment model where the firm support of other parties to go ahead with a minimum concerned has a reduction in the actual fee for the payment and do you feel that a minimum payment actual claimant and the claimant receives the £500. would actually speed up the resolution of some of We had addressed that model about 18 months these cases, lessening the queue therefore and adding beforehand and the diYculty that it created was that to the more expeditious settling of the cases that some firms of solicitors were prepared to do it and are left? some were not. I suppose it has a more immediate Mr Tucker: The question requires a step back to give impact potentially on the firm depending on their you a bit of background first. We did raise the issue profile than the (if I can put it inelegantly) skimming- of the minimum payment when the scheme was oV-the-top method across the whole fund that we under negotiation for the reason, quite simply, that had in mind. We have listened to the DTI. We think it was clear from the way the scheme was designed in the RPI fund works better as a whole, albeit it causes terms of assessing the level of dust exposure and then more administrative work for them, which we applying that fraction, whatever it might be, to the accept, because we think it has the facility of individual for the level of damages, that it was covering the whole scheme, so we are now consulting entirely probable that you could come out with low with due respect to the DTI’s proposal and the awards. There have been oVers that are down in the Minister’s suggestion with the Solicitors’ Group pounds. No court awards damages at that level. again at the moment as to whether or not they are Judges start at a baseline if they are going to award prepared to consider reverting to the previous anything which obviously varies over time and may model. It has not concluded yet but a group of firms be £500 or £1,000 or something of that order. If the have indicated that they would not want to opt into scheme was going to reflect common law, which is it. So unfortunately at the moment it appears that the broad aim of it, that should be in place. The other whilst some firms might be prepared to elect for the feature of it, of course, is that it gives the scheme funding model, the DTI preferred model, not all of some basic integrity because it is not producing them would and that is less than ideal as far as we are outcomes which for some are just seen as insulting. concerned, and depending on how many say that to Those were the two primary reasons to give a us will aVect what we say to the DTI about where we minimum payment in the first place and I think the would prefer it to be moving forward. VWF scheme actually has a minimum payment in it. If you qualify at all you get £500. It is not specified as such but that is the eVect of the agreement. It Q21 Mr Clapham: So would it be fair to say that the could not be done as part of the scheme although model that you are consulting on now, which is the there were precedents at the outset for putting one in one that you previously discussed with the DTI, is place, and we have raised the subject subsequently unlikely to get the support of all the solicitors and without landing a report. When the negotiations therefore if it does not have the support of all the recommenced in 2003 there were then about solicitors it is very unlikely that it will be a runner? 3,500 oVers that were below £500 that had not been Mr Tucker: We have been told in the last few days accepted. We talked to the DTI about what were that the UDM panel of firms, of which there are four eVectively matched funding proposals. Solicitors or five, do not support the scheme funded directly on would forego some of the increase in tariV costs, the a case-by-case basis and we will have to see what the DTI would contribute some money, and that would other firms say. Certainly it looks as though we will fund a minimum payment, but that was not not have a unanimous approach by all the acceptable to them as a proper use of public money. Claimants’ Solicitors’ Group members. We went away and reconsidered it and because we see that there are benefits to the scheme as a whole we were prepared to say that the solicitors ought to Q22 Mr Clapham: So when would you expect that attempt to fund the scheme themselves. Eventually consultation exercise to be completed? we formulated a proposal whereby a sum of money Mr Tucker: It is going to conclude in the middle of would be withheld from the solicitors’ fees in all March. successful cases irrespective of the value of the oVer Mr Morgan: We have been told by UDM (obviously not just the low value cases) and that solicitors—and they have had separate meetings would apply across the whole scheme and would with the DTI which we were not told about—that at bind all of the firms of solicitors concerned. I think their meetings to discuss minimum payments they half of an annual RPI uplift at that time would have have told the DTI that they do not agree with it in cleared oV the 3,500 cases and would also have left a principle. bit of money over. Because there is no good way of Mr Evans: Can we be clear that the model is we are predicting what the future trend would be in volume consulting on is not what we regard as the ideal of low value oVers, we did not feel able to say we model. The ideal model is the one that Andrew could do this for the lifetime of the scheme. We did outlined first which is creating a sum of money to say that is what we wanted to achieve, but we wanted pay this and had that been accepted we think that to retain the right to review. After what in our view would have been something which could have has been 12 months of prevarication by oYcials, the applied across the board. Unfortunately, the model Minister confirmed at the end of last year that they now which we are having to consult on is not our would accept a minimum payment scheme in model and may result in some opting in and some principle but instead of the RPI fund model they opting out which is less than ideal. 3034421001 Page Type [O] 27-04-05 21:25:48 Pag Table: COENEW PPSysB Unit: PAG1

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Mr Tucker: It may lead us to come back and say Q26 Chairman: But nevertheless any recalcitrant if this is going to run it has to be the RPI model. group has in eVect the power of veto? One point I should have added, and it is in our Mr Morgan: Not if there were an agreement that report, is the number of cases concerned has now half the RPI (or whatever percentage of the uplift increased. From the CSG membership it is about or whatever mechanism) never formed part of the 7,500 claimants and the original 50% of an annual solicitors’ costs and instead of that money going increase to create a fund would not be suYcient so into solicitors’ costs, which would allow solicitors it would have to be a bigger sum of money, but we to control it, it did not go there, it went somewhere do not see that as an insuperable hurdle. else which solicitors individually had no control on. Mr Morgan: I think it is fair to say that the After consultation—and we consulted on this and negotiations with the DTI on minimum payments everybody was prepared to go along with that have been very diYcult. Even though the solicitors scheme—the problem comes with the DTI model are funding it, the view we have had is for some (which maybe they do not realise, I do not know) reason the DTI were against us. It was not until the because it is based on individual solicitors dealing judge in open court said it was a good idea that with their individual claims and taking less costs there seemed to be a change of attitude. per claim. That model is much easier for solicitors to say, “I am not doing that, I am not agreeing to Q23 Mr Clapham: Any idea why that change of that, I want my full fees,” and we know the UDM attitude might have been? solicitors are saying that. Mr Morgan: The judge saying solicitors funding a Mr Evans: Our proposal would have spread the payment scheme was something he had never heard cost among every participating solicitor. of before and was something to be applauded. Mr Lumsden: It may be worth adding as well that Q27 Sir Robert Smith: Could one of the the idea is that the RPI fund mechanism would be participating solicitors have said, “I don’t want to reviewed. It is not just something that we want to go down that road”? do this year and never do again, if that is the Mr Tucker: We consulted on it and they did not. Department’s concern, and we have said that to Sir Robert Smith: They were willing because it was them. It is something that we would look at when collective? the time comes around next year on a periodic basis Chairman: We will take that up with the DTI. to see what sort of fund of money would be Robert? required to keep it going. Q28 Sir Robert Smith: So in a sense that route would Q24 Chairman: Can we get a handle on how many have got rid of a lot of the backlog and got things up claimants we are talking about here and how long to speed a bit. One of the things being raised is the it will have to operate? way the DTI concentrated on claims that got stalled Mr Morgan: I think there are some 7,000 now. on your side in the handling. How has that been Mr Lumsden: 7,500. resolved? Mr Morgan: When we first suggested the scheme Mr Maddocks: The stalled claim proposals have it was less than half of that. If a scheme had been arisen under both schemes and my involvement introduced at that time that backlog could have has been greatest on the VWF scheme which I been cleared with half the RPI and it would only think came first. There is a problem. Obviously be an ongoing figure then which would have been thousands of cases are being dealt with and much easier to handle. The longer we take arguing inevitably cases get overlooked and get stuck and and discussing this the more diYcult it becomes to become stalled. We support the idea that there needs deal with the increased numbers that are going to to be a procedure for identifying and addressing the be involved. problem of stalled claims. There is no diYculty there. Our diYculties with the DTI’s approach in Q25 Chairman: I am not quite clear. Does this have stalled claims in VWF essentially were two-fold. to operate on the basis of consent or could it Firstly, there has been a reluctance to address the conceivably be imposed by the DTI? problem of claims that are stuck in the system at Mr Morgan: No, it cannot be imposed by the IRISC. The whole issue of stalled claims was first DTI because the solicitors have to fund it. The raised about a year ago. We said at the time it was suggestion that we made whereby a fund was put something that we were happy to discuss with them aside for this was much easier to persuade every constructively but we wanted some reciprocity and solicitor to buy into and they were not then having we wanted to address the problem of stalled claims to deal with individual cases. The DTI model is that at IRISC too. They did not seem interested in each solicitor takes less in costs per case that he has discussing that but only focusing on problems on the for less than £500. Our concern about this is that solicitors’ side. Although they have been keen to it makes it much easier for solicitors to say, “I do push on in addressing the problems that they not want any part of this,” and that is what we perceive with solicitors, they have not addressed the now have with the UDM group of solicitors. problem of claims stalled at IRISC at all and in fact They represent a large number of claims. If other only yesterday we obtained from the court an order solicitors then take the same view as the UDM it which requires them now to respond to proposals becomes very diYcult. It would be much easier to that we have put (which are a slight refinement of implement it on the model that we suggested. some proposals we put back in November) and they 3034421001 Page Type [E] 27-04-05 21:25:48 Pag Table: COENEW PPSysB Unit: PAG1

Ev 8 Trade and Industry Committee: Evidence

23 February 2005 Claimants’ Solicitors’ Groups have got to respond by 31 March, so we hope that Q29 Sir Robert Smith: In your evidence you say that finally the DTI will be pushed to address the a high proportion of cases are put into the stalled question of claims stalled at IRISC. The other process in error. Do you have a rough breakdown? problem was that they sought to implement the Mr Maddocks: It is diYcult. There were suggestions procedure without proper consultation and this from firms that 50% of the cases that IRISC had proved to be hugely disruptive. Initially the idea was identified had stalled had been put in in error. Cases floated, as I have said, about a year ago and then in were regarded as put into the stalled scheme in error March of last year we were given a supplementary on a number of accounts. In some cases it was paper which meant that we then had in outline a because the information that was allegedly complete picture of what they were proposing. We outstanding (and the fact it was outstanding was the responded and indicated the diYculties that we reason it was in stalled claims) had in fact been thought needed addressing. We were presented with supplied on more than one occasion and IRISC had a revised package in July which they floated past the overlooked it. In other cases it was because IRISC court and the judge said that she thought it was a had been told that the case could not progress good idea without having been addressed or seen the because information was awaited from a third party, detail, and they then proceeded to implement it. they were waiting for a DSS schedule to confirm There were a number of deficiencies that we employment or waiting to learn whether or not the man would undergo surgery for Carpel Tunnel identified and the DTI have now accepted needed Syndrome, this sort of thing. So there would be a raft remedying but did not before they proceeded to of diVerent reasons but various firms suggested that implement. Frankly, it caused a lot of diYculty over 50% of cases subject to the stalled claims procedure the period between October and December 2004. they thought had been subjected to the procedure They wrote in something like 4,000 claims saying inappropriately. “this claim is now subject to the stalled claims procedure”. You have to understand from the time the solicitor got that letter it meant they were on a Q30 Sir Robert Smith: One of the other things timetable whereby the claim would be closed in three obviously is the working of the fast track scheme in months if they did not respond. With that kind of terms of trying to get things moving again and you draconian consequence of course other things go by have got concerns about that. What are your main the board. Other claims handling activities are concerns? disrupted while they drop everything and try and Mr Evans: We support the idea of a fast track. It is pick up the ball that is being thrown to them. They obviously necessary. In the early part of this scheme were responding to IRISC only to find that IRISC there was what was referred to as an “expedited did not have the resources to deal with the responses. payment” scheme and that worked well. It had to be With the agreement of the DTI, IRISC were improved by the Minister because it was recognised V proposing to simply put to one side all the responses that the sums on o er were not of a kind of sum that that they received until the beginning of this year were attracting people to leave the scheme, which when they would reply which meant of course that was what was required, and the expedited payments solicitors did not know if the claim was still subject were increased. It worked reasonably well. It was a to the stalled claims procedure and facing possible scheme which was very much a joint endeavour. My strike out or closure or whether now everything was feeling is—and I think my colleagues share this feeling—that the present fast track oVer scheme is back to where it was, so the way it was implemented not the collective venture that the expedited was. caused huge diYculties. We have now got to a There was a proposal, which we found abhorrent, to position where the scheme has been modified and we make this a compulsory scheme. That was brought have got something that is workable. I hope some to the attention of representatives of communities lessons have been learned. The judge was moved in and there was a meeting in the House of Commons December to say that IRISC needed to be much and there was no doubt, everyone’s feeling there more careful about the way they put claims into the was that this was wrong and it was withdrawn. procedure but we still have the problem remaining Interestingly in the language that is used this is still Y that there is nothing to address the di culties at described as the fast track “optional” scheme which IRISC. Some of the things that emerged from that is rather odd because there is nothing to contrast it abortive implementation were the big diYculties at to, there is no compulsory scheme, but that is a IRISC, their inability to respond within a reasonable historic hangover from the time when there may time because they did not have the resources to do it. have been the desire to impose this. Frankly, for In discussions with solicitors, various solicitors were deceased cases the sums are £1,000 for a family and told at times IRISC had got 28,000 pieces of £1,200 where there is a widow. In our view, that is outstanding post that needed addressing. You not likely to be particularly tempting and to achieve expect some work in progress but on the face of it what we hope to achieve. This is supposed to start that is quite startling. We have real concerns that being implemented on 28 February and there are still there has been a reluctance to address problems at outstanding issues. IRISC and that is symptomatic of a wider concern Mr Morgan: I think the outstanding issues are as a about whether the Department is in a position to result of the real diYculties we find in trying to monitor what is going on at IRISC and hold them negotiate matters with the Department. In the past a properly to account. We think that theme runs lot was done by negotiation and agreement but over across both schemes. time there seems to have been a hardening of 3034421001 Page Type [O] 27-04-05 21:25:48 Pag Table: COENEW PPSysB Unit: PAG1

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23 February 2005 Claimants’ Solicitors’ Groups attitudes and it is now very diYcult to have any which you could pinpoint which would take us a lot meaningful negotiations on many topics. With this longer than the time we have got today to go through fast track system meant to be introduced on the but it is an example of how trust gets lost. The 28 February there are still disputes as to how much Department itself came along with this compulsory should be paid in certain categories. We still have position on fast track oVers without telling us that it uncertainty as to into which categories people may had changed its mind about what to do with fast fall. It is our view that this is a result of lack of tracks because up until 22 September when we meaningful negotiations between the parties where informally discussed things with the judge the the court is now seen as the DTI’s first option rather Department’s position was that it would be an than where it should be; their last option. option, not compulsory. Something changed Mr Lumsden: It may be worth making the point between 22 September and some time in October but (because it relates to the last item that you were we were not informed that it had changed. It was a asking questions about) that in both the fast track very important thing to come forward to the oVer context and in the context of stalled claims, coalfields and say to them that there would be a both parties really were at one at the start of it all and compulsory fast track oVer and not an option. It was it is interesting to watch how what has happened is a very, very important change and not to inform us that each has resulted in adversarial positions being about that or tell us what was driving that led us to taken up. On the stalled claims issue, our main have some dark suspicions about what the position on that is that you have to have an even- Department were doing. handed procedure otherwise all it looks as if you are trying to do is put pressure on claimants and get the Q32 Sir Robert Smith: So trust has broken down? claimants out of the system on the one hand but on Mr Lumsden: Yes. the other hand you do not apply any pressure on your own contractor to make sure the contractor finishes the claim that is sitting in his oYce. That just Q33 Judy Mallaber: Just to pick up on one of those does not seem right and we have tried to approach outstanding issues, do you have any hope at all of it from a basic fairness point of view and say to the persuading the DTI to change their position on Department we have the same interest in this surface worker claims? because we do not want claims to be stalled in Mr Morgan: We really have tried on this. The initial solicitors’ oYces or in IRISC’s oYce. We want all judgment was 1998. None of the lead judgments the claims to be progressed to an end. It is interesting covered surface work exposure so the judgment did that we have ended up adversarially on a point that not cover it at all. There was intensive negotiation in fact we should really be at one on. It is the same and investigation into the surface work position with fast track oVers. We started oV with each side which led in July 2000 to a Minute being put before wanting to have fast track oVers, each side wanting Parliament and this Minute was quite clear. It was to see the scheme speeded up, to see it improved in an acknowledgement that there were high levels of its delivery and focus on those claims where we think dust on the surface and that the Government was we can make fast track oVers work, but in fact the going to accept liability for it but within days of that dialogue broke down very early on. That episode in Minute going before Parliament there was a change October that has been referred to by one of my and the DTI took a diVerent stance and the new colleagues which required intervention from the stance was that they would only pay compensation House of Commons to get something done about it for dust exposure on the surface if a man had five was really the end of proper dialogue with the years’ underground experience or five years’ dust Department. It is sad to say that several months on exposure underground. The logic for this was they we have not been able to resume a proper discussion did not accept there were high levels of dust on the about how we should implement fast track oVers. surface suYcient to damage a man’s lung unless that man had a damaged lung when he commenced work on the surface and they accepted five years’ Q31 Sir Robert Smith: What do you think has underground work could have damaged the lung broken down that dialogue? suYciently to make the dust levels on the surface Mr Lumsden: I think part of it is trust. The element impact on it. Legally the position is completely of trust is not there that ought to be there to have a without logic because the majority of surface proper discussion with people about how you are workers would have been smokers so they would going to resolve a problem. One of the issues that have taken into the coal preparation plants damaged caused diYculties at the time was that there was an lungs. You may feel that there is a diVerence between indication that the Department had gone to its own a man whose lungs are damaged by underground medical contractor Atos and obtained some work and by smoking but as far as the consequence information that we did not get to see when we ought of his dust exposure on the surface is concerned from to have got to see it. The result was that we were not a legal point of view it makes absolutely no in a proper position to make representations in diVerence whatsoever. The basic legal position is relation to that information. It was advice from Atos that you take your claimant as you find him and if about how you might speed up the medical part of his lungs are damaged, it does not matter how, and the process. The big capacity problem is getting the if you cause more damage you should compensate medicals done, so the Department had gone and him. Despite that they took a completely diVerent sought some information in relation to that but we view and the reason they took this view was that they did not know that, and there are issues like that found some dust records which indicated very low 3034421001 Page Type [E] 27-04-05 21:25:48 Pag Table: COENEW PPSysB Unit: PAG1

Ev 10 Trade and Industry Committee: Evidence

23 February 2005 Claimants’ Solicitors’ Groups levels of dust in preparation plants. They then employed in a British coalmine but if you were obtained a medical report that said that level of dust employed on the surface you cannot. That just does will not cause any harm. You do not necessarily not seem to us to be fair. disagree with a doctor who says that if a man is not exposed to dust he will not have any dust-damaged Q34 Judy Mallaber: Basically it is deadlock unless lungs. What we have found is many, many records there is a ministerial decision to waive costs? Is that which show quite high levels of dust on the the current position? preparation plants but what we cannot get is a run Mr Tucker: I do not think we would be complaining of records in one preparation plant which would at all about the DTI’s position if we were at show dust levels over a period of time, the reason the beginning of the litigation process and not eight being that the respiratory dust regulations which years down the track with it. Having already made NCB and British Coal take dust samples established legal liability for exposure to the same underground on a regular basis did not apply to the dust underground and having 500,000 claimants coal preparation plants. The dust samples there were underground and having paid out however much taken on a more ad hoc basis. The problem is if there has been paid in damages as of today, it just seems was a group litigation there would be a number of to us that having been through all of that and also men in that group who we could not prove had been having agreed that the men who have worked on the exposed to high levels of dust because the records do surface in coal preparation plants and worked five not exist. It does not mean that that man was not years underground get compensated for their exposed to dust. It does not mean that that man has surface exposure (which has therefore removed the not got lung damage due to dust. It means we could majority of the coal preparation workers because the not prove it. What would happen then is there would majority did work underground) a sympathetic be an adverse cost order and that individual man attitude would have allowed the remaining few would have to pay the costs. Bearing in mind the thousand surface-only coal preparation men into small numbers involved, the cost of this sort of the scheme. litigation and the risk of adverse cost orders, it really Mr Morgan: Could I add one other point on surface is not a piece of litigation that should be brought on workers and that is the impact of the fast track an economic basis. We did ask the DTI if they were system. A surface worker who has worked prepared to consider waiving their rights to costs in underground for one or two days will now be the event of these cases being lost (which would have entitled to a payment under the fast track system so been a very significant factor) but the reply we had that should reduce even more the numbers who are from the DTI was no they would not and they would going to be excluded. It is only going to exclude not because they had taken legal advice and there those men who have not spent a day underground. was no legal reason why they should do this. That is If you have spent one day underground you get paid; of course right. You have a lawyer to win your case if you have got no days underground you do not. and any lawyer if he could prevent the opponent getting the claim to court would advise that. That is Q35 Chairman: Have you any estimates of what the the way to do it. It is not a legal question; it is a new figure will be? political and moral question and we feel it has not Mr Morgan: We do not know how many will been answered in that way and we feel that as long be picked up. All we know is that there are about as the DTI says that any man who loses their claim 3,500 to 5,000 who have got less than five years’ will have to pay adverse costs the claims cannot go exposure. on because we know there is a paucity of records and the chances of picking up the claimant who has the Q36 Chairman: Three and a half to five years medical conditions and perchance dust records were underground? taken when he was there are not great. What we can Mr Morgan: 3,500 to 5,000 men who have less than show, and we can show anybody, is many, many five years’ exposure underground but now anybody dust records of high dust levels in these preparation will be picked up as long as they have some. plants. We have submitted these to the DTI. We spent weeks looking through records to get these Q37 Mr Clapham: Could I just ask a question about together and we put volumes of them together and the medical assessors because the medical assessors V sent them o to the DTI and said, “These do not cover both schemes. Are you satisfied with the prove any individual case; what they prove is that the medical assessment process and the way in which dust records that you used as the basis of your resources are being used in order to speed up the assessment are not indicative generally of dust levels claims? in these preparation plants.” The reply we got back Mr Evans: The medical process is now provided by was, “It does not prove anything for an individual. a company called Atos Origin and we feel that they If you want to get compensation for those men take provide logistically and by the use of IT a much more it to court and if you lose the case we want the costs.” eYcient method of delivery than the previous Mr Evans: We estimate that between 3,000 and 5,000 contractor. Our concern is—and it perhaps reflects people are aVected by this in a scheme which now some of the other matters that we have touched on has over half a million people registered and it is before—that it is surprising that they are not more worth contrasting with what is known as the ‘rest of acutely aware than they appear to be that they are the world’ protocol. You could be in Venezuela and providing a joint expert. Frankly, they regard make a claim under this scheme if you had been themselves as the DTI’s contractors and dance to the 3034421001 Page Type [O] 27-04-05 21:25:48 Pag Table: COENEW PPSysB Unit: PAG1

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23 February 2005 Claimants’ Solicitors’ Groups tune of the paymaster, whereas we feel that they instructed by the Department to check out men who should rigorously maintain an independent role. presented for spirometry tests to see if they were However, that is an attitude matter; the actual people who had actually been in mining. You may delivery is considerably better. think that is a fairly obvious point that one would want to verify. However, it is not presently part of Q38 Mr Clapham: So you are satisfied with the Atos’s remit to that. It is not in the process that we delivery. On this issue of independence has that at all have agreed with the Department, so somebody been brought up with the DTI and what has their somewhere has asked Atos to make a check up response been? on a miner’s credentials. If he does not pass that Mr Morgan: We do raise this. It is not an easy matter credentials check, he is turned away and sent back to put your finger on because what you are really home again. We did not know about this. It certainly saying is there is an attitude. Just as a simple was news to me when that report came back to me. example, they would have numerous and frequent If it is true then it is another example of how Atos meetings with the Department. I cannot for my own will respond to that type of direct request to modify part imagine the Department saying that we could their procedures and seem to forget that they are have meetings with them, for example. Given where supposed to be jointly instructed in the process, not they are in the process, given our role, it seems to me instructed by one side or the other. that it would be perfectly logical that they meet with Mr Morgan: I think there are also problems with the us as often as they meet with the Department. fast track system and the medical assessment process. When the expedited system was introduced it was agreed that medical reports would simply be Q39 Chairman: You have sought meetings and been held back until the man had made his choice. Now refused or you have never asked? the DTI are insisting that medical reports are not Mr Tucker: We do meet them to review the quarterly prepared and that may have serious logistical audit so we have that meeting facility with them. I problems and may interfere long term with the think a contemporary example is that when the fast production of medical reports by those who want to track scheme was before the court we wrote to Atos go through the process, and it may delay matters and asked them some questions that were relevant to rather than speed them up. the structure of the system going forward and were told that they could not answer without the permission of the DTI and the request should go Q41 Chairman: You have cast doubt on the ability through their legal team rather than from us directly. of Capita-IRISC and the DTI to achieve the As Peter said, it is true that they are contracted to the aspirational end date for the settlement of the DTI but they are providing independent medical services claims. Do you think the DTI’s aspirational assessments so anything that goes to the clinical bit end dates are feasible or is this just pie in the sky? of the process is a joint exercise, so that is where our Mr Maddocks: Is that generally or in relation to concern lies. particular cases?

Q40 Mr Clapham: Just coming back to the answer Q42 Chairman: Just in general terms. that Mr Lumsden gave earlier with regard to the Mr Maddocks: Speaking with regard to VWF we are medical assessors, he suggested that a paper had very concerned as to whether or not the aspirational been produced for the hearing in court on the review end dates are going to be achieved in relation to the of the scheme but you never got sight of that until investigation of Group 3 cases. The aspirational end you reached the court steps? date for concluding investigations is September this Mr Tucker: Yes, I think it was produced for the year but, on the latest figures, to achieve that IRISC Department either by Atos or their subcontractor. I investigators would have to conclude investigations do not know whether the Department asked for it or at a rate which is significantly in excess of the target whether it was produced by the contractor who to date, and they have so far consistently failed to knew about the process. I do not think it matters achieve targets. So we are very doubtful that the much which it was, but it was not made available to aspirational end date of 30 September will be us on a timely basis and only after we discovered it achieved even though we know that despite poor and asked for it was it produced. performance and a poor record in relation to targets Mr Morgan: And it was a very important document to date they are confident it can be done. We just at the time because the Department were trying to wonder how. In relation to VWF services claims we introduce a compulsory fast track system, the main are concerned there as to whether or not the problem being in getting medical reports out. This aspirational end dates are achievable. We wrote to document suggested that Atos could speed up the the DTI at the end of December with an analysis of production of these medical reports and that there some figures. They had acknowledged in their court would therefore not be a necessity for the fast track report, to be fair, that they thought there was six system now being envisaged but that document was months’ slippage in the timetable and we wrote to not provided to us. them and said having looked at the figures ourselves Mr Lumsden: There is a feeling, Mr Clapham, that we were concerned slippage was potentially Atos will respond directly to the Department much significantly more than six months for the reasons more readily than they will respond directly to the that we set out, and we invited comment which we claimants’ side. Recently in Edinburgh he had an are still awaiting. On a broader level in VWF, there example of being advised that Atos had been are significant concerns that in relation to certain 3034421001 Page Type [E] 27-04-05 21:25:48 Pag Table: COENEW PPSysB Unit: PAG1

Ev 12 Trade and Industry Committee: Evidence

23 February 2005 Claimants’ Solicitors’ Groups cases the statistics that are available do not really obviously a vexed issue. It may be one that attracts enable anyone to get a clear picture on progress. We more attention in the eyes of some people than it have had some discussions only recently with the merits. We would not for a moment suggest that the DTI in relation to the statistics that are produced for DTI should not be exercised by fraudulent claims services claims and made some suggestions there. because fraud draws the whole scheme into We have raised with them the issue of statistics disrepute and it is harmful to the reputation of which they have just now started to consider in decent people who are trying to make reasonable relation to VWF wage loss claims, the wage loss cut- claims. Do you think there could be improvements? oV having kicked in on 31 January. There is a Given that this is an unfortunate necessity, do you concern that the statistics that are available do not think there are improvements that could be made to enable certainly ourselves or the Department to the system of investigation that is going on at the really measure performance and the way that some moment? of the statistics are provided makes it very diYcult to Mr Evans: It is diYcult because as with the article see what the performance of the Department’s that was referred to earlier we are not taken into the contractor is. The services statistics that they have Department’s confidence about this and they referred to in their formal presentation are very hard eVectively say that if it were made known how they to see. You can see the performance of some of the were investigating it, it would only lead to an other interested parties in the process but it almost increase in fraud, so the fact of the matter is we are looks as if they have been designed—and I am not kept at arms’ length from that. We do not for a suggesting this is deliberate—one could almost think moment say that it is anything other than perfectly they had been designed so that you could not get a proper to investigate potentially fraudulent claims handle on the position at IRISC. when you are spending this amount of public money. On the other hand, it is worth putting it in context. Q43 Chairman: That has happened before. You well know the size of this scheme. In January Obfuscation is not unusual. 2005 of the respiratory claims 132 claims had been Mr Maddocks: Therefore it is very diYcult for us to denied and 86% reduced. That just gives you a see (unless the Department have statistics that we do feeling of how much at the margin this is. Even not see) how they are in a position to monitor though all human endeavour, sadly, is going to be performance and therefore get a clear picture of the tinged with this, there is nothing to suggest that this likelihood of achieving certain of the aspirational is in any way more susceptible to fraud than any end dates. other scheme and what evidence there is suggests that it is less likely to be susceptible to it. Q44 Chairman: If you open the hearts of many Mr Maddocks: I have real concerns about the way oYcials when they die I doubt if you will find the that fraud is investigated. We all start from the same word ‘transparency’ on them, but that is another point that it is perfectly proper for the Department matter! to investigate cases where there are grounds for Mr Lumsden: Does this question not also go to some suspecting fraud and that is entirely accepted, but extent to planning because you might ask the there have been real concerns about the way in which question in the context of having to grapple with the investigations have been conducted and the length of large numbers of claims that came in, was it time that they are taking. It has been something that necessary to have end dates at all in that way? It was we have raised with the Department on a number of desirable surely to have people who had claims to occasions. There has been a refusal to make clear make make them as soon as possible, but was it what the procedures to which the investigators necessary to bring a drawbridge down that closed operate are, and that has been touched on already. the whole scheme down? If you look at what One part of the approach that they were adopting happened in industrial deafness claims in 1980s and was that at a certain point they would seek to 1990s (and many miners obviously made interview the claimant, which would be a very compensation claims in respect of that ailment) there unusual step in civil litigation, one that a solicitor never was a cut-oV date imposed after two or three advising a client would hesitate to encourage a years or four or five years. claimant to agree to. The position was compounded because the Department’s investigators were not Q45 Chairman: With respect, Mr Lumsden, that is telling the claimant or the claimant’s solicitor in maybe a rhetorical question. I do not think it is for advance what the nature of the concerns were, so the us to answer but it is for us to ask and we certainly request was for an interview but without revealing will take it up. I think they might well take the any guidance as to what areas they wished to discuss. view that the volume, the amount of publicity, the That created problems in a number of cases where attention that was given to it, the close-knit because of the reluctance to be a bit more character of mining communities would mean transparent no progress was made towards that most people would know about the availability interview. A lot of the cases which have been referred or opportunity to claim and that perhaps for to the security investigation department of Capita administrative reasons a line was drawn underneath seem to take a long while to make any progress and it. I think we will leave the Minister et al to discuss delay is a big concern. A delay of months with no that. There is one small point that I just wanted to explanation as to what is happening and why the raise before we come on to the final questions and it case has been stuck. The example was given at the was in relation to fraudulent claims. This is VWF hearing in December of a case that had 3034421001 Page Type [O] 27-04-05 21:25:48 Pag Table: COENEW PPSysB Unit: PAG1

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23 February 2005 Claimants’ Solicitors’ Groups disappeared. It was under investigation for months Mr Maddocks: Can I very briefly make a couple of and months, approaching a year, and during that quick points on the fraud point. If you look at the time neither the claimant nor the claimant’s solicitor figures when you get them as to the amount of could get any understanding as to what the problem money that is contended being saved, then one has was. We asked the Department recently if we could to have care to see that the money saved is actually have some figures so we could see the size of the as a result of the revelation of fraud. Figures that we problem. We wanted to know the number of cases have seen suggest that some cases are being that have been referred and of those how many had investigated, a number have been denied or had been under investigation for three months or more monies reduced, and we do not know whether they than six months, and we were told that they were not were denied because the claim was fraudulent or prepared to share that information with us. We are denied because of the some other reason or that the aware that delay is a problem but we do not have a claim was reduced because of fraud or reduced clear picture and we do not know whether they do as simply as part of the claims handling process. The to the extent. figures need to be looked at critically on this point.

Q46 Chairman: That is something we will take up Q49 Chairman: I would also imagine—and you are with them. Certainly the number of claimants who lawyers and you would know about this—that if are being investigated, the number who have been, something is fraudulent you do not get any money? the strike rate, if I can put it that way, the amount Mr Tucker: Yes, Chairman. of money that has been raised and perhaps even, as taxpayers, the amount of money that has been Q50 Judy Mallaber: Can I move on to the claims expended in trying to see this--- If there is anyone in handling companies and the controversy about them the room who is listening to this they will have due taking money out of settlements even though warning that we will be seeking that information solicitors are getting paid by the DTI for doing the from the Minister when he comes along. work. Can I take it that you do not represent any of Mr Morgan: Can I make a final point on this the claims handling companies? Can you tell us how question. We object to the assumption on the the solicitors that you represent deal with those amount of fraud that is going on. There was this claims handling companies and how they have dealt feeling there was going to be a large number of with this question about fees being taken out to fraudulent claims from the mining community. How pay them? do you make a fraudulent claim for respiratory Mr Tucker: The answer is that we do not know. This disease? Are you going to put in a claim if you have is very much an iceberg scenario. never worked underground? You may be lucky and find out that the records have been destroyed from Q51 Judy Mallaber: Presumably your companies are that colliery but any miner because of the nature of getting quite a lot of cases passed on to you from his work will have medical records referring to him those companies? as a miner. If a person is not a miner, it is evident Mr Tucker: Undoubtedly thereare solicitors’ firms in from his medical records. There was a fear of thesolicitors’groupwhoreceivereferralsfromclaims multiple claims but all claims are routed down to the management companies. Claims management deceased miner and so they are picked up. There are companies come in all shapes and forms and multiple claims not to defraud but because brothers regrettably some of them take charges from the and sisters have fallen out and they have both put claimant; others do not, they just charge the solicitor claims in. a referral fee. So there is a wide variety of practice but Mr Lumsden: That is quite common. we do not know any of the specific arrangements Mr Morgan: The one piece of dishonesty that we between individual firms and the various claims have found is amongst the family where one brother management companies that exist. has fallen out with a sister but that does not aVect the amount of compensation and does not aVect Q52 Judy Mallaber: The biggest oVender in my area their ETI. is UDM where money is taken out of settlements. What is your view on the UDM having that separate Q47 Chairman: You can only take the horse to the handling scheme and do you have any ideas about water once? how that came about, or again is this something that Mr Morgan: Yes. you have observed? Mr Morgan: We were very, very surprised to see that because we represent the other mining unions. For Q48 Chairman: My understanding, having some reason the UDM was oVered this deal, which represented a mining constituency for 25 years, is financially is of quite considerable benefit to them, that there is a fair amount of knowledge about but that arrangement was not made available to the everybody else’s business and when somebody steps NUM or NACODS. Why that is we do not know out of line in this kind of way there is tremendous but it is financially very advantageous to the UDM community resentment against it. It worries one that because they are allowed to be paid for handling there seems to be a lack of appreciation of the nature claims. They have a separate handling agreement of the communities from which these people come. that shadows ours and there are separate If I can go on and ask Judy to ask you some negotiations with the UDM. Why they are the questions. This is our last set of questions. favoured union we do not know. 3034421001 Page Type [E] 27-04-05 21:25:48 Pag Table: COENEW PPSysB Unit: PAG1

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23 February 2005 Claimants’ Solicitors’ Groups

Q53 Judy Mallaber: So you do not know anything Mr Tucker: Yes, it has the same potential for causing about the history as to how that would have come us grief as it does you in that sense but there is a about? prioritisation system. Also the fast track process will Mr Morgan: It is something the other unions have assist in taking out some of those cases that do not asked us on many occasions and they would like to require a full medical assessment. So we hope and we know, but we do not know. certainly intend to work towards the living claims and the widows’ claims still getting them pushed Q54 Judy Mallaber: The other area that concerns me through first. locally about what I call the ‘ambulance chasers’ Mr Evans: We should make it clear that we would rather than the claims handling companies is their prefer these claims handling companies simply not swoop now on trying to get families to make claims to exist. If they have to exist they ought to be where it might not have occurred to them to make properly regulated. Our universal view is that they claims. The hard work was done in our area by add nothing to this system; they are parasitical on it. organisations linked to the unions getting current and former miners’ claims in, but now there have been mass mailings, as you know, encouraging children, brothers, sisters, et cetera. I know there is Q57 Judy Mallaber: There was one other issue about still meant to be a clear priority for current miners resources. The English Monitoring Group suggested and widows but do you think that that mass attempt that the fee structure for solicitors does not provide to get a broader range of people claiming for families any incentive to check or query calculations for has in any sense distorted the work of the solicitors compensation other than your own professional and the work of IRISC and so on and this has made conduct and there were also queries raised about the it harder to make sure priority does go to the most ability to check claims properly. We had one important cases? suggestion of one firm with 80,000 claims and only Mr Lumsden: If I can attempt to answer that one, I three qualified solicitors. Is that an area that think the short answer is yes it has to some extent but concerns you? it is a by-product, is it not, of the cut-oV date and the Mr Evans: I hope that we can all rely on our advertising that the Chairman was referring to a bit colleagues’ professional conduct. People are paid to earlier, that people were encouraged by all sorts of check these oVers and it is our clear view that they means to try and get their claims in before that date ought to be doing so. Any solicitor who does not was missed. What you saw happening in the scheme opens themselves up ultimately to a negligence if you were involved in it from the start, as some of claim. us were, for better or worse, was that in the early Chairman: We will leave it to your union to pursue years many ill people came forward, made claims, that matter. and there was only a very slow realisation that families could make claims and that families might be able to make claims in respect of deaths that occurred decades ago. All that started to penetrate Q58 Mr Clapham: Just one very quick question, relatively late into the consciousness of the mining Chairman. I hear what Mr Evans said about the communities and the advertising campaigns started claims handling companies and the fact that it is to be directed specifically at those groups of people. diYcult to get a grip on them. Is it your view You have got an eVect there of the cut-oV date and collectively that if, for example, the Law Society of targeted mass advertising combining to produced were to instruct that where solicitors use a claims a large influx of claims in a short space of time before handling company that they should be responsible 31 March and most of those claims, if you look at the for paying the fees of the company rather than profile of them, are exactly the kind of claims that allowing the solicitor to pass them on to the client you are describing. that it would control the claims handling companies? Q55 Judy Mallaber: Do you think that has distorted Mr Evans: It is tempting and I think it is the present the process or has it been possible for us to still make strategy to try and use solicitors to control the claims sure that the priority is going to those priority cases? companies. In my view that is mistaken and it would Mr Tucker: We still have a prioritisation system be far better if they did not exist or if they were that targets the living and the widows’ cases independently regulated. Without that then you are predominantly but the overall profile has been forced into trying to get the solicitors to control distorted so that there are now more estate claims them and that is well without our control, that is a than anything else. matter that the Law Society would have to rule on. We have brought to the Law Society’s attention Q56 Judy Mallaber: But the fact I will write on various matters and the Law Society issued guidance behalf of an aggrieved constituent who has come to in January 2004 about this very matter. me because the estate claim has not been settled, Mr Tucker: This is not about regulation but you can even when I might not be totally sympathetic to the regulate in that way by requiring a regulated body, personal circumstances there, does that not then a solicitor, to control the activities of a third party. create problems for you as solicitors in that you are However, it seems to me it is regulation with one arm still having to respond to it if it is a claim that has up your back and the better thing to do is to regulate been lodged via one of your firms? the organisations you are concerned about directly. 3034421001 Page Type [O] 27-04-05 21:25:48 Pag Table: COENEW PPSysB Unit: PAG1

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23 February 2005 Claimants’ Solicitors’ Groups

Q59 Chairman: Is it the same in Scotland? Q60 Chairman: We did ask the Law Society for Mr Lumsden: It is the same, Chairman, and I would evidence. They did not produce any but that does just add to the points that have been made to my not prevent us from asking them some pointed right: what about insurance? What insurance do written questions and I think we may well take it up. these companies carry? Solicitors all have to carry Could I just ask one last question. It might seem kind insurance for our mistakes. What about the of daft but when do you expect this to finish? protection for the claimant when people go to claims Mr Lumsden: 2009 is the projected end date for companies? What is the service that they get when COP. they go to claims handling companies? What Chairman: I will not use the expression I was going standard is being set for any service that they to use but I think we will believe that when we see it. purportedly oVer? What about the practices that we The reason I was asking that is if there is to be any have seen in the mining context perhaps more than regulation of this kind of activity one would imagine in any other recently; cold calling? What about that it might well fall within the Financial Services hidden charges? I think all of this is an area Agency or something like that. We will explore the that needs to be looked at. We have said for quite issue of who would be an appropriate body to some time, looking at it from where we sit, that it regulate the unregulated, as it were, if that is an issue, is something that the Government should be and we will certainly take it up with the Law Society. regulating. Can I just say we are grateful for the evidence you Mr Morgan: As a result of claims farmers’ work in have given us. Once we have pored over it there may VWF there is now a lot of secondary litigation to be additional information we require, although from enable people to get the right amount of the evidence you have given us at least some of the compensation, but that is no way of doing it. A additional information we require will come from claimant does not want to have one claim, then find the DTI, I suspect, and they keep an eye on these out he has been undersold and litigate again. That is proceedings and doubtless they will have an idea as a very poor way of resolving it. It is important that to areas we will want to explore with them in due there is regulation and these things are done course. Thank you very much for your contribution properly the first time. this morning. 3034421002 Page Type [E] 27-04-05 21:25:48 Pag Table: COENEW PPSysB Unit: PAG1

Ev 16 Trade and Industry Committee: Evidence

Tuesday 1 March 2005

Members present:

Mr Martin O’Neill, in the Chair

Mr Roger Berry Linda Perham Mr Michael Clapham Sir Robert Smith Judy Mallaber

Witnesses: Ms Sue Gibson, General Manager and Accounts Director, Occupational Health, Counselling and Screening Services, Dr Colin Wigley, Head of Service Delivery Screening Services and Mr Simon Chipperfield, Vice President, Atos Origin Medical Services, examined.

Q61 Chairman: Good afternoon. Ms Gibson, can Q66 Linda Perham: That sounds very good, but is it you introduce your colleagues please. set out that there are financial incentives or penalties Ms Gibson: On my right is Simon Chipperfield, who attached to performance targets? is the Vice President of the Medical Services Division Ms Gibson: There are no financial penalties in either within Atos Origin. I am the Accounts Director and contract. In the Chronic Obstructive Pulmonary General Manager for Occupational Health and Disease there is an incentive linked to quality where, Screening Services, which includes the work we do in fact, we do not realise the full value of the revenue for the Department of Trade and Industry. On my in the contract unless we deliver a fit for purpose left is Dr Colin Wigley, who is the Service Delivery report in at least 95% of cases. Manager for both the Vibration White Finger and the Chronic Obstructive Pulmonary Disease Q67 Linda Perham: Sorry, did you say there were no contracts. penalties attached? Ms Gibson: There are no financial penalties, that is Q62 Chairman: Thank you. Maybe we can start with correct. you giving us a sort of overview of the scale of your operations in connection with the Coal Health Q68 Linda Perham: Is that unusual? Compensation Schemes? Ms Gibson: We deliver medical assessments to a Mr Chipperfield: We have been involved since the number of Government departments and some inception of Vibration White Finger in 1999. We contracts do include financial penalties and some do carried out all of the medical assessments for the not, it is probably about 50-50. Vibration White Finger medical assessment process and that is over 100,000 since 1999. For the Chronic Q69 Sir Robert Smith: Last week we heard about Obstructive Pulmonary Disease contract, we delays in the process, on the whole, of handling of became involved in November 2002 when it was re- claims, and we heard about various concerns from tendered and since then we have carried out over the Solicitors’ Groups. From what you are saying, 100,000 assessments for Chronic Obstructive does the medical assessment in any way play a part Pulmonary Disease and more than 100,000 in the delays in handling claimants? Spirometry assessments. Ms Gibson: I will let Colin answer that as our contract manager. Q63 Mr Berry: Does your contract with the DTI Dr Wigley: It is a very complicated process and for require you to perform the assessments within a a claim to make its way from the start of the claim particular timescale? I assume they do, so what through to a completed assessment, it goes through would those timescales be? several stages. Initially, the case is referred through to us for a Spirometry assessment. Those cases came Ms Gibson: The contract includes the requirement through to us in a large volume at the beginning of that we deliver a medical report back to IRISC the scheme, so it is a matter of working through that within 20 days of the assessment taking place, but it head of work, again we will finish that by probably does not specify timescales for assessments taking June/July of this year. In terms of clearing cases place. Currently, in both schemes, because our head quickly, we have a very small head of work. What we of work is very low, we turn around assessments do have an issue with is cases which become stuck in very, very quickly. the system and that is usually where we are either waiting for information because we have not got Q64 Mr Berry: You meet the timescale comfortably? contact details—we are trying to contact the Ms Gibson: Yes. claimant but we cannot get hold of them—or where a case is on hold because for one reason or another the claimant cannot attend, they may be ill or Q65 Mr Berry: In all cases? awaiting an operation. Currently the situation is we Ms Gibson: The contractual timescale is to deliver have cases on hold because the oVer scheme, which the report back to IRISC within 20 days and yes, we is in place now, will prevent cases going through to meet that. examination. 3034421002 Page Type [O] 27-04-05 21:25:48 Pag Table: COENEW PPSysB Unit: PAG1

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1 March 2005 Atos Origin Medical Services

Q70 Sir Robert Smith: The actual medical bit is quite to deliver a certain number of cases to a certain quick, but the trigger is when you have got standard and they have a role in monitoring our everything you need? performance there. If there are any policy issues in Dr Wigley: The case is referred through for relation to the completion of the MAP reports, then Spirometry and then we refer it back to the claims those issues are discussed at joint meetings. We handlers. When the additional information from the have joint meetings with the Department and the claimants’ representative is there and all the Solicitors’ Group on a regular basis, every month. mandates are there for the record collection, it is We have regular meetings with large groups of then referred back to us. It then takes probably solicitors to look at the problems with the process about three months for us to obtain the medical and where cases are being stalled within the process records; we have a subcontractor, Elision, who to try and make things move through more quickly. provides that service for us. There are a lot of On projects such as Electronic Form, we have processes in place to ensure cases do not get stuck in recently introduced an electronic report form to try that process. There is a process of prioritisation of and improve quality and make the reports more cases according to the age of the claimant and how legible. To develop that we had meetings with long they have been within the scheme to ensure the members of the CG on their own to identify issues more urgent cases are dealt with quickly. That they had with it so we were fully informed about prioritisation works also once the case gets referred their concerns. I think we do work closely with them, for medical assessment. On the whole, the head of but the relationship is diVerent between the DTI and work—people waiting for assessments—is fairly the CG because the DTI have a contractual low. Providing we have all the contact details of the monitoring process which the CG do not have. In claimant, we would expect the case to proceed relation to medical issues, we work jointly with through a three month period for record collection, them. then probably two months waiting for an appointment and then another couple of weeks Q73 Mr Clapham: Why do you think they might feel whilst we do our quality checks before it is returned you are more biased to the DTI than working to the customer. equally with them? Dr Wigley: Again, I am surprised to hear they feel Q71 Sir Robert Smith: Would there be any regional that because I think we try and maintain an equal pattern to that? Is that an overall average for the balance between both parties. I know concerns have country or are there areas where it is quick and areas been raised about the issuing of instructions, but I where it is slow? think those instructions have always been in relation Dr Wigley: There are certain parts of the country to processes rather than medical assessments. We where we have much more resource than we have accept the medical assessment must be independent claimants, and therefore we are not able to fully and jointly acceptable to both parties. utilise that. There are other areas, certainly in the Yorkshire area, where there are more claimants than Q74 Mr Clapham: Do you feel that when preparing we have had capacity. That was true in the past, documents for a proposal put by the DTI, for currently, there is virtually no head of work example, on changes to the scheme, any information anywhere in the country and as a result of cases you provide should be available also to the other side being withdrawn from the TariV Option scheme. as well? Dr Wigley: Absolutely. I have no reservations about Q72 Mr Clapham: Last week the Claimants’ Group that at all. of Solicitors told us that they were generally satisfied with the medical aspects of your work, but there Q75 Mr Clapham: One of the things which came out were other things which did cause them some last week was there was a feeling of grievance that concern. For example, they thought the relationship the Claimants’ Group of Solicitors found when they should be one in which you are working for both were in court on one session, there had been a report sides, but the way they saw it generally they were prepared about some of the changes which were seen to be working for the DTI rather than being being proposed and your role in those changes, but seen as working with both parties. Do you agree you that document had not been disclosed to them until should be working with both parties? they got to the court. Dr Wigley: Absolutely. Can I answer that by Dr Wigley: I would like to clarify that. Certainly that splitting it into two halves. The main objective is to was not a document which we prepared, that was produce a MAP report which is independent, prepared independently by our subcontractor who objective and unbiased and that is produced equally does the record collection, Elision, and we had no for both parties. The rules and regulations which part to play in the production of that. We were determine how that report is completed are copied into it when the DTI was copied into it as well contained in the Claims Handling Agreement. to ask for opinions, but, again, we felt it was Obviously we apply that strictly and any changes to inappropriate for us to comment on that. We were processes have to be agreed by both parties and, fully involved in the development of the oVer certainly, we do not give any instructions to the schemes. We had numerous workshops with all respiratory specialists without them being agreed by parties and also the judge to look at ways in which both parties. The relationship we have with the DTI the scheme should be brought forward. We had an is diVerent, obviously we have a contract with them opportunity to express our ideas and concerns about 3034421002 Page Type [E] 27-04-05 21:25:48 Pag Table: COENEW PPSysB Unit: PAG1

Ev 18 Trade and Industry Committee: Evidence

1 March 2005 Atos Origin Medical Services the scheme at that stage, therefore it seemed those doctors who appear to be possibly behaving inappropriate for us to comment on that document diVerently. I think we have to accept there is a wide prior to court. Certainly it was not an ATOS variation there. That is contained within the document. quarterly report which goes to both parties and if they identify doctors who they wish to look at in Q76 Judy Mallaber: Are there types of information, more detail, then we will do a more detailed targeted like progress reports, for example, that you are audit of their cases and report those findings back to contractually required to reserve for the DTI the parties. because the point made by Michael Clapham about the complaint of reluctance to pass on information Q80 Judy Mallaber: We had one doctor who was to the solicitors, which has gone to the DTI, is a taken oV the list who was dealing with one of my complaint which was made? Are there certain constituents, but it seemed to take a large number of reports which you are required to reserve just for complaints coming in from individual cases and the DTI? letters to the Minister before that doctor was taken Ms Gibson: No. We are contractually obliged to oV the list. How strict are you where you see a doctor produce a quarterly report which covers our who is refusing to accept any claims, for example? performance against all of the contractual targets, Dr Wigley: We will stop using doctors if the both in terms of turnaround time and quality. That feedback we are giving does not appear to put the is made available to all parties and, in fact, is situation right. I believe the case I think you are discussed at a joint meeting with the DTI, the talking about was before we took over this contract. Claimants’ Solicitors Group and other parties. We Again, we have a very robust process for the feel there is very much visibility of our performance feedback to the respiratory specialists. We then do a against our contracted targets. further audit to make sure the situation has improved or has been resolved to satisfaction. If it Q77 Judy Mallaber: So the claimants’ has not, we have a standard process for taking them representatives can obtain exactly the same level of through retraining and if retraining has not worked, information as the DTI? we will stop using the doctor. Ms Gibson: Yes. Q81 Judy Mallaber: One of the earlier complaints Q78 Judy Mallaber: Do they know what certainly we had was about the discomfort of information you provide to the DTI so they know undertaking some of the lung tests. Has that now what information to ask you for? been resolved and are you happy with the way in Ms Gibson: I would say I believe so, but I would be which they are now handled? guessing. Dr Wigley: I think that is largely an issue of understanding. The respiratory test, if undertaken V Q79 Judy Mallaber: Can I ask you on one particular correctly takes a lot of e ort. I know from having tried to perform them myself, you are looking for a aspect of assessments which has come up in relation Y to claims which have been dealt with in my area. very forceful blow and that may be di cult for How far do you monitor the work of the diVerent elderly people and people who are not well. We send doctors and specialists who are undertaking these a video out with the MAP appointment so they have claims to see whether they are operating consistent an idea about what is expected of them when they criteria across the claims they are dealing with? come. Inevitably there will be complaints, but I Dr Wigley: Obviously a uniform approach to this is think the complaint rate is something like 0.2% for crucial to the success of the scheme because we have the MAPs which have been completed during the got 200 doctors working and we need to make sure course, so it is a very, very small proportion. Again, they are all applying the same rules—applying the it is something which we are aware of and it is scheme in the same way. There is always a danger something we cover in the training we give to the with experts that they can all have independent lung function technicians. opinions. What we are trying to do in the scheme is to say, “The actual process has already been defined Q82 Mr Clapham: Finally, are the doctors under any by another panel of experts and really you have got instruction, for example, to record core morbidity, to adhere to those rules if you are doing these where we have got an additional disease, for assessments”. We have a quality monitoring system example, and if not, can I ask why not? and we audit a statistically valid sample of cases each Dr Wigley: Yes, they are. It is something which has month against a set of standard criteria, there are a been within the MAP process and, again, it has been series of attributes which have to be present within highlighted by changes in the MAP form in the most each report. Those results are fed back to the recent version because, certainly, doctors should be individual doctor and they have a regional adviser to expected to take account of that. act as mentors to give feedback to their respiratory specialist. Sue mentioned that we produce a Q83 Mr Clapham: One of the discussions we had quarterly report also and with that we have earlier with the second Minister of Energy was what diagnosis rates, so we can compare one centre we would do at the end of the process with the data? against another to see if any doctors’ outcomes from It was agreed in that period that it may all be passed those reports appear to be diVerent from the norm. on to the Industrial Injuries Advisory Council for We apply statistical analysis to those and highlight further scrutiny because, clearly, this is perhaps the 3034421002 Page Type [O] 27-04-05 21:25:48 Pag Table: COENEW PPSysB Unit: PAG1

Trade and Industry Committee: Evidence Ev 19

1 March 2005 Atos Origin Medical Services most comprehensive study of any working group comment. The point you make is very valid though which is available. In terms of the reporting of core as it is probably the biggest pool of information that morbidity, is there any particular second disease has ever been recorded on this type of condition and which is striking? I am sure it could be put to good use. The diYculty Dr Wigley: I do not think I am in a position to with it will be that it is on paper-based form, so it will answer that because whilst I am medical, I am not a be diYcult to evaluate. respiratory specialist. I am not actually completing Chairman: Thank you very much, that is very MAPs myself and it would be diYcult for me to helpful.

Witnesses: Mr Martin Trainer, COO Claims Outsourcing, Mr JeV Wilson, IRISC Technical Director, Ms Kate Roy, IRISC Operations Director and Mr John Tizard, Director, Group Corporate AVairs and, Capita-IRISC, examined.

Q84 Chairman: Mr Trainer, would you like to Department. Our reward is based almost totally introduce your colleagues? upon achieving targets which are agreed and set Mr Trainer: I am Martin Trainer and I am the with the Department. Chief Operating OYcer for our Claims Outsourcing Business. To my left I have John Q88 Linda Perham: We have heard from other Tizard, who is our Group Director of Corporate witnesses that the administration of the schemes AVairs; to my right I have Kate Roy, who is the was poor from the outset, but things are improving Operations Director for the IRISC Operations now. Do you have any explanation of the which run the Coal Health Scheme, Claims underlying reasons for the bad impression? Handling and to my far right is JeV Wilson, who Mr Wilson: When we go back to when the schemes is the Technical Director for the IRISC Operation. were formulated, with the Claims Handling Agreements in 1999, there was an estimation that V there were potentially 100,000 claims which would be Q85 Chairman: I would like to start o much the dealt with over five years. What has happened same way as we did with the previous group of throughout time is more and more claims have come witnesses. Can you describe to us the basis and into the pot to the extent that when the COPD—that terms of your contractual relationship with the is the chest disease scheme—cut-oV was applied in DTI? March 2004, in the 12 months prior to that there were Mr Trainer: Certainly. Capita has been involved in 250,000 claims which were submitted and of these the scheme now for just over 12 months. We approximately 150,000 claims submitted in the final acquired the IRISC business, which has been acting quarter of that period, so volume and scale has as claims handlers on the contract now for some increased significantly from the original projections. time, from Aon in February 2004. In April 2004, we again acquired a business from Aon, at that Q89 Linda Perham: It was really the sheer size of the time—called Aon Health Solutions, which handles problem rather than poor planning or poor project the medical assessment in the VWF services definition on behalf of the customer? element of the scheme. So from February of last Mr Wilson: The sheer size has taken all parties by year, and then subsequently from April in the case surprise. As far back in the days of British Coal, they of the Health Solutions business, we have been employed statisticians to try and predict the working closely with the Department and other potential numbers. The DTI and all parties have stakeholders on delivering business as usual and constantly tried to predict the number of claims improving the programme to make things better throughout this process. In fact, in the 12 months V and more e ective for everybody. Our contracting prior to the cut-oV, we spent a lot of time with relationship is direct with the DTI, we are not solicitors and other parties trying to get a feel for the instructed jointly. The DTI sets the priorities and scale of the numbers. Ultimately it is the sheer scale the terms under which we engage with all parties. of the numbers involved.

Q86 Chairman: You have got targets to meet in Q90 Linda Perham: We may come on to the specific reference to the work which goes through and the problems in a moment, but how do you assess your speed of the claims and things like that, is that performance compared to one, two or even three correct? years ago? Mr Trainer: Absolutely. Ms Roy: In relation to performance targets, which for both schemes are predominantly linked to the progression of claims and ultimately the payment of Q87 Chairman: Does that have incentives for you damages within the scheme, we have year-on-year, to try harder? since the signing of the claims handling Mr Trainer: Yes. The essence of our contract is that arrangements, increased the throughput on both we agree our resourcing plans with the Department schemes. To date, we have paid over two and a half in advance and most of the costs which we incur billion pounds worth of compensation out to on the scheme are directly recoverable from the claimants within the scheme. We have consistently 3034421002 Page Type [E] 27-04-05 21:25:48 Pag Table: COENEW PPSysB Unit: PAG1

Ev 20 Trade and Industry Committee: Evidence

1 March 2005 Capita-IRISC increased our full and final oVer outputs over the last Q94 Sir Robert Smith: The question we had from three years. For COPD alone, we moved from one of the witnesses we had last week was how much 50,000 oVers to 60,000 oVers to 70,000 oVers last expertise and training those staV had, particularly year and we anticipate somewhere in the region of the claims adjusters. There was a concern by the 120,000 oVers including the fast-track system, which witnesses to the feeling that they did not have went live yesterday, to be able to take claims out of enough. How do you respond to that? the system this year as well. Mr Wilson: We have bespoke training schemes and we have invested a lot of time and money in training new staV. Most staV spend between six and Q91 Linda Perham: How have you managed to nine months on a training programme which is make those improvements? Has it been more accelerated depending upon their progress and their eYcient? Are there more staV? level of skills which they bring to the claims. We have Ms Roy: It is a combination of staV recruitment and mentoring and coaching systems in place and we V ramp-up. We have increased our staYng numbers have 40 technical sta who are ex-British Coal consistently to some significant level over the last people who give mining information and expertise. In addition to that, in the Group 3 claims we have four to five years. Four years ago we had somewhere V in the region of 150 staV involved in the claims 61 sta who have a considerable number of years of mining experience. In fact, one of our problems is handling process, we have almost 1,400 staV now our technical staV training is particularly so good across four sites across the country in mining areas that we lose people to other solicitors in the process. managing throughputs on both of these schemes. We go out and we train solicitors, we go out and we Mr Trainer: Since Capita acquired the business last give them calculators, so ultimately we spend a lot of year, we have engaged with the Department and set time and investment on training, but in any new in place a Continuous Improvement Programme process when you train it takes time for it to bed in. Y V which is designed to improve e ciency, e ectiveness Also, it is accepted that when staV are being trained, and value for money across the piece. We have put in some respects their experience only progresses to in a significant investment which has been going on the point where they are fully trained over a period now for something like eight months which is of time. designed to and is already delivering significant results, which will increase productivity, throughput and quality. A continuous improvement culture is Q95 Sir Robert Smith: You mentioned that you train them and then they move on and that was the second very much the message. We have got a great team in concern which was raised, that there was a high IRISC, they have been working very hard for a long turnover of the workforce. The suggestion was in time and they understand the concerns which are 2004, it was as high as 25%. Is that accurate? utmost to all of us, the Department and other Ms Roy: It is important to remember that we are stakeholders, the claimants and the claimants’ currently on plan for all of our staYng targets, we solicitors. We are very proud of what we do and our are ahead on the overall staV numbers this year sole mission in life, as it were, obviously is to pay the against last year. You are absolutely right, we right amount of money to the right person as quickly recognise that we have to manage the turnover issues as possible. We are proactively engaging with all the within the business. No one should be really stakeholders to try and drive forward, as far and as surprised at the level of turnover we are seeing, fast as we can, the estimates of when the schemes will which is currently at around 25%. Our four key ultimately be closed. operational sites are situated within very buoyant employment markets. In SheYeld, in particular, we have a high degree of employment for this type in Q92 Sir Robert Smith: Whose initiative was it to this sector of job and, as my colleague has already bring the Business Improvement Programme mentioned, particularly in SheYeld, nearly 28% of forward? our leavers have gone directly to solicitors who Mr Trainer: When we were in the process of operate within the scheme. This has been brought to discussing with the Department and Aon the the attention of the judges within the process. We are possibility of Capita acquiring the business, there aware of it and we have managed to those was discussion, which had already been initiated constraints. This is almost a naturally inflated between the Department and Aon, about a Business number of staV turnover within these schemes by the Improvement Programme. Capita made the point very nature of its uniqueness. that we would normally expect to do a Business Improvement Programme on a business which we Q96 Sir Robert Smith: Would it be worth resourcing acquired, therefore we were absolutely very them more to try and stop the turnover? In a sense, supportive of the idea. We have maintained that which is better: keeping the person you have trained concept and enhanced and invested significantly in it or putting the eVort into training a new person? over the last 12 months. Ms Roy: Clearly the eVort of investment, both in time and resources in training new staV, would be far better spent, in our view, by retaining them in the Q93 Sir Robert Smith: To follow up, there are 14,000 first place. Under the Business Improvement staV now? Programme, which my colleague has already Mr Trainer: There are 1,400 staV. mentioned, we have a number of initiatives which we 3034421002 Page Type [O] 27-04-05 21:25:48 Pag Table: COENEW PPSysB Unit: PAG1

Trade and Industry Committee: Evidence Ev 21

1 March 2005 Capita-IRISC are looking at to ensure we can retain greater levels Young, and we have listened to the concerns of the of staV. Specifically, and not surprisingly to the monitoring groups and other people. As a result of Committee, we are looking at reward and that, we now give out more detailed information to recognition packages, ensuring that we are paying solicitors. We have enhanced the quality checking competitive market rates to not only attract the best where people who are new to the job have staV but to make sure they stay with us. We are 100% checking of their decisions and even the looking at the performance targets and rewards and experts have something like a one in ten check. We bonuses involved within that process and we are brought regional experts in who were recommended looking at the environment within which they to us by the unions to also assess this. Month-on- operate. When you are in a buoyant employment month last year, we increased productivity and market, our surroundings, in terms of air output but there is still some way to go to do that. conditioning, the desks, the circumstances that they will work in, can all be instrumental in encouraging people to look elsewhere. We are addressing each Q99 Mr Clapham: Given some of the criticisms, and one of these areas under our Improvement bearing in mind what you have said about the Programme. mining expertise, there comes a point when perhaps mining sense rather than the expertise is required if Q97 Chairman: Maybe the lawyers are getting more we are going to move some of these cases on. Is this money than you are? one of the issues which has been discussed with the Ms Roy: It would not be for me to comment. adjusters, but the adjusters have perhaps been told Mr Wilson: We take the view that if people at least to focus a little more and use some mining sense go to lawyers in this process, they are still in the rather than merely the expertise which relates to process and, certainly, we would meet with our ex- the book? colleagues and other solicitors in certain instances to Mr Wilson: We constantly review that and we share and compare notes. encourage people to look at things in the balance of probability and try and find in favour of the claimant. What happens is the senior expert team Q98 Mr Clapham: Can I ask a question about the have regular monthly workshops with the adjusters Occupational Group Procedure because some of the themselves and we do measure the outliers and the submissions we received, and particularly taking decisions which they make. For example if someone evidence from the solicitors last week, they were may have a high proportion of denials that might critical that the process was first introduced to speed look unusual or a high proportion of acceptances. up the claims, but now you have introduced various V new aspects—for example the adjusters, the mining We move the claims around constantly to di erent expertise—and it has slowed down the claims. In adjusters and we measure the decisions which they particular, they were critical about the Group 3 take. claimants. How would you respond to that criticism? Q100 Mr Clapham: Would it be fair to say that in Mr Wilson: The Occupational Group Procedure sets some cases it may appear that the use of the adjusters out the level of evidence which must be submitted by has introduced another adversarial tier? the claimant and it was negotiated between the DTI and the CSG. The DTI look to be satisfied that the Mr Wilson: It may appear like that, but we are claimants did handle vibrating tools in jobs which committed to moving these claims through the would not normally be perceived as being exposed to process and we are committed to the right decisions vibration. Capita’s job is to assess the evidence to being made and the right compensation being paid make sure the employment criteria are met. It is to the claimants. These are individuals who are important that when information and evidence is employed by Capita and the standard that we set is submitted in the Occupational Group Procedure, it they have to be consistent in the decisions which they follows the form of proper evidence in terms of make. At the end of the day, there will always be a claims, questionnaires and witness statements. proportion of claims which come through that will There will be instances where we will have to quality be denied and those that tend to be the case are check that information and return it to the solicitors. claims which are contested. I understand the concerns regarding the Group 3 adjusters, but what we have employed are 61 individuals who have got 1,500 years of mining Q101 Judy Mallaber: Following on from that, the experience. Ultimately, what they are trying to solicitors were complaining to us about requests on assess is the evidence before them. What we try to do the VWF Services Agreement for irrelevant and is encourage our adjusters to look for ways to pass a inappropriate information and they were being claim rather than fail it. We should be alive to the asked for information which they did not see was fact that approximately 50% of the claims which relevant and that was resulting in delays. Is that not they have assessed have been accepted. The issue a problem which you recognise at all? remains about the level of those claims which are Mr Wilson: Obviously in any scheme we have to denied and that is a process which is refined and have evidence to support a claim. We are required to constantly reviewed. Over the last 12 months we ask questions to check that level of evidence. We ask have tried to continually improve the process. We questions to support a claim so we can decide on the have had audits from external parties, like Ernst & compensation to pay. 3034421002 Page Type [E] 27-04-05 21:25:48 Pag Table: COENEW PPSysB Unit: PAG1

Ev 22 Trade and Industry Committee: Evidence

1 March 2005 Capita-IRISC

Q102 Judy Mallaber: The Claimants’ Group told us the end of this month. We have plans in place to that in some instances you have been responsive to manage the cut-oV for Group 3 evidence complaints about the conduct of individual cases submissions at the end of June. All of these cut-oV and you put matters right, but that seemed to be processes have been formally managed through dealt with very much on a case-by-case basis. They standard project management processes in said you did not seem to share that knowledge partnership with the DTI involving other amongst claims adjusters to make sure when a stakeholders and solicitors where necessary. mistake was made in one case it was not repeated Certainly the COPD case is an example with large elsewhere. Is that fair and what steps do you put in numbers and it was planned for over nine months to place to make sure there is a spread of best practice ensure that we could successfully secure the cut-oV. and to stop any errors being duplicated? Mr Wilson: I think they may be referring to the time Q106 Sir Robert Smith: Is the aim that the cut-oV when we talked about the Services Pilot which was a will not aVect other claims? couple of years ago, where in that period we invited Ms Roy: Our experience would be no. solicitors in to discuss with us seeing things from the other side. What we have done since then is to Q107 Mr Berry: Can we turn to fraudulent claims. constantly measure performance across all claims in How big a problem is this? terms of quality assessments and checking. We Ms Roy: To paint a picture in relation to our constantly discuss experiences and give training position as the appointed claims handlers, our advice based on any issues which arise from primary role is to accurately disburse public monies monitoring groups and meetings with the in terms of compensation to over three quarters of a Claimants’ Group. million claimants across both schemes. The Claims Handling Agreements clearly set out how those Q103 Judy Mallaber: You are confident that payments should be made, so we have a number of experience is fully shared and once you have internal screening and validation processes which discovered one way of doing things, which maybe ensure we get the right level of compensation to the was not quite right, that is passed on to all your other right claimant at the right time. Taken in that claims adjusters? context, there is a requirement, with the levels of Ms Roy: From an operational perspective, we have public money which we are involved in, to have some fairly rigorous internal audit procedures and fairly robust procedures where those validation processes where, by checking individual claims and processes suggest there might be something which looking at the quality of claims handling decisions potentially needs some further investigation. In being made within those claims, we analyse the context, out of the three quarters of a million claims outputs from that, we feed that back in not only to we are currently processing, so far 1,500 have been our training programmes, we deliver it back to the referred for some further investigation where there individuals concerned and we learn lessons across may be some potential concerns around those our technical team. It is the case that some of those validation processes. claims have continued to evolve over the last few years, whilst the Agreements were signed some four Q108 Mr Berry: The DTI in their submission said or five years ago. We are still making new decisions that there have been 1,500 cases registered as within the process, so there is a constant need to potentially fraudulent. Do you know how many are review how the operation will implement a legal fraudulent? decision or a legal agreement which has been Ms Roy: There is a distinction to be made between a reached and there is a need for us to constantly fraudulent prospective, where we are looking for V review how e ective that is. Feedback from the evidence of intent to mislead, and where there may be solicitors is exceptionally helpful in these instances. a degree of exaggeration involved within the claims handling process. The claims handling processes Q104 Judy Mallaber: You are happy when we write themselves are designed to identify that if someone to you about things? does not meet the criteria, they do not progress. In Ms Roy: Absolutely. relation to those who have been concluded so far, of the800 concludedinvestigations, 300have resultedin Q105 Sir Robert Smith: One of the concerns raised either a reduction in overall compensation being paid with us, dealing with the Vibration cut-oV,isthe or a prevention of that compensation being paid. deadline set by the court for submitting evidence. Do you anticipate a surge in claims because of people Q109 Mr Berry: Last week the solicitors expressed trying to get in before the deadline? some concern about the tactics adopted by fraud Ms Roy: Across both schemes we have managed the investigators. Is it right that when applicants are VWF general damages cut-oV both for live and being investigated they are not given a clear idea of posthumous claims. We have managed the fairly why they are being investigated and what the issues significant operational spike which came around of concern are? with the COPD cut-oV in March last year. We have Ms Roy: In the small number of instances where just managed the VWF wage loss cut-oV which took there is an external investigation involved, the place on 31 January. We have fairly advanced process for the external organisation will always be, planning in place, from an operational perspective, first of all, to correspond with the claimant’s to manage the services cut-oV which is scheduled for representative and seek their permission to contact 3034421002 Page Type [O] 27-04-05 21:25:48 Pag Table: COENEW PPSysB Unit: PAG1

Trade and Industry Committee: Evidence Ev 23

1 March 2005 Capita-IRISC claimants, and each claimant representative is given created seven aspirational end dates in relation to the option to attend an interview or be involved in the various stages of the VWF process. By enhancing any subsequent correspondence between both of our planning capabilities and forecasting those parties. We recognise that the claimants within methodologies during the course of last year, we this process have a right to representation at every have now some confidence over both the realistic step of the process, and we continue with that during elements of these end dates and, consequently, our the external investigation as well. ability to deliver them, subject to the co-operation of all parties, so if certain assumptions take place, we Q110 Mr Berry: Does the claimant or the claimant’s can plan and forecast much more accurately now. representative know the reason why the There is a recognition that we are only one part of investigation is taking place? Are they told, “our the big process here, and all stakeholders need to cause for concern is . . . ” or is it a trawl? be engaged. Ms Roy: They will be made aware that this has been highlighted as having the potential for further Q115 Chairman: So with all these qualifications investigation. would we be right in assuming that complete investigation of Group 3 claims will be achieved by Q111 Mr Berry: Do your investigators operate the end of quarter three of this year; that you will be under DTI guidelines? able to finish services MAPs by the end of 2006 and Ms Roy: Our investigators are an external settle all service claims by the end of 2007? Do you organisation, part of the Cantor Group, who are think these are realistic? compliant to FSA standards. They operate within Ms Roy: Yes, we do. the insurance industry, which is tightly governed by Mr Trainer: I would just like to put a couple of FSA standards. caveats to that. Firstly, as Kate said, there is significant interdependence between ourselves and Q112 Mr Berry: In the DTI’s submission, the claimants’ representatives, and the claimants’ interestingly, the question about the guidelines representatives need to buy into these timescales and which claims handlers use to identify potentially targets and do their part of the piece. Secondly, our fraudulent cases is referred to, and we are told that contract expires in 2006 so if we are still involved these were intended as internal documents, and that beyond 2006 we are confident, but obviously it is why they are not in the public domain. There remains to be seen whether that is the case. would be no reason, would there, why these guidelines could not be provided to the Committee Q116 Chairman: You have been parachuted in here. in confidence? Do you have any regrets? Do you wish you had Mr Trainer: They are certainly documents that are never started? agreed with the Department. As to whether they Mr Trainer: Absolutely not. could be provided to the Committee, we have no objections to that, but that is a matter I suggest you Q117 Chairman: It is not uncommon for us to find might want to raise with the Department. that people come in as visiting fire people or Mr Berry: Thank you. I think we will. whatever, and they say, “God, we wish we had never got into this”. Q113 Chairman: Am I right in thinking that from the Mr Trainer: If I go back 15-16 months ago, I guess figures you have suggested there are 1,500 out of when I first became aware of the scheme I was quite 750,000, so it is about 2%? astonished, to be honest, that something of this scale Ms Roy: 0.2%. and magnitude was going on. Outside of the mining areas it was not widely known what was going on. Q114 Chairman: We have spoken about the fact that Having got into the process and met the team and you are incentivised, and it is understandable that we seen what is going on, it is a wholly worthwhile have that, but we have now got a series of endeavour, and we are very proud of what we do and aspirational end dates. Are they more realistic than we are very pleased to be doing it. aspirational, or more aspirational than realistic? Chairman: Let us hope we do not have to call you in Ms Roy: In the early part of last year, we alongside again and say, “why have you not done this?” other contractors were involved with the Certainly I would not, but some of my colleagues Department in looking at ways in which we could may well do. Thank you for your evidence. If there bring some closure for the claimants within VWF is anything else that we need, we will get back to you, scheme. As a consequence, we, in partnership, but you have been very helpful. 3034421002 Page Type [E] 27-04-05 21:25:48 Pag Table: COENEW PPSysB Unit: PAG1

Ev 24 Trade and Industry Committee: Evidence

Witnesses: Mr Nigel GriYths, a Member of the House, Parliamentary Under-Secretary of State, Mr Nick French, Assistant Director, COPD Operations, Ms Ann Taylor CBE Director, Co-Liabilities Unit and Ms Christine Chamberlain, Assistant Director, Vibration White Finger Operations, Department of Trade and Industry, examined.

Q118 Chairman: Good afternoon, Mr GriYths. and others that put together the agreement. That Would you like to introduce your team, and then we agreement was reached on COPD in September will get started? 1999, and two months later the UDM signed an Nigel GriYths: Thank you, Mr O’Neill. Ann Taylor, identical agreement. It was identical for 476 pages. CBE, is the Director of our Co-Liabilities Unit; Nick We have them here. There were two pages that were French is the Assistant Director of the COPD diVerent, and those concerned the payment. The Operations, the respiratory claims, and Christine UDM levies a lower fee, and that is reflected on page Chamberlain is the Assistant Director of Vibration 446 of the contract. Indeed, my predecessors had a White Finger Operations. I should like to thank you correspondence with the NUM to ask whether they and the Members here for your long-term wanted a similar agreement, and the answer was commitment on behalf of constituents to this “no”. They had an agreement with the CG. scheme. I estimate that the six Members present on the Committee—and I know others are in the Chamber—have represented up to 12,488 sick Q121 Judy Mallaber: But according to the evidence miners, at a total cost in compensation of we had from the English monitoring group, the trade £67.2 million. Thank you for your help. unions have denied that they were made such oVers, and there has not been any evidence of that from Q119 Chairman: I am sure our constituents will be the DTI. informed! We started with the best of intentions. It Nigel GriYths: I am very happy to furnish you with probably could have had a better beginning, but the minutes from Helen Liddell through to Brian there is a sense now that we seem to be on the Wilson that reinforce that oVer. I understand that no right track, and there are probably still some response was given to the oVers of my predecessors shortcomings, and we will want to explore them, but to sit down. I am not quite sure why they wanted to after a diYcult start and a period when it looked as sit down and have separate agreements. As I say, for if you were being swamped, are you beginning to see 476 pages these are identical, so there is nothing lights at the ends of tunnels? special. The only special deal is that the UDM, by Nigel GriYths: I think that is a very fair summary. If not using solicitors, in particular more latterly, I am you look at the estimates that the National Union of informed charge a smaller fee. Mineworkers, the solicitors and the DTI had provided in the beginning, they were far too low: 5,000 vibration white finger lead cases, with a forecast of 40,000, was more than four times an Q122 Judy Mallaber: However, the claims handling underestimate of 170,000; and 30,000 respiratory organisation, Vendside, which is clearly integrally COPD claims, with a forecast of 70,000 cases, more connected with UDM—I am not sure of the exact than eight times underestimated. There was a rapid structure—does insist on taking a payment out of response in the early days which meant that the settlements that are made, and you know that solicitors as well as us had capacity problems; but that is a source of considerable grievance when the desire of members and my predecessors and of people are asked to sign up to those agreements the Department staV was to catch sick miners while with Vendside, in my area in Derbyshire, in they were still alive and make payments as quickly as Nottinghamshire and the Leicestershire coalfields. Y possible. What have become the two largest personal Nigel Gri ths: I am aware of that. That, of course, injury compensation schemes in the world have is nothing to do with the Claims Handling evolved from there, and so have the staYng ratios Agreement and is not reflected in the Claims been ratcheted up. Handling Agreement; and that is why there is no preferential treatment. It is quite a separate issue. Indeed, the NUM in some areas—the UDM and Q120 Judy Mallaber: I should declare an interest as NACODs charge a sort of membership fee or we have had nearly £17 million of compensation into whatever in various areas, so it is not just Vendside Amber Valley so far. You will not be surprised if I that has this type of arrangement. It is not covered raise this issue, though: both the claimants’ solicitors by either the Claims Handling Agreement, or by the group and the voluntary groups drew our attention agreement with Vendside, which I am informed is to the fact that the DTI negotiated a separate identical apart from the payment pages—sorry, it is Handling Agreement with the UDM, but not with a reduced fee basis. the other unions and not with the NUM or NACODs. Why did the UDM get special treatment? Nigel GriYths: It did not get special treatment. What happened was that in the 1990s the National Union Q123 Judy Mallaber: But from experience that does of Mineworkers wound up its claims-handling not seem to happen with the claims in my area department and transferred all its claims processing that are settled through the NUM-connected to nominated solicitors; but UDM separately organisations. continued to handle members’ claims. The UDM Nigel GriYths: That could well be why I did choose were not represented by the claimants’ group, the my words carefully. I said that the NUM in some original group representing solicitors, and the NUM areas— 3034421002 Page Type [O] 27-04-05 21:25:48 Pag Table: COENEW PPSysB Unit: PAG1

Trade and Industry Committee: Evidence Ev 25

1 March 2005 Department of Trade and Industry

Q124 Judy Mallaber: Is it acceptable that that diYcult because of the desire to ensure that public money is taken out by Vendside in Claims Handling money is not paid out when it should not be, or to Agreements, and is it also acceptable that the UDM reduce the size of the claim? and Vendside have come touting for business, even Nigel GriYths: The National Audit OYce is not in areas that are not majority UDM areas? simply limited to an assessment of how public Nigel GriYths: I am not here to give a personal view money is spent; it is also very interested, as Sir John on whether it is acceptable or not. Is it permitted Bourne proselytises for, in best practice too, so it is within the present rules of how trade unions run in a slightly wider context here. Last year has been a their aVairs? I understand it is. Colleagues who have frustrating time for the solicitors; they have had high discussed this with me who feel it is not I do not hopes in certain areas of these compensation claims, believe have succeeded in getting those responsible with, as far as I am aware—and I can assure the for regulating union conduct to reach a conclusion Committee they cooperated fully with them—but that I may concur with and that you have certainly some of the areas they thought would bear fruit for got a strong view on, but is outwith the Claims their clients just did not, and I think perhaps that Handling Agreement. frustration is reflected in their statements about cooperation. I take all criticisms seriously, and I do Q125 Sir Robert Smith: Can we move on to the not believe that these are fair criticisms. relationship between the DTI and other stakeholders. The claimants’ solicitors and the Q127 Sir Robert Smith: I think other members of the English and Scottish monitoring groups have voiced Committee are now going to explore the specific a fear that there was initially a constructive and areas, which maybe will tease out where the collaborative approach adopted by the Department, diVerences are. but they sense it is changing. The solicitors Ms Taylor: I think we have been in a slightly specifically referred to deterioration of constructive diVerent situation in the last few months in that the dialogue aimed at resolving issues by agreement. Is Judge is now more involved on the lung disease that a concern you would share? Has there been a scheme, in terms of setting parameters for the fast- change in relationship, or a move away from a track oVers. So things that we had previously constructive dialogue to a more adversarial negotiated ourselves, the Judge is now concerning approach? himself with. Nigel GriYths: In my time of doing this job, Sir Robert, it is not my impression, chairing regular Q128 Sir Robert Smith: Is that not a symptom of the meetings with the solicitors, the unions and MP point they are making, that things have got away colleagues, that there has been this marked from the ability to come to a negotiated settlement, deterioration. Of course, there are diVerences of and now the Judge is back into the process? opinion, but we have given solicitors unprecedented Ms Taylor: We had a workshop meeting with the access both to British records—a decision I took in Judge in September, with the solicitors, all together, September 2003—and to other data supplied by and it was at that point that we were all agreed that IRISC. I accept that the solicitors, the unions and continuing with the scheme we had got was going to others, together with us, have a common cause, and take far too long and we needed collectively to adopt that is to make sure that those sick miners, their a fast-track approach. The Judge was then drawn widows and their families receive the payment to into that and became involved in that. That was one which they are entitled as quickly as possible. Such of the reasons why we put forward a suggestion accounts as the one you have given do distress me, about mandatory oVers, which we know did not find but I do not believe they broadly reflect the favour, but it was the Judge who asked us to do that; relationship between all the parties involved in it was not something we did of our own volition. securing what is our aim to deliver. Last month I was Ms Chamberlain: Can I just say on VWF that on a checking the figures, and our DTI team, which working level since I have been in post over five years incidentally was praised by the National Audit we have increased the frequency with which we meet OYce in its report last year, met solicitors on four the claimants’ groups, some of the members you met occasions over COPD, on three occasions on last week. We meet them more often on more vibration white finger; and that was outside informal subjects than we have ever done, and we correspond discussions which had taken place in court and with them regularly. Virtually every day there are elsewhere. Our oYcials met them again yesterday letters coming in and out on various issues. I do not and they have another meeting again next week. I necessarily recognise that we have been less think that I cannot allow my own civil servants to be transparent. It is a feature particularly on VWF that criticised for complying with issues that the Judge we are at the very end part of the scheme, and has instructed us to do, which I know again have therefore any issues that are easy to resolve we would been the source of some complaint by the solicitors’ have resolved by now; however, we have got the group, the claimants’ group. sticky issues which clearly are not so easy to resolve, and they might require the Judge’s intervention. Q126 Sir Robert Smith: If the National Audit OYce endorsed the DTI’s role, would that be partly in a Q129 Mr Clapham: Minister, could I look at three sense perhaps where they were coming from in terms issues that were raised by the claimants’ group of of protecting public money? Would the solicitors solicitors, but before doing so I should like to ask have been concerned that things had got more about the particularly scandalous operation that has 3034421002 Page Type [E] 27-04-05 21:25:48 Pag Table: COENEW PPSysB Unit: PAG1

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1 March 2005 Department of Trade and Industry been run by claims handling companies. I know that appeared to move for some time were resolved; and you feel the same as I do about the way in which this is under discussion. I understand the solicitors claims-handling companies have been able to exploit put forward their attempt at a solution to this on the the situation. We did expect something more robust VWF claims and separately on the COPD claims, coming from the Clementi report. I want to explore because we are dealing with two diVerent judges. We whether you take the view that the best way of being are getting back to them this month on the VWF to control these claims-handling companies would claim, and shortly afterwards the COPD claim. We be by way of insisting that where a company are trying to resolve this. Capita of course, as they provides a solicitor with claims, that it is up to that touched on, do get an element of payment by their solicitor to pay the fees for the claims-handling results. It is not in their interest to stall claims. That company rather than the claims-handling company is not an eYcient use of their human resources or to exploit the situation and take the fee from the other resources, and nor does it ensure that they get claimant. full payments under the contract. They are required Nigel GriYths: That arrangement would certainly to meet certain targets, and those targets are make claims-handling companies’ activities far more determined not by stopping people getting paid but accountable, and I am sure far more acceptable to by making sure that people get paid and as quickly colleagues. as possible.

Q130 Mr Clapham: Is that something that you Q132 Mr Clapham: Nevertheless, as you say, where would support? Is it something, for example, that we stalled claims have occurred on the contractors’ side, might find the Department may well suggest to the you take steps to make sure that they are moving on. Constitutional Department, that there should be a Nigel GriYths: We are on both sides. As I say, we are way of controlling these claims-handling firms? grateful to the solicitors for their suggestions about Nigel GriYths: We are very happy to give our advice how to speed things up. This is part of the dialogue and experience to colleagues in other departments, that my colleagues are having with them, and I hope and to highlight from the sort of cases that you and we can reach agreement on COPD before the end of other colleagues have assiduously brought to our this month. That is the intention for VWF before the attention the real diYculties that this is posing—the end of this month, and, shortly after, respiratory. resentment of miners who find that they are having to give up some of their compensation. My stand, Q133 Mr Clapham: One of the other things that the and that of my predecessor and the Department, has claimants’ group raised was the fact that IRISC were been very clear on this. We have spent £477 million instructed by the Department to send out some 4,000 on the legal and other expenses separate from letters, when in fact they were not in a position to compensation to ensure that not one penny of deal with responses. What was the reasoning behind compensation is lost by miners. We have heard that? Did it cause delay and, if it did, have we now already how certain organisations have charged fees got over the delays? that colleagues have been critical of, and this is Ms Chamberlain: We have certainly got over those another area. It is certainly true that if they were delays. Let us put this into some sort of context. required in any way to work through solicitors, then Managing the contractors and the process is not a all the control and supervision that is required by the passive experience for the Department; we are Law Society would be brought to bear on their actively managing various stages of the process, and activities. that means where there are blockages, wherever that blockage is it is part of our role and responsibility to Q131 Mr Clapham: The Law Society has been try to unblock that. It is proper that we should look particularly helpful in relation to their members, but at those claims that are stalled with solicitors for it is the group of claims companies that are very clarity’s sake and certainty’s sake, and to at least try diYcult to control, and it is a way of finding how we to bring some certainty to those claimants that are might exercise control on them. Having said that, I still in the system. The point that I have made about turn to three particular points that were raised by the where we are in the VWF scheme—we are virtually claimants’ group of solicitors around stalled claims. at the end of general damages. There are perhaps One of the questions they raised was why the DTI only between 10 and 12% of all claims in general insisted for example to tackle the backlog of claims damages that are yet to be settled or to have a stalled under the claimants’ side whilst it appears decision. We are not at the start. We are really at the that on the side of the contractors there was not any end. It is this remainder of claims that we need to pressure exerted to deal with that backlog. seek some clarity on, as to whether or not they Nigel GriYths: You will know, and I want to are progressing through the system. That is the make clear to everyone, that there is quite often on background as to why we felt it was appropriate as stalled claims a simple confusion—because of the proper, good business governance of the scheme, to 750,000 claims going in—about just where they are say that if a claim has stalled and is stuck in the in the chain. Sometimes solicitors believe that IRISC system, why is that? If we can progress, let us is sitting on them, and they are stalled at IRISC, and progress it; but the onus is on the solicitor, as far as sometimes on exactly the same claim there is that we are concerned, to tell us what the problem is. misapprehension that it is the solicitors. In order to With any new process there are teething problems, tackle that, we asked the Judge last year to put in and we have had further negotiations with the CG place a mechanism where claims that have not about areas of the stalled claims process that we can 3034421002 Page Type [O] 27-04-05 21:25:48 Pag Table: COENEW PPSysB Unit: PAG1

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1 March 2005 Department of Trade and Industry refine and amend. We think we have got to the stage aware of course that colleagues felt that that would now where it is operating properly, and while there not be seen as fair within their communities, and we were those discussions going on, we suspended the listened to you on that and decided accordingly. process because we thought it was proper to do so. But the Judge has endorsed it, and it is back on track now from 1 February, and from an IRISC and Q136 Linda Perham: You are saying you moved to Capita perspective they are resourced up to deal with a voluntary system because you were listening to the the correspondence that comes in. You are right to wishes of other members who, from their experience say there are only 4,000 claims, and that is something in their communities, decided that their feeling was like 3% of all the claims we have handled for VWF that that would be a better system? Y that have gone into this process. That is probably an Nigel Gri ths: Indeed. The Judge instructed us to indication of the fact that there are not significant look at a compulsory scheme as one of the options. volumes of claims yet to go through the system. We did it, and having taken soundings from those V There are a small number that are stuck, and we need most a ected we decided that we would not go to know why. forward on the basis of a compulsory scheme; that that would cause claims to be settled a little later, but it would not be seen to be unjust. Q134 Mr Clapham: Is it fair to say that now Ms Taylor: At that stage we were looking only at discussions are taking place with the solicitor and we making oVers to those people who on spirometry are getting over some of the feeling that perhaps showed normal lung function, so their respiratory there have been some shortcuts taken by not function was normal on the spirometry readings, discussing with the solicitors that have led to frayed and only a small percentage of those people would relationships, shall we say? have gone on to show disability in the full MAP Ms Chamberlain: It is fair to say there were frayed process—around 6% of those people. It was a group relationships but then at the end of the day the Judge of claimants who very likely were not going to be was involved on numerous occasions, and on the last disabled, and we were proposing an average tariV. occasion she went through the whole of the The scheme has moved on since then and we have a agreement and endorsed it. In fact, at an earlier wider group in there. hearing she went further than the Department had Nigel GriYths: There are those of us who know— proposed by deciding that a claim, once it is through those of us in here, but the wider world perhaps does this process, is out and outside of the scheme. That not—that there is only a finite number of medical was her decision. We tried to involve the Judge in specialists who can carry out the medical assessment making decisions where it was appropriate to do so, process. There are about 600 respiratory specialists but inevitably when you are talking about claims in the country, and we are using 200 of them, one- which potentially have the capacity to exit the third of just about all the available man and woman scheme, you are talking about contentious areas power, to put people through the proper levels of where there will not necessarily be a degree of unity testing that we know unfortunately medical with solicitors that that is what should happen. practitioners cannot be brought up to the proper standards on and deliver full and just assessments. It Q135 Linda Perham: Minister, can I ask you about is a desire to harness the resources that we have got the fast-track oYce for COPD? I understand last there, and that is one of the major bottlenecks of year the Department tried to introduce a that scheme that we have been working hard to compulsory system and has now fixed on a overcome—and I am grateful to the medical voluntary one. Why was the attempt made initially profession. to move to a compulsory system? Mr French: Around 90% of the claimants with Nigel GriYths: Because that is what the Judge asked normal lung function would go on to show chronic us to do. The pressure to fast-track has come from bronchitis in medical assessment, although they MPs, from sick miners, from unions, from widows would not have disabling chronic obstructive and from solicitors; and the Judge agreed to that. In pulmonary disease. That is why we are proposing September he instructed our Department and my fast-track payments to that group rather than denial colleagues to look at the options, and he specifically of the claims. asked the parties to examine a compulsory tariV scheme for miners showing little or no health disability. This was done to try and stop those who Q137 Mr Berry: May we turn to minimum are the least aVected from delaying the claims of payments, an issue that you would expect us to raise? sicker miners. Anyone with high levels of disability From the start of the COPD scheme, the DTI has at the spirometry tests would still go straight to refused to accept the principle, and has not yet MAP and still will. I recognise that the Judge’s wish accepted the principle of a minimum payments for us to examine a compulsory fast-track scheme scheme. Why is that? did not command the support of the claimants’ Nigel GriYths: Because there is no real scope for the group. In fairness, the solicitors in front of the Judge Government to overrule the amount that is did object all along; however, it is wrong to suggest calculated using a court formula, and on the basis of that the compulsory scheme originated from us, millions of cases of civilians who suVered from when the Judge himself said that on the basis of an medical problems that are directly attributable to estimate a compulsory scheme would make the their workplace, it would leave any litigant who was process that we all seek even faster. 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1 March 2005 Department of Trade and Industry against a Government department or agency, to say, payments. Within the confines of the judicial “give me a higher ex gratia payment”. That is one of decision, there is a problem, but outwith the judicial the key problems with it. decision, where the money would be sourced elsewhere other than government, then it is possible Q138 Mr Berry: Why are you discussing the issue of to do it. minimum payments? Nigel GriYths: I am happy to take that as a Nigel GriYths: We are discussing it because the summary. solicitors proposed a solicitors’-funded scheme to Chairman: That is where we start from. Roger would provide a minimum payment of £500 to me some like to pursue a couple of points. time ago. Q143 Mr Berry: The solicitors suggested that it Q139 Mr Berry: Sorry, but is the issue here the would be impossible to fund a minimum payments principle, or is the issue the funding? I thought your scheme through the increased funding they will be first answer, Minister, was that it was an issue of able to get from the RPI increase. principle. Nigel GriYths: It would be? Nigel GriYths: Correct. Q144 Mr Berry: It would be. Q140 Mr Berry: If it is an issue of principle, I do not Nigel GriYths: No. On our calculation they have understand why there is a discussion of funding. said that that is their preferred way of doing it, which What is the point of having discussions five years is to take half of the increase in the RPI. The down the line on funding when you are saying you shortfall, if was to be applied last year, is estimated cannot do it or should not do it? at 400,000 and would not fund it—it would leave Nigel GriYths: No, I am saying what we are not able 1,600 miners without money to make up for the to do. I am sorry, I have not made myself clear. The minimum payment. solicitors some time ago proposed to me that there should be a solicitors’-funded scheme to provide Q145 Mr Berry: Their argument is that if that minimum payments of £500. I think that that is on scheme had been implemented when they first the basis, as I said earlier, that we have paid some suggested it, it would have covered the costs. Are £477 million to solicitors in fees. I am not making a they wrong? comment on that. The solicitor’s standard fee is Nigel GriYths: I do not know whether they are right £2,300 plus VAT. I can appreciate the feeling of or wrong on that. To be fair to them, I have been some solicitors that to their client this may seem high warned throughout that it would not fund it, and I when the settlements that they are asking them to can tell you retrospectively if it had been brought in accept, because of for instance heavy smoking, were to cover last year, on the figures I have seen, our reduced to a few hundred pounds. actuaries have advised me that the shortfall would have been £400,000. Q141 Mr Berry: Forgive me, I am still not clear whether it is the principle you are opposing the Q146 Chairman: Can you send us a note? minimum payment scheme, or you have not yet Nigel GriYths: Yes. found a funding way that is acceptable. Is it the first or the second? Q147 Mr Berry: Is there any argument that has been Y Nigel Gri ths: The second. suggested that a delay in considering that proposal eVectively means that it goes from being fundable to The Committee was suspended from 4.04 pm to being non-fundable? I would be very keen to see the 4.27 pm for a Division in the House of Commons numbers behind that. Nigel GriYths: I am very keen to supply them, but Q142 Chairman: As I understand it, if I may clarify there is a fundamental objection to that way of doing the situation, the protocol which followed the things, and it is illustrated by the figures I have given; judicial decision that triggered oV the whole process but there is no guarantee that that would be self- does not provide for minimum payments funded by funding. Indeed the fears of our oYcials on this were the DTI. The Judge has indicated however that well-founded, if you apply it back—and I will supply minimum payments could be introduced provided the Committee with the figures. From day one, when they did not come from public funds, and that at the solicitors proposed this, I have given it every least some of the claims settlement community are encouragement. We have told the court. We were prepared to forego some of their fees on the told that they could not fund it directly because the understanding that they would be used for minimum Law Society did not allow for that. We checked with payments, because the understanding that we got the Law Society and they confirmed that it could be was that since a minimum amount of work is funded in a way that would allow us to cut out the involved in minimum payments, nevertheless the fee bureaucracy. My objection to the way the solicitors is on a pro rata basis, which does not necessarily have suggested that they pay this is not just that it relate to the amount of eVort that the solicitors put could lead to a shortfall of hundreds if not thousands in. They are saying that given the minimal amount of people not getting that minimum payment having of eVort involved in minimum payments, they would had high expectations, with no chance of a pay-out; be happy to forego at least a part of their fee, and but I was suggesting that the simple way to achieve that that money could be used to fund the minimum the minimum payment was for the Department to 3034421002 Page Type [O] 27-04-05 21:25:48 Pag Table: COENEW PPSysB Unit: PAG1

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1 March 2005 Department of Trade and Industry send solicitors monies to cover their fee and the employment, that is to say claimants who worked compensation so that the miner would get £500 and underground and then on the surface, because we the solicitor the balance. If I might give an believe that their underground employment would illustration, if they assess compensation of, say, take them to a threshold of exposure after which £400, the solicitor would get a cheque for £2,200 not further exposure on the surface could cause them £2,300, and the miner would be passed a cheque for damage. £500. In terms of making this administratively simple and ensuring the speediest payment, I clearly believe that this is the best way forward. Q151 Judy Mallaber: As of now, are you saying Chairman: We look forward to receiving the the door is still open for further discussions if the additional information. solicitors’ group comes back with further evidence and arguments? Nigel GriYths: I do not want to egg the pudding, but Q148 Judy Mallaber: On surface worker claims, in I went out of my way to accede to their very the evidence session last week the solicitors’ group reasonable request to look at the court records we conceded that your refusal to accept liability for held, because they felt that they did not have full and surface worker claims was legally correct, but that appropriate access to them. They were given that. It you should recognise your moral responsibilities. was as a result of that that I have catalogued the Do you not think that you have some form of court hearings. Everything was very optimistic until responsibility to these men? late last year. They informed the Judge they had Nigel GriYths: My responsibility is to make sure identified 15 cases. They had set aside their medical that people who have suVered lung disease because experts to look at it, which is why I am sure, because they have inhaled coal dust get compensation. There of his commitments, and also wanting to do a are two ways of achieving this. There is the way that thorough examination, they were not expecting to is open to any individual at the moment, which is report back to the court until January. However, through a civil case—and of course the schemes we from the evidence they gave last week it appears that are talking about were because of a number of civil what Nick French has just said is right; that there is cases advanced—or to bring them within one of the not evidence, and they cannot get cases where they schemes we have. Our problem is this: in September can show measurable levels of damage to lungs 2003 I agreed to open the records for the inspection of solicitors to see if they could advance cases that caused to surface-only workers. show that COPD has been caused on the surface. From 5 May of last year the solicitors told the Judge Q152 Mr Clapham: Can I respond to that, Minister? that they would be preparing a case for 9 July. On 13 As I understood what was said last week, although July they asked for an extension to 1 October. On 4 there were 15 cases, the real diYculty is that there October they asked for a further extension to 17 were no readings in the coal preparation plants November, and at that time they asked for an where these men had been exposed. The extension to January so that their medical expert, underground workings were monitored on a very Mr Rudd, could examine 15 cases. On 14 December systematic basis, but the coal prep plants were not they withdrew their claim. I have since written to monitored as such. Consequently, although one can them, asking them why, and I have not yet received identify men who have a chest disease, being able to a response. prove that that chest disease was due to excessive dust becomes extremely diYcult when there are no Q149 Judy Mallaber: So the ball is in their court. gravometer readings taken in the coal preparation Nigel GriYths: Very much so. plant. I understand that is what the solicitors were saying yesterday; but if you are saying that you Q150 Judy Mallaber: I understand what you are would be prepared to discuss the matter further, I saying about taking civil claims, but obviously that am sure it might be able to be taken further towards is a real problem, given the cost for an individual to a conclusion. take a common law claim for this. Nigel GriYths: I would hope so. That is a very Nigel GriYths: Of course there are ways for low helpful explanation. I think though the reason why income individuals, people with disabilities on low there was not monitoring in those surface areas and incomes, to look at how they can get funded for that, the reason why the National Union of Mineworkers either through legal aid; or it can be agreed—and I would have insisted on it, almost throughout the am not speaking as a qualified lawyer here—how a history of the union, was because they well knew that payment can be appointed, in terms of taking those there was a real deep-seated problem underground, cases between the claimant and the defendant. and in those locations; and therefore it had to be Mr French: The diYculty we have is that according monitored. There is an element of commonsense to our evidence the levels of respirable dust on the that says to me that because the surface was not surface will be too low to cause COPD in all but the thought in any way to be comparable, then the most extreme susceptible cases. On that basis, it does monitoring was not pressed for by the workers’ not seem logical to set up a scheme to pay damages representatives and certainly not acceded to by the for COPD to these claimants, whereas we can look mining companies. That is the strong impression I at individual claims that are advanced. The other get, which would reinforce what spirometry and point that I would like to make is that we do already other tests I understand are saying about surface compensate claimants who had so-called mixed working. 3034421002 Page Type [E] 27-04-05 21:25:48 Pag Table: COENEW PPSysB Unit: PAG1

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1 March 2005 Department of Trade and Industry

Q153 Mr Clapham: Another explanation of course is Mr French: A number of claims have already been that the underground took precedence, and there processed in relation to small mines, so we are was little done. I can tell you that I worked for two starting to make oVers. I think perhaps the software years as a member of the safety team, and as part of issue you are referring to is in relation to pension that my job was air monitoring and dust sampling. calculations. We are in discussion with the I can count honestly on one hand over the two-year claimants’ solicitors group and with the small mines period the times that we went into the coal prep about amendments to the pensions calculator that plant. will be required for some claims. I understand that it Nigel GriYths: You speak with great authority on only aVects claims whose last period of employment this subject. was with a small mine, so we are paying out those Mr French: I think we would all agree that the claims that we can at present whilst actively seeking principal issue relates to dust levels. I do not think to resolve the issues with the claimants’ solicitors the claimants’ solicitors’ medical expert would and with AGF, so that all of the claims, even those suggest that if the dust levels we have are correct, claims where the final period of employment was men who worked only on the surface would contract with a small mine, can be fully discharged. COPD from working on the surface. Their issue is that the dust levels we have are incorrect. We have Q158 Judy Mallaber: Are you saying it will not be given access to the claimants’ solicitors to look possible to resolve the pre-1972 claims? through the dust records, and they have not as yet Mr French: That is a separate issue. The issue now is found evidence that supports their position; but we that—not the claimants’ solicitors but some all agree that it is the central issue. coalfield representatives—have suggested to us that in the absence of an insurer for those claims pre- Q154 Mr Clapham: It may be, Minister, if we can sit 1972, that the Department should accept liability for down and discuss the matter, that we might be able them. Our advice is that we have no legal liability for to come to a satisfactory conclusion. those claims where there is no insurer pre-1972. Nigel GriYths: I can undertake to colleagues and to this Committee that we will give maximum Q159 Judy Mallaber: Will a moral liability be cooperation to resolving this. accepted to include those people who just happen to have slipped through the net? Nigel GriYths: Obviously, we look at how, within Q155 Judy Mallaber: Can I move on to another the parameters we work under, we can secure justice, unresolved issue and clarify the position on but it is a diYcult area. The courts are likely not to small mines? My understanding from the last find us liable. We cannot be liable for everybody else correspondence I had with you Minister, is that who is not liable, if you know what I mean; so if agreement was meant to have been reached on people fall down on their liabilities, government of incorporating small mines in the Claims-Handling course does not automatically pick that up. That is Agreement, but we certainly still know of solicitors why we are working hard with the smaller mines to where—some small mines are still contesting their try and ensure that they meet their commitments. I involvement within that. I, and others, have am sadly certain that there will not be 100% justice constituents who may well die before this issue is in this area. resolved, and I wonder whether you can clarify the current position. Nigel GriYths: Not too many, I would hope. I think Q160 Chairman: Do you think that on some of the there have been significant moves by small mines. points relating to small mines, you could write to us Mr French: There is agreement between the in relation to points you would want to clarify? That Department, the claimants’ solicitors and AGF who would be helpful. represent the interests of small mines, who are the Mr French: Yes. insurers of small mines from 1972 onwards, about incorporation of small mines into the Claims Q161 Mr Clapham: Can I pick up a couple of points Handling Agreement. There is an agreement that is that Roger raised with IRISC Capita on the issue of now being operationalised. There is an issue in the fraudulent claims. There are 1,500 of which it is relation to claims pre-1972, where there is no fair to say that 300 have been found to have some insurer. element of exaggeration rather than fraud; and that resulted in the damages being modified in some way or another. Is it possible to say how much money has Q156 Judy Mallaber: So it is not relating to specific been saved as a result of having a special mines; it is relating to the timescale. investigation department? Mr French: My understanding is that it relates to the Nigel GriYths: I think it will be hard to quantify timescale. for one clear reason: there are figures covering those cases, but of course by having such a Q157 Judy Mallaber: The other question is how long department and people being aware that they it will take the British coal insurers to resolve the should retain as sharp a memory as possible and software issues that we understand are still on exaggerate as little as possible, then there is a disaggregating the claims arising from British Coal deterrent there to any element of dishonesty. and from small mines employment. When will those The vast majority of people are perfectly honest. I software issues be dealt with? am advised that we estimated the saving on the 3034421002 Page Type [O] 27-04-05 21:25:48 Pag Table: COENEW PPSysB Unit: PAG1

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1 March 2005 Department of Trade and Industry

156 denied claims to be £1.85 million as a result of to clarify with us as well, so we would be happy this; and the 132 reduced claims that were to receive the correspondence. Thank you for your mentioned by Capita is £1.25 million; so the savings evidence. were £3.1 million on those specifically. That was on Ms Taylor: Can I say one thing before we finish? 1,594 claims that were referred, which, as you One of the things you said last time really stung rightly point out, were only 0.2% of all claims me when I was looking back through the transcript, registered. about transparency rarely being found on the heart of oYcials when they died. Actually, we have tried in my team to wear transparency on our Q162 Mr Clapham: Is it possible to say how much sleeves. We have tried very hard to be open with was spent on investigating those cases? Y solicitors and other stakeholders. We do have joint Nigel Gri ths: I am advised it was £500,000. operations meetings. We have provided masses and masses of information to the solicitors’ group and Q163 Mr Clapham: Half a million pounds on other people. That is certainly something that we investigation and so in cost/benefit analysis there have tried throughout the whole of this process to has been a benefit. Is it possible to say how much do. It is diYcult and we have probably failed in all the special investigation department is costing sorts of areas, but we have tried very hard to be as annually? transparent as possible so that when the sunshine Ms Taylor: Half a million pounds. shone on us people would say that everybody knew what we were doing. Q164 Mr Clapham: Half a million pounds annually. I thought that related to the cases that Q166 Chairman: Ten years in this job as Chairman has made me very conscious of the obfuscating we had identified rather than the cost of the tendencies within the British public service, and if department. for any reason I have lumped you in with the rest Ms Taylor: It is about half a million pounds a year of them, please forgive me. There are characteristics to keep the special investigations department. within the DTI and beyond in Whitehall that sometimes tend to veer towards opacity rather than Q165 Chairman: I think we have covered all the transparency—let us put it like that. Thank you for areas. Having said that, if there is something else your evidence. that we think of, we will write to you, I imagine. Nigel GriYths: Thank you for your commitment to There are obviously some points that you will want this issue.

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Trade and Industry Committee: Evidence Ev 33 Written evidence

APPENDIX 1

Memorandum submitted by Coalfield Communities Campaign

1. Coalfield Communities Campaign (CCC) 1.1 The Coalfield Communities Campaign (CCC) is the all-party association representing more than eighty local authorities in the present and former coalmining areas of England, Scotland and Wales. The coalfields in total include around five million people. Since its formation in 1985, CCC has played a pivotal role in promoting the economic, social and environmental renewal of areas aVected by mining job losses.

2. CCC Involvement 2.1 As a local government body from coalfield areas, CCC representatives have inevitably had to deal on a daily basis with the legacy of the coal mining industry. Part of that legacy is associated with the coal health compensation schemes. 2.2 When the court cases were won and the two main compensation schemes were set up, CCC was pleased that the Labour government was in the process of putting right some old wrongs and properly compensating miners for the damage to their health inflicted as a result of working in the coal industry. 2.3 Unfortunately, the message our local councillors have been getting for some years was that the way the schemes are administered is resulting in much frustration and bitterness. 2.4 With regard to the respiratory disease scheme, after the first year or so when the administrative machinery struggled to cope, successive ministers, the DTI and the organisations under them have worked hard to improve matters. There were huge diYculties delivering the biggest schemes of their type in the world. There are also so many complexities within the Claims Handling Agreement that it is not surprising problems have arisen. 2.5 Now, some eight years after the court cases, both schemes have paid out around £2.3 billion in total (DTI Press Release 24 January 2005). No one should play down the significance of this for former mining areas. Many ex-miners or their families have received compensation and in many cases they will be satisfied with the outcome. 2.6 Nevertheless, in general, people in the coalfields remain dissatisfied with the way the schemes have been operating. Despite the hard work of all agencies and the progress made in getting the administrative machinery to work, problems persist. The DTI has been keen not to dwell on the problems and appeared to take the view that it is just a matter of letting the administrative machinery do its job. It was not until after the scheme closed and the true size of the task ahead became clear that the DTI was moved to look again at the Handling Agreement and what could be done to expedite matters. 2.7 The Hand Arm Vibration Syndrome/Vibration White Finger (HAVS/VWF) scheme has had a lower public profile and less apparent controversy. Nevertheless, there are also some outstanding areas of concern within the HAVS scheme, mainly associated with Group 3 claims and the burden of proof required to establish a claim. In common with the respiratory disease schemes, these concerns have been expressed repeatedly by claimants, solicitors, the Monitoring Groups, not just CCC.

3. Respiratory Disease Scheme—Outstanding Issues 3.1 In January 2004, according to Hansard, there were 34,306 settlements for less than £1,000. That was some 26% of all settlements at that time. If that rate were to be applied to the total claims submitted (560,000) there could have been the prospect of over 145,000 claims settled for less than £1,000. Because of the recent Fast Track proposals, that will not now happen because fewer claims will go through the full Medical Assessment Procedure (MAP). In January 2005 the DTI assessed that there were 9,000 low value oVers outstanding. 3.2 Low oVers and low settlements remain a central concern of CCC. This has been for three reasons. Firstly, oVers have been made as compensation for respiratory disease that has occurred as result of working in the coal industry. Having won the right in court to compensation, an ex-miner with lung damage should be entitled to a fair payment no matter what other contributing factors are taken into account. Secondly, low oVers clog up the system because claimants are unwilling to settle. Thirdly, these low oVers are out of all proportion to the amount of resources used to process the claims and the amount of money going to the organisations involved. Reported in Hansard in March 2004, solicitors were being paid £2,000 for a claim that was worth only £200 to the claimants. This does not take into account the bill for the services of other contractors (Capita/IRISC, Atos Origin/Sema/Healthcall). It is unhelpful to create an impression that the claimants themselves benefit from the schemes the least. 3030281001 Page Type [E] 27-04-05 22:34:29 Pag Table: COENEW PPSysB Unit: PAG1

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The case for a minimum payment 3.3 CCC, solicitors (including the Claimants’ Solicitors Group) and Members of Parliament have all made the case for a minimum payment. The basis of this argument has been that there is both a moral and a practical case to make a minimum payment where damage to the lungs from working in the mines is established. 3.4 CCC contends that by rigidly applying the Handling Agreement and the mathematical formula that is supposed to work out a fair apportionment of liability, oVers are made that do not come near to those routinely oVered in County Court settlements. 3.5 For every low oVer made in the coal health schemes for respiratory disease, hundreds of other County Court settlements could be used to demonstrate the inequity. Two examples as comparators are included here but these are not unusual. 3.6 Case 1—an ex-miner with 13 years in the coal industry in Derbyshire was found to have chronic bronchitis and his un-apportioned award assessed at £5,304. Using the Handling Agreement calculator the recoverable proportion (taking into account smoking) was just 0.31% of the total, resulting in an oVer of £17.64. 3.7 Compare this to a 46 year-old woman in Taunton was awarded £925 for a lumber strain as a result of a minor road accident. She has some time oV work but was fully recovered in 12 weeks. 3.8 Case 2—an ex-miner with 13 years’ underground service in County Durham was oVered £33.36 due to 24 years of average smoking being taken into account. 3.9 Compare this to a publican who was sued by a customer for a small cut to the little finger of a child from broken glass. The child was left with a half a centimetre long, faint scar and was awarded £962.05p.

Fast track and minimum payments 3.10 For many years the DTI defended the Handling Agreement and therefore saw no problem if thousands of claimants were oVered compensation of less than £1,000. In many cases the oVers were for much less—sometimes just a few pounds. More recently with the fast track scheme, the DTI has demonstrated a willingness to be more flexible in order to address the problems of so many claims and the potential work load for many years to come. 3.11 The new Fast Track or Risk OVer proposals try to balance fairness with expediency just as CCC has argued. If a claimant is found to have some lung damage as result of working in the coal industry he will now be compensated for no less than £1,400. The bottom tariV for deceased claims is £1,000 for estates and £1,200 for widows. 3.12 Under the new Fast Track scheme—the same ex-miners referred to in the previous examples who were oVered £17.64 and £33.36 would have been oVered £1,400. 3.13 Yet in the DTI Report to court of January 2005 it is categorically stated: “The Department has made it clear that public money will not be used to fund a minimum payment.” (Paragraph 44, page 11.) 3.14 The DTI is therefore not considering introducing any type of minimum payment outside of the Fast Track option, either for claims still in the system or retrospectively. 3.15 Instead the DTI have focused on the solicitors’ proposals to top-up payments to a £500 minimum using a proportion of their own fees. CCC would not wish to dissuade the solicitors from making a contribution in this way, but this is a reflection of the embarrassment they feel because the scheme has produced such derisory oVers in the first place. Solicitors should not be put in such a position. 3.16 The Government took over the liabilities of British Coal, therefore it is the obligation of the DTI to address this issue and not the solicitors. By supporting a minimum payment on the proviso that someone else pays, the DTI is side stepping its responsibilities. 3.17 CCC takes the view that the Handling Agreement produced unfair results at the bottom end of the compensation scale and that it is neither a misuse of public money nor does it set a dangerous precedent to make the necessary changes to accommodate a minimum payment. 3.18 Taking into account the money already oVered, the overall cost to the Government would be relatively modest and only a fraction of the many billions of pounds involved in the schemes overall. With regard to minimum payments, it cannot be fair to have such a discrepancy between very low settlements under the full MAP scheme and the current minimum of £1,400 for live claims under the Fast Track option.

Surface only claims 3.19 The longstanding issue of claims for coal mining employees who only worked on the surface appears no nearer a satisfactory resolution. Although the number of mineworkers who may wish to claim in this category is relatively small, the DTI and its solicitors have resolutely defended their exclusion from the scheme. This position was adopted based on their interpretation of an expert medical opinion. 3030281001 Page Type [O] 27-04-05 22:34:29 Pag Table: COENEW PPSysB Unit: PAG1

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3.20 After the Judge gave leave for the Claimants’ Solicitors Group to search for evidence in British Coal records, prospects for real progress improved. However, faced with financial risks associated with group litigation, the CSG have not proceeded. 3.21 Although this issue has been back and forth between the various parties involved, the basic argument remains the same. It is universally accepted that a great deal of airborne dust was generated in coal preparation plants and coke batteries. Records of the levels of dust were not routinely kept, therefore finding evidence to support claims has been more diYcult. Nevertheless, there is an established causal link between coal dust and respiratory disease. It is not surprising therefore that the question continues to be asked—why was British Coal (and now the DTI) found liable for exposing its underground workers to harmful dust but not those who worked in dusty conditions on the surface? 3.22 In Hansard (27 January) the DTI minister gave an undertaking to examine the position once more. CCC welcomes that and hopes that justice can be done for this excluded group of mineworkers.

4. Hand Arm Vibration Syndrome (HAVS) or Vibration White Finger (VWF)—Outstanding Issues 4.1 The HAVS/VWF scheme was closed at the end of October 2002. Yet only 60% of the claims have been settled. This is in part due to the continuing wrangle about denials of Group 3 claims and in part due to outstanding “services” claims. The current and long running argument is mainly about burden of proof. A claim is placed in the Group 3 category if the assigned job did not involve using the relevant vibrating tools. An assumption is made that because it was not in the job description the claimant cannot have used the tools and they are automatically denied. Claimants then have to find evidence to prove otherwise. 4.2 The English Monitoring Group has consistently challenged the approach of the DTI and its claims adjusters to Group 3 cases. A dossier containing seventeen examples was submitted by the English Monitoring Group in 2003. The intention was not to resolve the individual cases but to demonstrate that the adversarial approach of the DTI and its contractors was biased against the claimant. 4.3 Denials have been based on misunderstandings about mining practice and an assumption that claims in the Group 3 category were less legitimate than others. There is a requirement for claims to be supported by evidence from two witnesses. This is very diYcult to achieve especially with older or deceased claimants. Capita/IRISC have discretionary powers to settle for less evidence but have, by and large, chosen not to. 4.4 Where evidence is produced by claimants and backed up by witness statements, it appears to have little validity in the eyes of Capita/IRISC adjusters. The role of the claims adjusters is key to the problem with many of these denials and there is a continuing argument about the written guidance they use to make assessments.

Some examples of injustice 4.5 Case 1—The claim was denied of a shift charge engineer (electrical) who worked at Murton colliery in County Durham. The IRISC claims adjuster asserts that the claimant could not have used any vibratory tools because he was too busy doing other work and could have deployed someone else to use the tools if necessary. Witness statements from fellow workers of the claimant were ignored. 4.6 Case 2—A coal face overman worked at Horden colliery (County Durham) for 35 years. His claim for vibration white finger was denied because using the specified tools was judged not consistent with the job of a face overman despite witness statements to the contrary. 4.7 Case 3—A miner from Maltby colliery (Yorkshire) was denied, then reviewed, then denied again despite the fact that his training records and an accident report clearly showed him to have worked as a face ripper during part of his post-1975 service. Ripping is a Group 1 occupation and involved regular use of the specified tools. 4.8 Case 4—A worker at Duckmanton workshops in Derbyshire was denied a claim despite his boss confirming he often used vibrating tools. After his local MP took up the matter with two DTI ministers, IRISC agree to look at it again and an oVer was made. 4.9 Such cases are commonplace in HAVS/VWF denials. Very often the success or failure of the claim comes down to vague assertions about mining practice and the assumption that “one man one job” was the universal code of all mineworkers. On the contrary, the very nature of mining meant that tasks were interchangeable and that diYculties were overcome by teamwork with the use of all kinds of tools, including compressed air tools or similar. 4.10 Several thousand Group 3 cases were eventually re-examined by Capita/IRISC. A significant proportion of the re-examined cases were found to be in fact Group 1 or 2 cases ie in occupational groups eligible for compensation. This demonstrates that many initial denials were made with little reference to the evidence. 4.11 It is a recurring theme at Monitoring Group meetings that Capita/IRISC have not always followed the correct procedure or have missed some important information. Missing information or no record of letters received, for example, may seem fairly trivial administrative matters but, taken as a whole, they give the impression that claims are being blocked rather than simply processed. 3030281001 Page Type [E] 27-04-05 22:34:29 Pag Table: COENEW PPSysB Unit: PAG1

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4.12 There can be no winners if these claims are allowed to drag on for years, costing the taxpayer much more than if reasonable settlements were made based on the balance of probabilities. The approach of the DTI and the adjusters appears to have been to stonewall these claims until they become time-barred or the claimant just gives up. In such circumstances any mutual trust between parties is lost. The recent concern about the use of lie detection technology (Hansard, 10 January 2005) only serves to reinforce claimants’ perceptions.

5. In Conclusion 5.1 Throughout the life of the coal health compensation schemes there should have been a willingness on all sides to adapt to a developing situation. After all it was entirely new territory, particularly with regard to the volume of claims for respiratory disease. It is only by learning lessons and then implementing sensible policy solutions that a satisfactory outcome can be achieved. 5.2 Ministers and the DTI have responded to developments and taken action to move matters forward. It bears repeating that these schemes were huge and, with the best will in the world, many diYculties would have to be overcome. Yet an element of an adversarial approach remains. 5.3 The assertion that the DTI cannot use public money to help fund a minimum payment flies in the face of common sense. The Handling Agreement has been modified to address practical issues and it can be modified to provide a minimum payment for all. The new fast track proposals demonstrate clearly that there is suYcient flexibility in the system and that there need be no precedent set for industrial disease and injury benefits outside of the scheme. 5.4 A similar willingness to balance fairness and expediency for surface only claims and the remaining outstanding issues in the HAVS/VWF scheme would go a long way to resolving problems and make faster progress towards completion of the whole process for both schemes. February 2005

APPENDIX 2

Memorandum by the Department of Trade and Industry

Terms of Reference The Committee intends to review the scope of the two schemes and their administration, including claims registration and handling, the coordination of these processes with the medical assessment procedures, the claims settlement process and the scope for accelerating the settlement and payment of claims.

INDEX Title Page—Including Terms of Reference Index Glossary Introduction Background Judgments and Handling Agreements The Conditions Parties to the Process Flowchart for COPD claims Flowchart for VWF claims Flowchart for VWF Services claims Medical assessments Record collection Progress Constraints Electronic delivery Communications Monitoring the Processes Fraud 3030281002 Page Type [O] 27-04-05 22:34:29 Pag Table: COENEW PPSysB Unit: PAG1

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EYciency Recent Progress Remaining Issues Aspirational Scheme End Dates Conclusion Annex A—Copy of the COPD CHA on CD-Rom* Annex B—Copy of the VWF CHA on CD-Rom* Annex C—Copy of the latest COPD quarterly report to court Annex D—Copy of the latest VWF quarterly report to court Annex E—COPD Claims Process Annex F—VWF Claims Process Annex G1 & G2—Headline Statistics Annex H—Top 25 constituencies by total compensation

Glossary ASEDS—Aspirational Scheme End Dates BCC—British Coal Corporation CAPITA—Is not an acronym CB—Chronic Bronchitis CBE—Chronic Bronchitis and Emphysema CG—Coordinating Group (the negotiating group of solicitors) CHA—Claims Handling Agreement (COPD)/Arrangement (VWF) CLU—Coal Liabilities Unit COPD—Chronic Obstructive Pulmonary Disease DWP—Department for Work and Pensions FEV1—Forced Expiratory Volume (of air breathed out in first second) FVC—Forced Vital Capacity (maximum volume of air that can be breathed out with maximum eVort) IRISC—Is not an acronym MAP—Medical Assessment Process RS—Respiratory Specialist VWF—Vibration White Finger

Introduction 1. The British Coal health compensation schemes have attracted considerable regional media and Parliamentary attention since the original court judgments seven years ago. This has increased over recent months, following the introduction of initiatives by the Department, miners’ solicitors and Sir Michael Turner, the judge who oversees the respiratory disease litigation, for speeding up the claims process. 2. This memorandum responds to a call by the Trade and Industry Select Committee for evidence in relation to the progress and administration of the coal health schemes.

Background

Judgments and Handling Agreements 3. DTI has responsibility for the two largest personal injury compensation schemes in the world, one for lung diseases due to coal dust (Chronic Obstructive Pulmonary Disease), the second for hand injuries due to vibration (Vibration White Finger). There are nearly 770,000 claims registered under the schemes, which are both now closed to new claimants. Costs are likely to be around £7.5 billion, with nearly £2.5 billion paid to date. Nothing like this, in size or complexity, has been attempted before. The Coal Liabilities Unit administers the schemes with some forty staV plus 1,700 people at six service providers involved in delivery.

* Not printed. 3030281003 Page Type [E] 27-04-05 22:34:29 Pag Table: COENEW PPSysB Unit: PAG1

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4. DTI took on these liabilities from British Coal on 1 January 1998 under the Coal Industry Act 1994. It had not been feasible to pass them on to purchasers of the pits due to uncertainty as to their nature and size and diYculty in obtaining employer’s liability insurance. British Coal was taken to the High Court in two separate group actions and found negligent in both, in January 1998 for COPD and July 1997 for VWF. British Coal was found negligent in relation to exposure to coal dust from 1954 to 1994 and in relation to VWF from 1975 to 1994. 5. The courts ordered DTI and the miners’ solicitors to agree detailed arrangements to assess compensation. The alternative, each claimant having to fight in court, was unacceptable to all, not least because the Personal Injury courts’ capacity is in the region of 10,000 claims per year. Detailed Claims Handling Agreements (CHAs) for dealing with the claims, which have now been signed up to by 700 or so firms of solicitors acting for individual claimants, were negotiated with the claimants’ solicitors coordinating group (CG). 6. As the judgments did not cover Scottish claims, a separate agreement for each scheme was negotiated for these. These agreements are substantially the same as those for England and Wales, diVering only where Scottish law is diVerent. In addition, separate agreements were also signed with the Union of Democratic Mineworkers (UDM) which were identical to those signed with the CG except for the levels of costs paid, which were lower as the UDM handle claims through their own claims handling agent. 7. The CHAs for each disease were then endorsed by the two High Court judges who manage all claims. They are necessarily complex as they specify how claims will be handled, in accordance with common law, and they reflect the judgments in the test cases presented in the group actions. Awards are set (at court levels) for given levels of injury, payments for financial loss due to that injury, and the broad weight of evidence is as required by a court. This is diVerent to a “no-fault” scheme (eg the Coal Workers’ Pneumoconiosis Scheme ) where less evidence is needed and smaller, less discriminatory awards are made. The courts oversee the CHAs’ operation aiming to avoid further court action. The judges resolve points of law and DTI and the CG report back to them regularly (3–4 times a year) on progress in settling claims. As the CHAs are contracts between DTI and the solicitors all changes are by mutual agreement. Copies of the CHAs are attached, on CD-Rom, at Annex A (COPD) and Annex B (VWF). In addition, copies of the most recent reports to the Court are attached at Annex C (COPD) and Annex D (VWF).

The conditions 8. COPD covers chronic bronchitis and emphysema, with breathlessness the main symptom, as the lungs cannot get enough oxygen into the blood, and thus into the muscles, to allow normal exertion. COPD is irreversible and untreatable, usually progressive and can cause premature death. In the general population, the most common cause is smoking. VWF aVects the fingers, with damage to blood vessels and nerves, and varies from temporary numbness and tingling, through reduced dexterity, to amputation in severe cases. It is irreversible and untreatable and worse when exposed to cold.

Parties to the Process 9. The Schemes are managed by the DTI who negotiate changes to the CHAs with the Claimants Group (CG). The CG represent the solicitors in the process. Sir Michael Turner presides as Court case manager for the COPD Scheme and Dame Janet Smith for the VWF Scheme. The administration of the Schemes is delivered through service providers contracted to the DTI who are responsible for claims handling, medical services, record collection and legal advice. The solicitors act on behalf of claimants and mainly deal direct with the DTI’s claims handlers. 10. A more detailed summary of the other parties responsibilities are detailed below: (a) Claimants Solicitors/UDM—Claims are submitted to the DTI Claims Handlers, IRISC. The DTI does not deal directly with claimants. Claimants representatives are responsible for taking instructions from their clients and providing the appropriate information and documentation to IRISC. They are responsible for assessing oVers and arranging acceptance and payment. (b) DTI Claims Handlers—IRISC have been the claims handling service providers for both Schemes since the CHAs were agreed in 1999. They were originally part of the Aon Group until February 2004 when Capita assumed responsibility for the service. Claims are processed at oYces in SheYeld, Manchester, Edinburgh and CardiV. IRISC’s responsibilities include claims registration, agreeing employment history, collating the documentation prior to medical records collection for COPD, valuing claims, making oVers where appropriate and providing claims handling policy advice to the DTI. They also have an MPs’ unit that provides answers to MP enquiries and information for parliamentary questions, in consultation with CLU. (c) Medical assessment—COPD—Healthcall were the service providers for the COPD Medical Assessment from 1999 to 2002. Responsibility for this transferred to Atos Origin, formerly known as SchlumbergerSema in November 2002. Atos Origin sub contract the collection of medical records to Elision previously known as MPC. 3030281003 Page Type [O] 27-04-05 22:34:29 Pag Table: COENEW PPSysB Unit: PAG1

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(d) Medical Assessment ı VWF—ATOS Origin, formerly known as SchlumbergerSema, have been service providers for VWF General Damages since the formation of the CHA. Aon Health Solutions were the original service providers for the VWF Services medical assessment process when it commenced in April 2003. Capita took over the company and assumed responsibility for this service in March 2004. (e) British Coal records holder;—Hays Record Management was originally the British Coal Records holder. The business was subsequently purchased by Iron Mountain. Whilst Iron Mountain store the British Coal Records all the data is wholly owned by the Department. (f) Legal Service Provider—Nabarro Nathanson are the DTI’s legal service provider for both schemes. They assist in the provision of legal advice to the DTI and with the management of the court process. McClure Naismith provide specific advice in relation to Scottish issues. 11. Disputes Procedures covering all aspects of claims handling, including medical issues, have been agreed for each disease with the CG. If the issues in dispute cannot be resolved the cases can, with the judges’ agreement, go back to court. However, to keep to an absolute minimum the number of cases that go back to court, the option of mediation (a form of Alternative Dispute Resolution) is available after the disputes procedure. To date no cases have proceeded back to court. 12. Claims for deceased miners are handled in broadly the same way as living claimants, using any medical records, a death certificate and post mortem report (for COPD), and DWP assessment for VWF. A statutory bereavement award is payable to the widow where COPD was the main or a contributory cause of death. 13. Diagrams showing the flow of the claims handling processes are below , and descriptions of the process are attached at Annex E (COPD) and Annex F (VWF). 3030281003 Page Type [E] 27-04-05 22:34:29 Pag Table: COENEW PPSysB Unit: PAG1

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High Level - COPD Flowchart ATOS Solicitors Capita IRISC Origin Iron Mountain

Take Claimants Instructions

Solicitors submit CAPITA send details to CAPITA register the claim claim medical contractor

Collate and submit CAPITA request records or advise if Employment Records unavailable

Solicitors receive CAPITA receive employment records employment records

Spiro results received at ATOS conduct the CAPITA Spirometry test (Live Claims only) (Live Claims only)

CAPITA make either an Accept or Reject Expedited Offer and the Expedited Offer/ claim is settled or the claim Risk Offer progresses to MAP (Live Claims only)

Solicitors complete and submit the ATOS requests Ellision to Claims collect medical rcords Questionnaire pack

CAPITA receive the Accept Offer or Denial MAP and make in Full and Final or ATOS conducts the MAP either an Offer or query/dispute Offer Denial

Ackowledge receipt of query or dispute and SETTLE THE consider CLAIM 3030281003 Page Type [O] 27-04-05 22:34:29 Pag Table: COENEW PPSysB Unit: PAG1

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High Level - VWF General Damages Flowchart Solicitor Capita IRISC ATOS Origin Iron Mountain

Take Claimants instructions

Prepare Schedule 8 and submit Letter of Claim Acknowledge Claim receipt, register and request records from Iron Mountain requesting further Sch 8 information if appropriate Collate and Supply further Submit records or information advise if unavailable Confirm minimum liability for VWF and prepare for Medical or Deny claim Agree Denial or provide Additional/ Supporting information

Request Medical from ATOS Origin

Perform Medical and submit report to Capita IRISC

Review Medical Report and prepare Offer or Denial for Claimant Accept General Damages Award in Full and Final Settlement, Agree Denial, Reject for another Head of Damage, Query or Dispute

Pay General Damages Award and Costs, Settling Claim

Acknowledge receipt of Query or Dispute and consider

Pay Interim and acknowledge Claim for additional Head of Damage

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High Level - VWF Services Flowchart Solicitor Capita IRISC Capita Health Solutions Helpers

Take Claimants Instructions

Collect Claimant Complete Helper and Helper Questionnaires Questionnaires

Reject VWF General Damages Offer for Services award, submit questionnaires Review submitted questionnaires request any missing information and prepare for Helper Calls. Query missing Information.

Provide further information

Corroborate Perform Helper information Calls supplied in Helper Questionnaires

Prepare Claim for Services Medical

Perform Services Medical and submit report to Review Medical Capita IRISC Respond to Report and Request for prepare Offer for Additional Claimant or information Request additional information

Accept Services Damage Award Offer or Query / Dispute Acknowledge receipt of query or dispute and consider

Pay Services Award and Costs* Settling Claim

(* Costs not yet agreed)

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Medical Assessments

14. The CHAs set out the medical assessments which will be conducted. The assessment processes were agreed by the Department and the CG with advice from senior medical experts in each condition. The assessing doctors are regarded as joint experts answerable to both the Department and the CG. These defined medical assessments for each disease produce consistent, reliable reports and replace the individual referrals by each party to a doctor of their choice, which is more usual in common law cases. Major delivery contracts allow nation-wide processing to assured standards. 15. For COPD, the first stage of the assessment is screening spirometry which shows the extent of lung damage, but not the cause, allowing risk and fast track oVers to be made, enabling claimants to leave th eprocess early. Alternatively it prioritises claimants, allowing the eldest and most severely injured to be seen first in the main Medical Assessment Process(MAP). In this a respiratory specialist, aided by lung function test results, medical records and a consultation with the claimant (in live cases), diagnoses any diseases and assesses disability due to COPD in 10% gradations, discounting co-morbidity (other disabling conditions for which DTI is not liable). The medical judgments involved require the use of specialists, they are not ones GPs could make. 16. For VWF, a long standing injury scale is used—though this is critically dependent upon the accurate reporting of his symptoms by the claimant—with evidence obtained by a combination of tests and an interview with a generalist doctor. The “staging” of the disease on assessment is then read across to agreed tariVs in the CHA. 17. The medial experts continue to provide advice and expertise as members of the jointly appointed COPD and VWF Services Medical Reference Panels.

Record Collection

18. Iron Mountain (the company who have custody of the former British Coal records) are responsible for the collation of an agreed employment records pack and its dissemination to IRISC and the claimants’ solicitors. The collection of these employment records has not been without diYculty as the existing records retrieval system was not designed for large scale, speedy retrieval. A further problem is missing employment records: some local records were destroyed as the industry contracted. Those records that survive can in some cases be incomplete, which can aVect the agreement of the employment history. 19. The Department has funded improvements to the Iron Mountain database to allow for comprehensive searching amongst the files that Iron Mountain hold. This has reduced the number of no traces, thus making the establishment of employment history easier. 20. The DTI introduced scanning of employment records to move away from a paper based system to allow easier storage, to lay foundations for electronic archives more fitting for the 21st Century and to assist for any possible future claims against the Department. 21. Electronic links between IRISC and Iron Mountain enable electronic transfer of information between these two key service providers. This reduces the amount of time needed to transfer information and the possibility of losing files. 22. Atos Origin have sub-contracted to Elision Group the task of collecting the medical records for individual claimants. The records include both GP and hospital records, as well as those held by the DWP and BCC medical records—although hospital records are only collected if the GP records are not available.

Progress

23. With regard to COPD, nearly 576,000 claims have been fully registered to date. In the last six months of the scheme over 250,000 claims (doubling the total number of claims) were received, mostly from younger men with potentially much lower levels of disability, and estate claims, where the miner died many years ago and is therefore unlikely to have any medical records. Nearly 183,000 claims have been settled and a further 78,000 interim payments made. In total over £1.3 billion has been paid to COPD claimants. 24. As to VWF, 170,000 claims were received prior to the cut-oV date. Nearly 100,000 claims have been settled and 97,000 interim payments made. In total nearly £1.1 billion has been paid to VWF claimants. Copies of the national statistics are attached at Annex G which show the current position of the schemes and Annex H shows how much has been spent in the main coal constituencies. 25. Levels of compensation vary greatly, as shown in the statistics, but the average settlements are for COPD £7,800 and for VWF general damages £7,400. 3030281004 Page Type [E] 27-04-05 22:34:29 Pag Table: COENEW PPSysB Unit: PAG1

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Constraints 26. The CHAs are, as Sir Michael Turner has previously stated, necessarily complex and the sheer scale of the schemes is unprecedented. This has meant that there have been a number of constraints in establishing and maintaining both schemes. 27. Following the Court Judgments of 1997 and 1998 there was tremendous pressure to see that compensation started to flow quickly to claimants, particularly those with lung disease, many of whom were old and sick and some dying of the disease. This meant that as soon as the structure and basic details of the Agreements were settled, the process had to be put into operation immediately. There wasn’t time to pilot the process. The Department has worked with both its service providers and the CG to address issues as they arose and tried to ensure that these delays to the flow of claims were kept to a minimum. 28. Sir Michael Turner has kept a close watch on progress of the lung disease scheme and while concerned about delays has commended the eVorts of all those involved to get the process going and noted that the complexities of the Scheme and the thorough medical assessment were a necessary part of ensuring that claimants get a fair deal. 29. Pressures to get money flowing out led to several significant changes in the process early on. On COPD, for example, the scope for expedited oVers was extended—on professional medical advice and on the basis of evidence from cases that had already gone through. This successfully got compensation of around £80 million paid in three months but also produced diYculties with some claims which were half way through the process. 30. In May 2000 the VWF Agreement was extended to cover a further head of damages—Services. Damages are paid as compensation for miners with VWF needing help with common household work such as gardening, car maintenance and DIY. Their eligibility for this is determined from a further medical and questionnaires completed by helpers. 31. The volume of claims has been much higher than anyone expected and this has led to problems in scaling up the process. At the time of the lead case trial judgment there were less than 5,000 VWF cases and the forecast total was around 40,000. On COPD, the figures were 30,000 and 70,000. These were the best guess estimates of the CG and DTI. No one had any firm basis for making these estimates—British Coal had estimated their total liability very much lower (only £50 million was included as a provision in their accounts). The outturn has been very diVerent (see National Statistics). As noted above, as at February 2005 there are nearly 170,000 VWF claims registered and 576,000 claims for COPD. 32. Managing rapid change has been a feature of both schemes. As claims began to increase significantly in 2000, plans were put in place by the DTI with its service providers to ramp up resources to deal with this increase. This included additional resources, enhancing existing systems and encouraging the use of e- technology amongst claimants’ solicitors. 33. The key constraint on the COPD process has been the availability of Respiratory Specialists in the UK that could be available to be trained in the Medical Assessment Process ( MAP ). There are only 600 respiratory specialists in the UK and around 200 are involved in the scheme. Service providers have ramped up resources to deal with rapid flow through of claims. IRISC for example increased claims handling resources on COPD from 140 in 2000 to 532 by the end of 2003 to accommodate the growth in claims. Due to the complexity of the work new members of staV are required to go through a steep learning curve which means it takes time to train individuals to the required standard. The Department has always involved solicitors in projecting flow through to ensure that claims are delayed as little as possible at each stage. On both schemes we have organised workshops for solicitors so that they knew what was happening on the schemes and what to expect going forward. 34. On VWF, there have been two main constraints. Earlier in the scheme, the provision of training records to confirm occupation was slow and cumbersome but was speeded up largely by the use of electronic data imaging between IRISC and Iron Mountain. 35. Latterly, it has become clear that the remaining general damages claims have a high level of co- defendant involvement (the claimant worked for mines other than British Coal’s); these claims are, by necessity, more complex to co-ordinate. A programme of activity is currently underway at IRISC to ensure the engagement of co-defendants in the process, particularly at oVer stage. 36. If those negotiating the CHAs had been able to see the volumes which would be going through the processes, it might have been that both sides would have recognised that the complexity of the Agreements, while accurately reflecting common law and the judgments (and thus giving every man his due) was not suitable for what is eVectively now an industrial process. The complexity has slowed delivery. Simpler schemes that involved more averaging would have been quicker in delivery, although less fair to the individual. 37. The slow start up caused by the formulation of the CHAs and the diYculties of resolving policy issues and then putting change into operation, have meant that many thousands of cases when they got to final assessment stage were held up because a full and final oVer could not be made. The rapid increase in volumes of claims on COPD over a short period of time in 2000 meant that service providers and solicitors could not handle all the cases in the time frames set out in the Handling Agreement. It was agreed by the parties to 3030281004 Page Type [O] 27-04-05 22:34:29 Pag Table: COENEW PPSysB Unit: PAG1

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suspend these timetables and a whole cohort of claims—those for miners’ estates other than widows—were, with the agreement of the CG and the judge, set aside so that live claims and widows’ claims could be dealt with first.

Electronic Delivery 38. When the parties were considering how to put into operation the administration of the Schemes in mid 1999 web use was only just taking oV. The CG believed that some solicitors would have diYculty in adopting electronic technology. 39. From the beginning the Schemes had some innovative e-business elements. Employment and medical records were sent to IRISC and solicitors on CDs and there were internal database links between the Service providers but, initially, solicitors were not part of the web community. 40. E-solutions over the last three years have significantly speeded up the process. Both Schemes have embraced e-business and the Department’s service providers and solicitors have greatly expanded the e- business element of delivery. For example, calculation models have been developed which have substantially improved productivity by reducing the time taken for complex calculations of special damages. These were shared with the solicitors on CD-Rom and are now available on the website. 41. Significant investments in electronic processes have included the DTI’s claims handlers introducing in 2002 an electronic document management system which saw 30 million pages of paper documents scanned into the system. All work at IRISC is now handled exclusively via electronic means. In addition, as noted above, the British Coal’s employment record archive was scanned, enabling copies to be circulated to both claims handlers and solicitors much more eYciently and speedily. 42. In August 2000 DTI contracted with Healthcall to develop a process by which, initially, certain databases could be accessed and claims forms could be completed electronically via the internet. The coalclaims.com website came on line at the end of October 2000 and solicitors welcomed the system as a way to speed up claims processing. The site was further developed in July 2001 to include a case tracking system. The site was fully revamped in September 2003 when the development and hosting contract was re- tendered and awarded to Cable & Wireless. This is the first e-claims website of its kind and is now used by over 2,000 individual users who represent some 60% of solicitors. 43. The website contains the Dust Calculator (for apportioning damages), the Schedule 10 Calculator (for special damages) and details of work history can be agreed over the web and oVers made. Claims handling teams can agree workflow of cases with solicitors so that both sides are working on the same claims to improve eYciency. Solicitors can use the website to provide management information about their own caseload.

Communications 44. DTI has monthly meetings with the CG for each scheme on claims processing and policy issues, with ad hoc meetings as necessary. Service providers attend on a regular basis. IRISC have developed routine contacts with solicitors, with Solicitor Liaison Managers employed to deal with the top 10 firms (who represent 80% of the total claims) on a regular basis. The Department and the CG get quarterly reports on the quality of the medical assessments from the service providers’ internal audits. 45. DTI produces a quarterly Compensation for Miners Newsletter which provides information on the schemes, progress to date, procedures etc and is circulated to GP surgeries, Citizens Advice Bureaux, Members of Parliament and mining unions. Ministers have also continued to write to interested MPs on a regular basis to bring them up to speed. 46. In addition, in November 1999 Helen Liddell, the then DTI Minister for Energy, established a Coal Health Ministerial Monitoring Group. The National Group comprises three members from each of England, Wales and Scotland with at least one MP and union oYcial from each. The CG, DTI oYcials and service providers attend the Groups meetings. 47. The purpose of the Group is to monitor the process “on the ground” and report back to the Minister about problems. It meets 3–4 times per year. In addition Members from the three national groups (England, Wales & Scotland) also meet together in between National Group meetings to discuss issues which are specific to their areas. Within England there are further regional groups established which meet regularly to discuss the specific impact of issues on their region. 48. To assist solicitors and claimants, DTI set up helplines for assessment queries, apportionment questions and for help with electronic forms. 49. The DTI has its own website with background to the schemes, current issues and figures of payments made broken down by constituency. It gets around 15,000 hits a month. 3030281005 Page Type [E] 27-04-05 22:34:29 Pag Table: COENEW PPSysB Unit: PAG1

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Monitoring the Processes 50. The main risks to smooth delivery of compensation have been problems and delays due to changes in policy or process and operational risks between the service providers and solicitors. CLU keep service providers’ performance under regular review and there are frequent meetings with them. There is a regular programme of audit of service providers ı systems, processes, and disaster recovery arrangements. CLU keeps a comprehensive risk register and its risk management processes have been commended by the National Audit OYce. 51. CLU has visited other public agencies handling claims to see if we could learn any lessons from them but no one is dealing with the handling of schemed litigated claims or with anything on this scale.

Fraud 52. There is an inherent risk within any scheme of this size that there will be some fraud. In COPD the medical assessment process is the main protection against fraud and in VWF the employment requirement serves the same purpose. About 10% of COPD claims and 20% of VWF claims are denied. The unit and its service providers also have procedures and controls in place for managing potentially fraudulent claims. There have currently been 1,500 cases registered as potentially fraudulent—most of them concerned with VWF services claims. 53. The Department has received requests from solicitors and members of the Ministerial Monitoring Groups to disclose the guidelines which our claims handlers use to identify potentially fraudulent cases. These were intended as internal documents and the VWF judge, Dame Janet Smith, has indicated that she agrees it would be inappropriate to disclose them.

Efficiency 54. Since the inception of the Schemes there has been a continuous focus at the DTI and with IRISC its claims handlers on eYciency improvements. Within DTI, for example, a high-level secondee from Shell UK worked with CLU for a year to restructure the CLU organisation and put in place improved arrangements for managing the CLU processes in line with commercial private sector practice for handling major projects. This work resulted in CLU taking on secondees from PWC and latterly Deloitte to provide professional input to project management, risk and audit work and process improvement. In addition, major benefits have been achieved at IRISC in terms of productivity improvement, quality enhancement, eVectiveness of communications, and assurance levels. Overall we estimate that the measures taken improved eYciency by around £100 million. This figure includes a saving of around £40 million from the retendering of contracts and a major contribution from the introduction of electronic calculators for special damages. 55. Since 2002, IRISC have operated a Programme OYce to manage major eYciency improvement programmes. In addition, both the VWF and COPD schemes have their own process improvement teams specifically focused on enhancing eYciency in their respective areas. 56. In addition to productivity improvements there have also been additional benefits in terms of accuracy and consistency. By allowing claimants’ solicitors access to the calculators, disputes over amounts oVered have also been virtually eliminated because solicitors are now able to check through the calculation themselves. This is a highly unusual, but beneficial feature of the claims handling work—it is not normal in litigation cases for defendants and claimants to co-operate to the extent of sharing systems. 57. Following the completion of the cut oV dates for VWF Services and Group 3 claims in March and June of this year both schemes will be in “run-oV” mode. The management challenges then will be to process diYcult “pockets” of cases where the work resource required to complete each case may be substantially diVerent and greater than that at present. To manage the run oV eVectively tight control of resources and strong management information systems will be required in order to set and control operational priorities. 58. To address the above management challenges, IRISC embarked, during 2004, on a “World Class Programme” with the overall objective of uplifting quality, service, and cost eYciency to top rate standards. The “IRISC World Class Programme” builds on the foundations and improvements already put in place, and will deliver a significant step change in performance to a “World Class level”. In addition the programme aims to deliver a review of the strategic options and practical solutions to deliver the schemes within acceptable and realistic timescales.

Recent Progress 59. Given the number of COPD claims received prior to the cut-oV date urgent and radical measures are required to speed up the settlement of claims. The steps in hand are described below in paragraphs 68–72. 3030281005 Page Type [O] 27-04-05 22:34:29 Pag Table: COENEW PPSysB Unit: PAG1

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60. The decision of key co-defendants, such as UK Coal, and AGF (the insurer representing the interests of small private mines) to sign up to the terms of the CHA is a welcome step forward. Work is in hand to make the necessary adjustments to the relevant calculators to accommodate these co-defendants so that cases involving more than one employer can be fully discharged. Cases involving small mines have already started to receive full and final payments. 61. In relation to VWF, there has been recent emphasis on progressing those general damages claims which have been through the medical process but have not yet had an oVer. This broadly resulted at the end of last year in every such claim, where practicable, either receiving an oVer or an interim payment. We have agreed cut-oV dates with the claimants’ solicitors for those remaining heads of damage; these come into eVect over the course of this year. The Court has also endorsed a stalled claims process which is aimed at flushing out or closing claims which are no longer active. This is being put into operation at IRISC.

Remaining Issues 62. A very small number of detailed COPD policy issues remain under discussion between the parties. In the great majority of cases, these issues do not prevent the oVer or settlement of claims. 63. The parties are at present in discussion on the issue of minimum payments. The CG believe that claimants whose claims are worth less than £500 following apportionment should receive a top up payment to bring the claim to the value of £500. They have oVered to fund this, asking the DTI to administer the payments on their behalf through IRISC. The DTI is willing to administer the payments but believes the payment mechanism should be sustainable, pointing to a need to fund the payments from solicitors’ core costs, rather than the CG’s preferred option of the “pot” of money available from forgoing the RPI increase on solicitors’ costs (which DTI believes may be insuYcient to meet requirements, in the first year of making such payments). The CG are considering this. 64. Claims from men who worked only on the surface in the mines were not covered by the COPD judgment which dealt with underground work. Surface-only claims are therefore outwith the scope of the scheme. Following a minute to Parliament on this potential liability in June 2000, the Department and the CG entered into negotiations on the possible inclusion in the scheme of surface workers and did agree terms on which men who had worked both underground and on the surface could be covered by the scheme. It was not however possible to agree terms for surface only workers and following a joint medical study, the DTI made clear that it could not accept that payments for COPD for surface workers could be schemed. The CG then initiated group litigation against the DTI. That litigation was withdrawn in December 2004. The DTI is of course willing to consider individual cases for surface dust compensation under a common law approach. 65. There are a small number of outstanding VWF policy issues aVecting a relatively small number of claimants. On Services there are two main areas requiring resolution which aVect claims: — Crossover—where a claimant is entitled to a payment under both the COPD and VWF scheme and the extent to which any such payment should be taken into account and, if so, how that it to be calculated. A Court Hearing is scheduled for 22–23 February to resolve this issue. — Employment—where a claimant is in employment which, at first sight, contra-indicates his claim for services (eg someone employed as a painter seeking compensation for help with decorating). The Department takes the view that it cannot, uncritically, accept the claimant’s account and will seek clarification in relevant cases. The judge agrees that we should make reasonable investigations. 66. The Department has not yet agreed solicitors’ costs in respect of services claims and a practical pilot is underway to evaluate this, looking at costs in a sample of cases. 67. On Group 3 (where claimants have to provide evidence of use of vibrating tools), there is an issue between the Department and the CG as to the extent to which apprentices and trainees should be routinely accepted into the scheme. An agreement is required as to the amount of time and usage of hand-held vibrating tools that such miners would be exposed to. It has been agreed that this issue should be referred to the Vibration Reference Panel, the jointly appointed advisory panel, for guidance. 68. There remains an issue about the qualifying criteria for Group 3 claimants and whether a solution can be found which would put them on a broadly equivalent footing to the criteria used for Group 1 and 2 claimants where the job done indicated suYcient exposure. The Department has made a proposal to the CG in this regard.

Aspirational Scheme End Dates (ASEDs) 69. COPD—Following the large influx of claims into the COPD scheme up to end March 2004, it was clear that at current rates of progress, the COPD scheme would extend up to 2009 for live claimants, and 2011 for deceased claims. The Judge overseeing the scheme, the DTI and the CG all regarded this timescale as unacceptable. As a result, the parties entered into negotiations on ways to speed up the settlement of claims. In mid-October, the Judge approved new optional risk oVers for 4 categories of live claimants, based on spirometry results. The idea behind the payments is that these claimants (who, for the most part, are not 3030281006 Page Type [E] 27-04-05 22:34:29 Pag Table: COENEW PPSysB Unit: PAG1

Ev 48 Trade and Industry Committee: Evidence

disabled, but who may have suVered from chronic bronchitis, which is a non-disabling condition) will have the option to take a risk payment based on the average for their spirometry category and leave the scheme. Those who do not wish to take the payment retain the right to a full medical assessment. 70. The payments will apply to over three quarters of remaining live claimants and will help to free resource in the MAP to deal with more seriously disabled cases. The risk oVers will go live on 28 February. The risk oVers fall into four bands but the amounts payable under each band are currently being contested by the CG. The rates currently on the table are £1,400 for those with normal lung function at screening spirometry and for those whose tests were avoidably unreliable; and £3,700 for those with a ratio failure; and £12,900 for those with failed reversibility. 71. The Judge has also ruled that risk oVers of £1000 to estates and £1200 to widows respectively should be paid for deceased claims where there is no evidence on the death certificate of COPD. Such cases are likely to recover damages for CB only at MAP. Again, this approach will help to free medical resource to give a detailed assessment to the more disabled cases where recovery of damages for COPD is more likely. The parties are in discussion on how best to put into operation the risk oVers for deceased cases. 72. The parties believe that, dependent on take-up, the risk oVers should bring forward the end dates for the COPD scheme to around 2007 for live claims and 2009 for deceased claims. 73. The judge has made rulings on solicitors costs with which we do not agree and the Department will be appealing the judgment on this issue. 74. The Department has put in place a number of aspirational end dates for the VWF scheme. The first, the making of general damages oVers, where practicable, to all claimants who have undergone their medical assessment, was achieved at the end of 2004. 75. The other aspirational dates are as follows: — all general damages claims settled by end quarter 3 2005, subject to co-defendant cooperation; — finish Services MAPs by end 2006; — settle all Services claims by end 2007; and — complete investigation of Group 3 claims by end quarter 3 2005.

Conclusion 76. The Department assumed the coal health liabilities in 1998. The COPD judgment was handed down only a few weeks later and the framework of negotiating handling agreements with the CG and operating under the supervision of the judges was quickly established. Nothing of this size and complexity had ever been done before. Throughout the negotiation and operationalisation of the CHAs there have been many delays, most of which were unforeseen, and the Department has worked hard in conjunction with its service providers to limit their impact and ensure that compensation was paid as speedily and as fairly as possible. 77. It should not be forgotten that the schemes have seen to date nearly half a million individual payments made to former miners, and their families, totalling nearly £2.5 billion.

Annex C Report to Court—January 2005 Department of Trade and Industry Overview Section I below sets out the headline statistics for progress since the last Report in October 2004 and the key points contained within the Report. Section II covers the main issues that have emerged since the last Report including the risk oVer proposals intended to shorten the life of the scheme, spirometry, proactive management of stalled claims, surface dust litigation, post cut oV date claims, smoking history protocol, the CG’s minimum payment proposal, unassessable claims, COPD VWF services claims, co-defendants, and fraud management.

SECTION I—KEY POINTS—HEADLINE STATISTICS As at 9 January 2005, 322,232 claim packs have been received, up 16% since the last Report. As at 9 January 2005, total post MAP oVers stood at 179,827. This is up 13% since September 2004. Capita met its target for 2004 of making 70,000 oVers over the 12 month period. 178,132 claims have been settled since September 2004, up 15%. This figure increases to 195,352 if archived and denied claims are included. As at 9 January 2005, 39% of live mineworker claims had been settled, 43% of widows’ claims and 18% of estate claims ı reflecting the late influx of estate claims prior to the cut oV date. As at 9 January 2005, total fully registered claims capable of progressing through the scheme stood at 575,222. 43% of these are live claims, 14% are widows claims and 42% estate claims. A further 29,500 claims are held pending the supply of further information to progress them, examples being date of birth, NI 3030281006 Page Type [O] 27-04-05 22:34:29 Pag Table: COENEW PPSysB Unit: PAG1

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number, full name and address. As at 9 January 2005, total post MAP oVers stood at 179,827 up 13% since September 2004. Capita met the target for 2004 of making 70,000 oVers over the year. 178,132 claims have been settled. This is up 15% since September 2004. This increases to 34% if archived and denied claims are also included. There continues to be a steady increase in denials up 39% since the last Report. This is thought to be primarily due to the profile of claims now within the scheme where increasing numbers of claims relate to older deceased mineworkers who may have an invalid claim due to no BC work history after the date of guilty knowledge; insuYcient evidence supplied via the CQ or available records in deceased cases to establish COPD/CB. Throughput and proposals to shorten the duration of the scheme As recorded in the last Report the Department, its contractors and the Claimants Group (CG) have been in discussions about how to manage the large volume of claims now in the scheme. On 22 September 2004, Sir Michael Turner was updated on these discussions at a workshop. These were worked up into proposals for shortening the scheme and special Hearings took place in October, November and December regarding these proposals. Sir Michael Turner ruled on 22 October 2004 that optional risk oVers will be introduced, pre MAP, for surviving mineworkers with certain spirometry results, and at tariVs that reflect likely settlements under the scheme. The process is due to become operational at the end of February 2005. Sir Michael Turner ruled on 22 December 2004 that optional risk oVers will be introduced pre-MAP for deceased cases. The implementation of the deceased risk oVer process is to be discussed between the parties, who will report back at the Review Hearing. Capita intend to work closely with Claimants’ Representatives (CRs) to ensure that the new processes are implemented with a minimum of disruption.

SECTION II—MAIN ISSUES—RISK OFFERS All parties are agreed that given the volume of claims now in the scheme, the majority of which were submitted in its closing months, it is imperative that ways are found to expedite the flow of claims to settlement. To this end a number of meetings have been held between the parties to consider ways of expediting the process. These have culminated in a series of Court Hearings in October, November and December.

Live Risk Offers—Overview Sir Michael Turner has ruled that optional risk oVers will be introduced pre MAP for surviving mineworkers with the following spirometry results. — FEV1 (90. — Avoidably unreliable. — Ratio failure (excluding where the RS’s review did change the result). — Failed reversibility (excluding where the RS’s review did change the result). Sir Michael also ruled on the principles upon which the tariVs for the various categories should be calculated. Those calculations have been made and the results audited by Ernst & Young ı see Annex 5. The tariVs applicable to the categories are shown below: FEV1 (90 £1,400 Avoidably unreliable £1,400 Ratio failure £3,700 Failed reversibility £12,900 OVers will be made after spirometry but before MAP appointment. Claimants currently categorised subsequent to their spirometry test as: FEV1 (90, avoidably unreliable, failed reversibility and ratio failure, and who have a MAP appointment after 28 February 2005 (the implementation date for the new process), will need to cancel the appointment to become eligible for the risk oVer. Claimants who have less than seven days before their MAP appointment will NOT be eligible for a risk oVer on canceling their MAP. This measure is to avoid undue disruptions to the medical process. The risk oVer, once made, will remain open for 56 days, after which time, if the oVer has not been properly accepted, the claim will proceed through the normal claims handling process.

Deceased Risk Offers—Overview It has been agreed that there will also be a risk oVer approach in deceased cases where there is no mention of COPD on the death certificate that would be attractive to claimants who might otherwise be likely to receive CB only awards under the scheme, ie claims where few or no medical records are likely to be available and where there is no available evidence of COPD. TariVs of £1,000 in estate cases and £1,200 in widows cases were accepted by the Court, these are based on average awards in the scheme to date for CB only, with the addition of an uplift as an encouragement towards wider take up. 3030281007 Page Type [E] 27-04-05 22:34:29 Pag Table: COENEW PPSysB Unit: PAG1

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Claimants will opt in to the risk oVer via a formal acceptance prior to the MAP being dispatched to Capita. Detailed discussions are being held with the CG about how this proposal will be implemented and the parties will report back at the Hearing.

Communication Strategy

The success of the risk oVer process is dependent on eVective communication with claimants and CRs. The DTI had proposed regional workshops with CRs to discuss Sir Michael’s rulings and facilitate discussion regarding the operational detail of the process, however these workshops have been declined by the CG on the basis that they do not believe these would aid planning. One to one meetings with the top 12 CRs to discuss suitable volumes of risk oVers on an individual basis have also been declined by the CG. In the absence of such discussions a guide will be made available explaining in detail the operation processes involved for live and deceased risk oVers. The guide will outline key aspects of the risk oVer process; claim eligibility criteria; managing the live risk oVer once it has been “opened”; solicitor communication and agreed cut oV rules. It is important that this message is imparted to CRs as soon as possible to minimise unnecessary disruption to the normal scheme process which could follow from any misunderstanding of the operational details or claimant eligibility for risk oVers. Information about the risk oVers will also be provided in a DTI newsletter (which is distributed to GP surgeries, Citizen Advice Bureaux, unions, the CG and MPs).

Risk Offer—Volumes and Capacity

In the absence of specific details about the capacity of individual firms to handle volumes of risk oVers, as detailed above, the Department has accepted the CG proposal that it allocates capacity on the basis of a percentage of the number of CRs eligible claims at December 2004. Capita plan to make an average of 2,000 live risk oVers per week with a view to make all live risk oVers within one year of the first oVers being issued. Initially oVer rates will be 10% of this figure and will gradually ramp up to maximum capacity over eight weeks. At these levels the average volume of live risk oVers likely to be received by the top 20 CRs based on their eligible claims is shown below.

Solicitor Average weekly no. of risk oVers

Beresfords Solicitors 402 Union of Democratic Mineworkers To be confirmed Raleys Solicitors 141 Browell Smith & Co 136 Hugh James, Merthyr Tydfil 99 Watson Burton 91 Graysons Solicitors, SheYeld 81 Thompsons Solicitors, Newcastle upon Tyne 73 Avalon Solicitors 58 Barber & Co 53 Delta Legal 38 Gorman Hamilton Solicitors 36 Thompsons Solicitors, CardiV 36 The Legal Warehouse 34 AMS Law 32 Thompsons Solicitors, Edinburgh 31 Corries Solicitors, York 29 Corries Solicitors, Glasgow 26 Randell Lloyd Jenkins & Martin 24 Kidd & Spoor Harper Solicitors 21

Further details are contained in Annex 6. As an opt in process volumes of deceased risk oVers will be driven in their entirety by the activity of CRs. Timescales will be dependent upon firstly, keeping operational processes simple and secondly, information from the CG and other CRs on likely volumes, time estimates and dependencies to accurately timetable resource requirements. As indicated by Counsel for the CG at the Court Hearing on 16 November 2004 the CG are confident that solicitors will be able to cope with dealing with risk oVers. 3030281007 Page Type [O] 27-04-05 22:34:29 Pag Table: COENEW PPSysB Unit: PAG1

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Risk Offers and Interaction with Existing Process At the Hearing on 3 December 2004 the Department raised its concerns about cancellation of cases pre MAP by CRs. Some 960 appointments have been cancelled or refused since 11 November 2004 however Atos Origin have managed to maintain throughput by making extra eVorts to re-fill cancelled slots with other claimants. MAP cancellations will continue to be monitored and a further report will be provided at the next Hearing. Once the Risk OVer process goes live it is anticipated that MAP throughput will be dramatically reduced as up to 90% of living claimants ready for a MAP appointment will be placed “on hold” until such time as they have received and considered their risk oVer.

Risk Offers and Solicitors Costs At the Hearing on 18 November Sir Michael ruled on the solicitors costs that will apply where live claimant risk oVers are accepted. The Department indicated via Counsel at that Hearing that it may wish to appeal that decision. Sir Michael agreed that the time for seeking leave to appeal should run from the date of his ruling on solicitors’ costs on deceased risk oVers.

Monitoring Risk Offers and Throughput—Review of Management Information Given the radical overhauling of the scheme to take account of the volume of claims now within it, it would seem appropriate to review the statistics produced to monitor the traditional elements of the scheme, and to commission new statistical reports to monitor the production and take-up of risk oVers. The Department has undertaken such a review over the last several months and an update Progress Report has been produced, see Annex 7, which is intended to replace all the statistics normally provided in the standard Progress Report, as well as the statistics normally provided in the Court Report itself, in the one document. Additional statistics to track the new Optional Risk OVers will be added in the coming weeks. Some preliminary formats which indicate the type of data which is likely to be included in future reports is shown below.

CR progress by firm

3500 3000 2500 Timed Out 2000 Declined 1500 Accepted 1000 Live Risk Offers Live Risk 500 0 Office 1 Office 2 Office 3 Office 4 Office 5 Office 6 Office 7 Office 8 Office 9 Office Office 10 20 3030281007 Page Type [E] 27-04-05 22:34:29 Pag Table: COENEW PPSysB Unit: PAG1

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CR Progress by firm

100% 90% 80% 70% 60% Timed Out 50% Declined 40% Accepted 30% 20% 10% 0% Percentage of Live Risk Offers Office 1 Office 2 Office 3 Office 4 Office 5 Office 6 Office 7 Office 8 Office 9 Office Office 10 20

Traditional Scheme Process and Issues Annexes 1 and 2 show the activity in the scheme as at the last four Hearings and by month over the last year of the scheme. As stated above, as at 9 January 2005, total fully registered claims capable of progressing through the scheme stood at 575,222 43% are live claims, 14% widows claims and 42% estate claims. A further 29,500 claims are held pending the supply of further information to progress them, for example date of birth, NI number, full name and address. As at 9 January 2005, 322,232 claim packs have been received, up 16% since the last Report. As at 9 January 2005, total post MAP oVers stood at 179,827. This is up 13% since September 2004. Capita met its target for 2004 of making 70,000 oVers over the 12 month period. 178,132 claims have been settled since September 2004, up 15%. This figure increases to 195,352 if archived and denied claims are included. As at 9 January 2005, 39% of live mineworker claims had been settled, 43 percent of widows’ claims and 18% of estate claims—reflecting the late influx of estate claims prior to the cut oV date. Annex 3 illustrates that the percentage of claimants with COPD disability at MAP is currently 18.3% down from 34 recorded for MAPs completed in January to March 2002. Average COPD disability levels are 19.9 up slightly from 19.4 in the period July to September 04.

Spirometry Annex 4 reflects claims that have not yet progressed to Atos Origin. At the end of December 2004 42,000 claims not yet at Atos Origin were currently awaiting a spirometry test. Atos Origin carry out an average of 1,346 tests per week and are on target to have tested the majority of claimants available to test by the end of March 2005. The average is based on the three months between weeks ending 2 October and 25 December 2005. This period also accounts for the holiday season, which naturally sees fewer claimants tested. There will of course be a number of cases which for one reason or another cannot be tested in this timescale. The DTI will be discussing with Atos Origin in the coming months how to make arrangements for the testing of these claimants.

Proactive Management of Stalled Claims The end to end archiving procedures discussed in previous reports are now in operation. In a modification to the process put before the Court in the July 2004 Report the new procedures will only be introduced for claims which are not eligible for risk oVers. This is to reduce nugatory work archiving claims that may exit the process as a result of acceptance of a risk oVer. The archiving protocol operates where information or action is awaited to move a claim forward and where the claim would not otherwise be subject to a live or deceased risk oVer. This supplements existing archiving processes where an expedited oVer has been made post spirometry but a statement of truth is awaited, and where the claimant has persistently failed to respond to an oVer of a spirometry appointment. 3030281008 Page Type [O] 27-04-05 22:34:29 Pag Table: COENEW PPSysB Unit: PAG1

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Archiving procedures Notice of the intention to archive will be given in each case to be archived. At the relevant point of entry into the archiving procedure, a letter will be sent to the CR advising them that the claim, or schedule of claims will be archived in six months unless a substantive response is received. Five months later a reminder letter will be issued giving 28 days notice for a response before the claim is archived. Six months after the point of entry into the archiving procedure a letter to the CR will confirm that the file has been archived. Where a substantive response is received, then the claim will be removed from the archiving procedure. If the claim again becomes stalled at a later date then the claim will start the archiving procedure afresh. The timescales at which claims enter the archiving procedure will be as follows:

Stage Entry point to archiving procedure

Denied claims Three months after the denial letter was dispatched or claim withdrawn Failure to provide a Substantive Response Six months after the query has been raised. to Capita or Atos Origin

Once a claim is archived, Capita will no longer review or process the claim unless a response is received from the CR enabling the claim to progress. Should the claimant wish to re-enter the claims assessment process, he may do so at any time until the claim is struck out. However, if a claim has been denied within the last 12 months and evidence is received in support of disputing the denial this will be taken through either the general or medical disputes procedure as appropriate. Those denials over 12 months old will be considered on a case by case basis. As reported previously in a number of cases CRs have attempted to reactivate withdrawn claims. These claims have not been accepted back in to the scheme. Claimants may reactivate archived claims at any time up to the point of strike out should a strike out procedure be approved by the Court.

Striking Out Of Archived Claims As agreed at the last Hearing, the parties have set out their positions by way of Skeleton Argument. The Department’s application to hear arguments on Strike Out was to be heard at the January Hearing. However given the number of issues to be considered at this Hearing the Department proposes that this application be postponed until the following Hearing.

Surface Dust Following the Hearing on 17 November 2004, the CG have given written notice to the Department to the eVect that the Group Litigation will not now proceed. They have, however, indicated that proceedings may be commenced in a number of individual claims and it would seem appropriate for all other pure surface work cases to be withdrawn by CRs. The Department believes that the case management conference listed for 28 February is no longer required as a result of the developments above.

Post Cut-off Date Claims and the Stay It was agreed at the July 2004 Hearing that the retention of the stay should be considered at each future Hearing. The Department believes that the retention of the stay has provided a significant disincentive to the filing of post cut oV claims in England and Wales. The Department believes the stay should continue to be retained to prevent “queue jumping” in view of the very significant numbers of schemed claims received before its closure. No further litigated claims have been received since the two claims reported at the October 2004 Hearing. To date, 247 late scheme claims have been received, as shown below.

Month Late scheme claims

April 91 May 32 June 27 July 43 August 12 September 9 October 13 November 19 December 1 Total: 247 3030281008 Page Type [E] 27-04-05 22:34:29 Pag Table: COENEW PPSysB Unit: PAG1

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Smoking History Protocol In the last report to the court it was explained that detailed planning was taking place for the implementation of the agreed Smoking History Protocol. Implementation plans were agreed and the protocol is now being implemented.

Minimum Payment The CG have proposed that CRs fund a minimum post MAP oVer to cover all future post MAP low value oVers and currently outstanding low value oVers. The value of the minimum oVer proposed is £500. The Department has accepted this oVer in principle but has rejected the proposed method of funding (from half of the RPI uplift to CR costs in 2005–06). The Department is concerned that the method proposed is unlikely to raise suYcient to cover the top-up payments required in 2005–06 for new oVers and outstanding low value oVers from previous years. As at 31 December 2004 there were 9,000 low value oVers outstanding, 7,500 of which relate to claims with CSG members. It is estimated that over £2.25 millionh would be required to make a minimum payment of £500 in these cases. This in itself is likely to exhaust the 50% RPI uplift fund proposed. As part of their proposal the CG also wish to introduce additional process to check for a minimum five year period of underground employment before a top up oVer is made. The Department rejects this requirement which would slow down oVer production at a time when considerable resource is being devoted to speed up processing. Low value oVers can arise for several reasons under the CHA, low levels of disability or no disability suVered by the miner, short periods of time working for British Coal after the agreed date of “guilty knowledge”, and the reduction of damages for factors such as smoking and other disabling conditions for which British Coal were not found liable. The Department has made clear that public money will not be used to fund a minimum payment.

Unassessable Claims There are currently a number of claims within the scheme which RS’s consider to be unassessable. Further scrutiny of these claims and discussions with the CG are planned to clarify the circumstances where a claim is to be formally considered unassessable and how that decision is ultimately made. The Department will report back at the next Hearing on these discussions.

COPD/VWF Services Claims At the last COPD Review Hearing, directions were put in place by Sir Michael Turner for the determination of the issues in dispute. The timetable culminates in a two day Hearing listed for 22 February 2005 and 23 February 2005 to be heard before both Lady Justice Smith and Sir Michael Turner. The Hearing will proceed if agreement cannot be reached between the parties prior to that date.

Co-defendants

Small Mines Small mines claims have now entered the operational stage. Full and final oVers commenced calculation in October 2004. There remains a cohort of claims which will be held up pending agreement on pension loss issues and amendment to the model. Work has begun on tackling these issues.

Successor Companies Having examined UK Coal’s proposals for accession to the Claims Handling Agreement in detail, the Department announced to the court on 3 December 2004 and subsequently confirmed in writing that it was content to proceed on this basis.

Fraud Management The Department has continued to develop its approach to potentially fraudulent claims under both schemes. The following statistics provide an overview of the position to date: Since May 2002, 1,470 potentially suspicious cases have been referred for additional investigation. These claims have a total potential claim value of £21.3 million. Approximately 60 new cases are referred each month directly from Operations. The majority of cases still relate to VWF Services, but since the COPD cut- oV date the number of COPD claims being referred has increased dramatically, currently 33% of all referrals are related to COPD claims. 3030281008 Page Type [O] 27-04-05 22:34:29 Pag Table: COENEW PPSysB Unit: PAG1

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Of the 1,470 referrals, 737 are currently under investigation and 773 have had their investigations completed. Of those that have had investigations completed, 132 claims have been denied and 86 claims have been reduced, with a total value of £2.6 million. The remaining claims were returned for processing once it was confirmed that there was no fraudulent activity, a claim was valid within the remit of the schemes, or any anomalies were clarified. Process streamlining and improvements are continuing to be introduced to minimise any unnecessary delay to valid claims. Where the Department is unable to complete its investigations (for example, where a witness or a claimant declines to be interviewed), then such cases are held in abeyance until such time as the Department’s concerns are either confirmed or allayed. Currently in excess of 34 claims are in abeyance; Various solicitors have been written to, addressing issues of professional conduct rather than fraud per se, eg intimating duplicate claims. Where appropriate, the Law Society is being included in this correspondence, with whom a working relationship has developed; The Department and the SID are providing a quarterly update to the CG on potentially fraudulent claims.

Annex D

THE HIGH COURT OF JUSTICE QUEEN’S BENCH DIVISION NEWCASTLE DISTRICT REGISTRY

BETWEEN: A B AND OTHERS Claimant and BRITISH COAL CORPORATION (Department of Trade and Industry) First Defendant and THYSSEN (GB) LIMITED HOLLYBANK ENGINEERING LIMITED CEMENTATION MINING LIMITED Second Defendants REPORT OF THE FIRST DEFENDANT AT HEARING ON 20 DECEMBER 2004

The Position as Between the Department and the CSG 1. The Department would, in particular, wish to raise with the Court the following issues between the Department and the CSG; (a) Application of cut oV dates for submission of evidence in Services, Group 3 and Wage Loss claims (see paragraph 9); (b) Definition of “Significant period” in Group 3 claims (see paragraph 16); (c) Warnings in Group 3 claims (see paragraph 17); (d) Employment issues in Services claims (see paragraph 19); (e) Stalled claims (see paragraph 22);

Progress on Claims

Statistics 2. At Appendix A to this Report is a summary of the headline statistics relating to the processing of claims under the Scheme. The Court will note that to the end of November £1.041 billion has been paid to claimants by way of compensation. 3. At the date of closure of the Scheme the total number of claims is 169,601. Approximately 13% of claims are made on behalf of deceased mineworkers’ estates. This number takes no account of Public Liability claims, which are outside of the Scheme. 3030281009 Page Type [E] 27-04-05 22:34:29 Pag Table: COENEW PPSysB Unit: PAG1

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OVers 4. The focus since the last hearing continues to be on those claims which have medical evidence but no oVer (or are subject to the posthumous protocol) “the priority pools”. These claims continue to be proactively reviewed by IRISC with the intention of a full and final oVer being made, or a 100% interim being made, or the claim entering the Stalled Claims Procedure. At the last hearing there were 14,652 claims in this category and as at 28 November there were 11,350. The Department remains optimistic that it will meet the aspiration that all Claimants, whose claims are ready for oVer (whether final, or in co-defended cases, interim) will receive an oVer by the end of the year. 5. The CSG has expressed concern at this approach, claiming that correspondence which does not relate to the priority pools is not receiving prompt response. This concern is understood but the Department takes the view that claims ready for oVer should take priority. Correspondence which raises matters of urgency, such as that relating to claimants with short life expectancy, is dealt with promptly. Other, less urgent, letters will be dealt with as expeditiously as possible.

Services 6. There are currently 11 Services MAP centres in operation; two in Scotland, two in Wales and seven in England. In the new year two further centres are already planned (one in Scotland and one in England) as part of eVorts to increase the number of services MAP reports. 7. The numbers of claims and their current position in the process are shown below.

Potential number of Services claims (As at 28/11/04) Services questionnaires have been submitted and claim being worked by IRISC (53%) 28,155 Services 22,277 questionnaire has been submitted but the claim not yet had the General Damages element resolved (4%)

There is a potential claim due to staging but no questionnaire has yet been submitted (42%) 2,297

8. There are only a few remaining areas of disagreement between the Department and the CSG; these are referred to below. The focus is now on operational delivery and the achievement of the ASEDs. The aspiration was to complete all Services medicals by the end of 2006, however based on current volume the Department estimates that target is almost six months behind schedule. The Department is considering a number of options and initiatives with its service providers to see what might be done to rectify the position. The Department will report to the Court on the next occasion in this regard.

Cut-off Dates for Services,Group 3 and Wage Loss Claims 9. As the Court will be aware, an Order (Appendix B) was made at the last Court hearing on 30 July 2004, providing for cut oV dates for submission of evidence by Claimants’ representatives in Services, Group 3 and Wage Loss claims. 10. The CSG has suggested to the Department that the cut oV dates, set out in the Order referred to above, do not apply to cases involving co-defendants where occupation group is still to be confirmed. The Department is of the view that these cut oV dates apply irrespective of any co-defendant involvement in a case. IRISC will confirm occupation group for the Department as soon as it can, irrespective of any co- defendant involvement. 3030281009 Page Type [O] 27-04-05 22:34:29 Pag Table: COENEW PPSysB Unit: PAG1

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11. Any Claimant must know whether he intends to advance a loss of earnings and/or services claim against the Department when he receives his General Damages MAP Report, or confirmation of occupation group. Any such claim against the Department should be made within the time period set out in the Order, irrespective of the co-defendant confirming employment, or whether that co-defendant is willing to accept any liability. In any event many co-defendants still do not accept the CHA occupation groups. 12. Furthermore, the Department does not accept that any delay on the part of a co-defendant in accepting liability has any eVect upon the Claimant’s claim for loss of earnings/services against the Department. This is particularly the case as, at the present time, no party other than the Department subscribes to the Services Agreement and Loss of Earnings and Associated Losses Protocol under which such claims are brought.

Group 3Claims 13. This cohort of claims remains contentious and at the forefront of the Department and CSG’s attention. 14. To date, 23 claims have been raised with IRISC as being suitable for reference to the Vibration Reference Panel (VRP). Of these, two claims have been deemed as unsuitable for referral to the VRP as they related to issues with the calculator rather than of mining sense. Upon further investigation, a further two claims were accepted thereby rendering referral unnecessary. The Special Investigations Department (see paragraph 32) is investigating one of the claims and six are in the process of being prepared for sending to the VRP. In the remaining 12 cases the VRP has reported to the parties, and in all of the cases the VRP’s recommendations as to the Claimant’s likely tool usage have been accepted by the Department (and apparently not contested by the Claimant). This has resulted in liability being accepted in five cases and the denial being maintained in seven. 15. Over 7,200 Group 3 claim investigations have been completed. Of these, approximately 750 have been accepted as Group 3 with exposure, 3,600 remain denied as Group 3 claims and 2,800 have been accepted as Group 1 or 2 claims upon further investigation. The following pie chart shows the number of claims to be investigated and the number of claims where the contested claim does not comply with the OGP and is awaiting action from the solicitor. The Department remains confident that all current contested Group 3 claims, where evidence has been submitted, will have been assessed by the end of September 2005.

Group 3 Investigations = 7,844 Investigations Ongoing at 2,147 IRSIC - 72%

Failed QA or do not comply with OGP - 5,697 awaiting solicitor action - 28%

Definition of “significant period” 16. Having regard to the judgment following the hearing on 29/30 July 2004 the Department reviewed the documents leading up to the agreement of the CHA which included a number of drafts of the CHA and correspondence between the interested parties with a view to forming an informed conclusion as to how the qualifying periods of employment for Group 1 and Group 2 Claimants (12 months and 24 months) were arrived at and agreed upon. This exercise confirmed the belief that these periods were not fixed on any scientific basis and were not extrapolated from Table 5 of BS:6842. In order to give eVect to the Court’s indication that the qualifying criteria for Group 3 Claimants should be fixed so as to create a broad equivalence of treatment between them and Group 1 and Group 2 Claimants the Department endeavoured 3030281009 Page Type [E] 27-04-05 22:34:29 Pag Table: COENEW PPSysB Unit: PAG1

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to assess the tool usage of typical employees in those Groups, and to extrapolate from those typical exposures periods by reference to Table 5. This analysis was then used to fix proposed qualifying criteria for Group 3 Claimants. These proposals have been put to the CSG with an explanation of the underlying methodology. The Department believes that its proposal does justice as between the parties and achieves in so far as is possible, the broad equivalence of treatment as between occupation groups that the Court desired. The CSG is considering the Department’s proposal.

Warnings 17. Notwithstanding the Court’s judgment the Department has received representations from the CSG that cases that proceed solely on the basis of warnings (with no qualifying period of exposure) should be dealt with within the Disputes Procedure of the CHA. The Department is firmly opposed to that proposal. The diYculties identified by the Court in its judgment would still remain. The Minister has recently received representations on this issue and the Court will be updated at the hearing.

Apprentices and Trainees 18. This remains an issue between the Department and the CSG. It has been agreed that it should be the subject of a reference to the VRP.

Employment Issues in Services Claim 19. This issue was raised in the Department’s last Report to the Court at paragraph 36 (Appendix C). It is the Department’s position that it is entitled to question a Claimant about his employment history in relation to his Services claim, as it cannot simply accept uncritically a Claimant’s account. The Department also contends that it is entitled to seek disclosure of documentary evidence such as the Claimant’s employment records, in appropriate cases. 20. The Department had intended to make an application for specific disclosure in one case in order to obtain guidance and clarification from the Court on this issue. However, that Claimant’s solicitors have recently agreed to provide this disclosure voluntarily by means of a signed authority from their Client. 21. The Court is referred to paragraph 37 from the Department’s last Court Report on the Services Matrix. In light of the comments made by the MRP in relation to the Employment Matrix and the subsequent comments received from the CSG, the Department intends to instruct IRISC to assess each case on its merits (where there is an issue of employment that may contraindicate the Claimant’s claim for services) and to base its initial judgement on the medical evidence guidance as opposed to the Employment Matrix. This guidance will be based upon already agreed medical descriptions of the relevant staging. Accordingly where IRISC identifies an employment that may contraindicate the claim for services, it will first carry out a desktop investigation and may then ask for further evidence from the Claimant. In some cases it will be appropriate to ask the Claimant to provide a signed Form of Authority for release of his personnel and/or medical records. The Court is requested to endorse the Department’s position and proposals in this regard.

Stalled Claims 22. The Stalled Claims Procedure was instituted on 1 October 2004. Since then 3,611 letters have been sent to solicitors under Stage 1 of the procedure. This is a larger number than it is anticipated will be sent in future because the process has only just started in earnest and there was a backlog of claims to which the new process applied. Representations have been made by Claimants’ representatives concerning the lead- in time (90 days in most cases) for specific categories of claims and a proposal has recently been made to the CSG which the Department believes will go some way to reduce the volumes of letters presently being sent to Claimants representatives. Services claims are presently excluded from the Stalled Claims Procedure. A copy of the Department’s Stalled Claims Procedure is attached as Appendix D. 23. The Department is disappointed that some Claimants representatives have failed to co-operate at all with the process, taking the view that it has not been agreed by the CSG nor approved by the Court. The Department views this as unhelpful. The Department’s last Court Report outlined the stages of the Stalled Claims Procedure and the timescales which were to be applied. There was discussion about the merits of the proposal and there were no substantive disagreements with the CSG save on one issue on limitation on which it made representations at the hearing. See the transcript from the last hearing at Appendix E pages 8 to 10 and 47 to 50. 24. The Department has, in any event, agreed that the Stalled Claims Procedure should include a facility for Claimants representatives to be able to request extensions of time. These are viewed sympathetically by IRISC on an individual basis, depending on the reasons given. In addition, IRISC sends out lists to Claimants representatives each month of those claims in which the first letter has been sent; this allows Claimants representatives to check that correspondence has not slipped through the net or been misfiled. 3030281010 Page Type [O] 27-04-05 22:34:29 Pag Table: COENEW PPSysB Unit: PAG1

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25. Although apparently agreeing in principle to the Stalled Claims Procedure the CSG has raised a variety of criticisms of it which the Department is unable to accept. For example the CSG complains that the procedure has been implemented without appropriate desk instructions or training of claims handlers and that claims have been “inappropriately” placed within the Stalled Claims Procedure. The former criticism is incorrect. The Department is prepared to accept that there may have been mistakes made in a small number of individual cases and continues to work with its services providers to minimise the incidence of the same. Individual Claimants representatives have been critical of the operation of the procedure but investigation of those criticisms usually reveals that they have either not understood or misinterpreted the procedure.

Other Issues Loss of Earnings and Associated Losses Protocol (Wage Loss) 26. The number of claims and their current position in the process is shown below.

Loss of Earnings Claims Number of claims

351

Potential claims

Claims at least part documented

5392

Loss of Earnings claims - fully or partly documented Number of Claims

129

119 Full documented - under investigation Fully documented - denied/withdrawn

Part documented

103

27. The Department continues to consider claims in line with the Protocol. 28. The Department is continuing to provide counter schedules of loss in individual cases, which incorporate requests for further information where such information is necessary in the Department’s investigation and assessment of a claim. 29. A meeting between the Department and the CSG will take place in the New Year to discuss these claims and the Department’s general approach. 3030281010 Page Type [E] 27-04-05 22:34:29 Pag Table: COENEW PPSysB Unit: PAG1

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Amended CHA 30. The CSG in its letter of 5 November 2004 provided its comments on the most recent version of the CHA which had been sent to the CSG on 20 April 2004. This version of the CHA was forwarded to the Court on 13 July 2004. The proposed amendments suggested by the CSG have been considered and a revised draft was sent to the CSG on 10 December 2004. It is hoped that this version of the CHA will be agreed between the parties (subject to a small number of sections in the CHA that are not agreed and are put into square brackets so that they are easily identified). The revised draft of the CHA will be added to the Coal Claims Website and will be sent to the Court and the co-defendants.

Fraud investigation 31. The Department has continued to develop its approach to potentially fraudulent claims under both schemes (ie COPD and VWF). 32. IRISC have set up the Special Investigations Department (SID). SID will manage and investigate potentially fraudulent claims. SID management have been delegated authority to make case investigation decisions to help improve eYciency. 33. The Department and SID provide a quarterly update to the CSG on potentially fraudulent claims. 34. The Department has also recently made proposals to the CSG in relation to the payment of Claimants representatives’ costs where cases are subject to investigation. In cases where Claimants representatives attend with their client for an interview and as a result of the interview the case is referred back for processing and there is no deduction from the value of the claim, the Claimants representatives’ reasonable costs in attending the interview will be paid. This proposal is still with the CSG.

The Position as Between the Department and Co-defendants 35. Co-defended claims account for almost 75% of the remaining post MAP pool. An insurer liaison programme has been introduced in an attempt to expedite the settlement of outstanding co-defended claims. Progress has been made as follows. 36. A letter outlining the current position on co-defendant claims was sent out to the top 16 insurers who, between them, are handling approximately 80% of outstanding co defended claims. The letter covered the closure of the scheme, ASED’s, stalled claims, the insurer liaison process and improved communications. This was followed by a schedule of each firm’s potential liabilities. 37. Twelve of the 16 companies have now responded. Of these, eight were extremely positive and welcomed the proposals to improve communications and progress the files. Of the remaining four, two were merely acknowledgements; one was fairly negative and one was not interested at all. This lack of cooperation is disappointing. 38. The 16 companies have now been contacted again, with a view to arranging meetings where necessary or to confirm their position (see Appendix F). 39. To date 10 visits have been made to seven insurers/claims handlers. File discussions have been arranged with three companies as a direct result. A further four visits are scheduled to take place before the end of the year, with another visit scheduled for January. A visit issues log has been created to keep a central record of actions arising from meetings. 40. DLA, for their clients, have provided an Annex A for the revised CHA detailing the provisions of the CHA to which their clients do not subscribe. 41. The Department has requested in correspondence confirmation from the other co-defendant representatives that they will prepare a similar document or confirm that their clients’ position reflects that of DLA’s clients. No response has been forthcoming save that Ricksons have indicated that, subject to formal approval by Zurich Insurance, the draft Annex A accords with their clients’ position. The Department understands that a similar request has recently been made by the CSG. 42. Such information is helpful to all parties in providing a full and clear picture of the stance of each co- defendant in relation to the CHA. 43. Some diYculties have arisen in relation to reimbursement between co-defendants. DLA have recently written to IRISC claiming reimbursement said to be long outstanding. It is understood that IRISC is dealing with these requests. It is fair to point out however that, as agreed with co-defendants, the Department continues to make repayments to the Compensation Recovery Unit of sums in fact due from co-defendants

Crossover 44. At the last COPD Court Review Hearing, directions were given by Sir Michael Turner for the determination of the issues in dispute. The timetable culminates in a two day hearing listed for the 22 February 2005 and 23 February 2005 to be heard before both Lady Justice Smith and Sir Michael Turner. The Hearing will proceed if agreement cannot be reached between the parties prior to that date. 3030281011 Page Type [O] 27-04-05 22:34:29 Pag Table: COENEW PPSysB Unit: PAG1

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Costs

Base Costs 45. The CSG has made a request for an increase on base costs. A procedure for reviewing the level of Claimant’s representatives’ costs has been agreed as between the Department and the CSG. This requires the identification of a cohort of cases, randomly chosen, and the assessment of the Claimants representatives costs by a Cost Draftsman appointed by the Department. The Department will then consider whether an increase in base costs might be warranted in the light of the evidence that it has received. It is intended that the co-defendants would be consulted before the Department makes any decisions. The result of the Cost Draftsman’s review will be shared with all interested parties.

Services Costs 46. The agreed assessment of a finite number of cases before the possible agreement of an appropriate fixed tariV is still underway. The other option that will be considered will be to continue to assess each case on its merits.

Co-Defendant Costs 47. The CSG has made representations that the costs paid in Co-Defended cases under the CHA should be uplifted to reflect the additional work undertaken by Claimants representatives in dealing with such claims. Neither the Department nor the co-defendants are attracted by the arguments so advanced by the CSG.

Phase V Generic Costs 48. Interim payments in respect of the Phase V costs have been made by the Department and the Co- Defendants. Apportionment of costs has been agreed as between the Department and the Co-Defendants.

Phase VI Generic Costs 49. The Department has made interim payments in respect of Phase VI. Apportionment as between the Defendants remains outstanding. A meeting between the Defendants’ Costs Draftsmen is proposed to consider the CSG’s Phase VI costs and it is anticipated that following this meeting, the Defendants will between them resolve the issue of apportionment of this phase of the generic costs. Ronald Walker QC, Catherine Foster 13 December 2004

Annex E

PROCESSING A COPD CLAIM The following steps summarise the procedures for processing a claim under the Respiratory Disease Claims Handling Agreement. — Upon receipt, the details of the claim are registered by IRISC, DTI’s claims handlers. — Live claimants are prioritised by age and date of claim to then undertake spirometry (basic lung function tests). In parallel, IRISC request employment records from Iron Mountain who look after the former British Coal records. — If a live claimant is receiving Industrial Injuries Disablement Benefit from DWP for Chronic Bronchitis and Emphysema, they receive a £2,000 interim payment. — Depending on the spirometry results IRISC may make an oVer of an Expedited Payment in final settlement of the claim. The claimant can accept the oVer and settle his claim, or decline the oVer and proceed through the Medical Assessment Process (MAP). If the latter, in most cases he will then receive an interim payment equal to roughly 70% of the Expedited oVer. Those who fail to attract an Expedited oVer on the basis of their spirometry results can still elect to proceed through the MAP. — Live claimants are then re-prioritised to proceed through the MAP on the basis of age, date of claim and the spirometry results—the greater the loss of lung function the higher the priority points. — IRISC inform the claimants’ solicitors of the revised priority score and ask them to send in claims packs—mandates (to allow access to the claimants’ medical records), claims questionnaire and financial and other losses questionnaire—in priority order. 3030281012 Page Type [E] 27-04-05 22:34:29 Pag Table: COENEW PPSysB Unit: PAG1

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— Having received a completed claims pack, IRISC check it for completeness before passing it to Atos Origin, together with the associated priority score. — Atos Origin extract the mandates and pass them to their sub-contractor, Elision, who is charged with obtaining and scanning (on to CD-ROM) the claimant’s medical records. — In parallel IRISC seek to agree the claimant’s detailed work history with the claimant’s solicitor, informed by whatever records Iron Mountain were able to supply. — Once the medical records have been scanned, Atos Origin contact the claimant to arrange a MAP appointment at the nearest or most convenient centre (or at home if the claimant is unfit to travel). Here the claimant undergoes a more comprehensive set of lung function tests than at screening spirometry before having a consultation with a Respiratory Specialist of consultant status. — The doctor checks the claimant’s medical history and asks a series of standard questions. He diagnoses any COPD conditions, plus other conditions which may be contributing to overall disability but for which DTI are not liable and thus do not merit compensation. He also validates, or amends, the claimant’s smoking history, before completing his medical, ie “MAP” report. — The MAP report is then QA’d by Atos Origin (for completeness and internal consistency, not clinical accuracy) before being returned to IRISC. — If IRISC have by then agreed the man’s work history with his solicitor they then calculate any compensation that is due. — If IRISC are unable to make a full and final oVer because of an incomplete or unagreed work history, or other unresolved issue, wherever possible they make a further interim payment. — Once the claimant’s representative accept a full and final oVer payment is made and the claim is closed. Claims relating to deceased men are handled in a broadly similar manner using the records only, obviously without the benefit of lung function tests and a consultation with a specialist. Claims are prioritised by age of the widow before the solicitor is invited to submit a Claims Pack, again consisting of mandates and questionnaires, in priority order. Claims from widows are also assessed initially for any entitlement to a statutory bereavement award. This is based primarily on the death certificate (and any post mortem report), and is paid where COPD caused or materially contributed to the death. Bereavement awards can also in some circumstances be paid post-MAP. For the full MAP report, the Respiratory Specialist completes this on the basis of the medical records and information in the claims documentation.

Annex F

PROCESSING A VWF CLAIM

The following steps summarise the procedures for processing a claim under the Vibration White Finger Claims Handling Arrangement. — Upon receipt of a claim details are registered by IRISC, DTI’s claims handlers. — IRISC request the claimant’s employment records from Iron Mountain to determine the claimant’s occupation—the first criterion for entitlement. — Once the occupation group has been established, claimants are prioritised by date of claim before going through the Medical Assessment Process (MAP). At this point an interim payment is paid where a claimant is receiving Industrial Injuries Disablement Benefit for VWF from DWP. — Claimants are invited to attend a convenient testing centre, run by Atos Origin, to undergo the MAP. — At the centre, initially, a technician carries out a series of tests to establish the degree of injury to the man’s blood vessels and nerve endings that may constitute disability due to VWF. — The technician completes a report with test results which is then passed to the doctor, usually a GP, who asks a series of standard questions of the man and conducts some additional tests. The doctor then completes the MAP report. — Atos Origin QA the report and forward it to IRISC, who then determine the amount of compensation where appropriate. — If IRISC are unable to make a full and final oVer because of an unresolved issue they make an interim payment where possible. The above procedures relate to general damages. In addition, there are many claims for certain heads of special damages—principally Loss of Services. 3030281013 Page Type [O] 27-04-05 22:34:29 Pag Table: COENEW PPSysB Unit: PAG1

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Annex G1 RESPIRATORY DISEASE HEADLINE STATISTICS

18 Jan 27 Jun 12 Sep 09 Jan Increase Since 2004 2004 2004 2005 Sept 2004 No. % a. Total number of claims *1 399,938 566,624 570,247 575,222 4,975 0.9% b. Compensation paid £ million 959 1,116 1,191 1,292 100 8.4% c. Claims pack submitted to Capita*2 201,932 241,328 277,342 322,232 44,890 16.2% d. MAPs completed 167,784 195,891 211,613 242,372 30,759 14.5% Cases processed post MAP e. Interim payments 35,185 36,014 36,264 36,634 370 1.0% f. Full and Final OVers*3 106,536 131,389 143,216 160,808 17,592 12.3% g. Denials 11,956 15,014 16,540 19,019 2,479 15.0% h. Total Post MAP OVers 118,492 146,403 159,756 179,827 20,071 12.6% Percentage of MAPs (d) 70.6% 74.7% 75.5% 74.2% Total Settlements i. Expedited Settlements 14,955 16,672 17,728 19,207 1,479 8.3% j. Post MAP Settlements 81,226 101,597 113,678 132,072 18,394 16.2% j(i) by payment 79,699 99,630 111,222 128,650 17,428 15.7% j(ii) by non payment (denials) 1,527 1,967 2,456 3,422 966 39.3% k. Other Settlements (non-MAP) 13,603 20,054 23,489 26,853 3,364 14.3% k(i) by payment 607 657 688 723 35 5.1% k(ii) by non payment (withdrawn) 12,996 19,397 22,801 26,130 3,329 14.6% l. Total Settled claims (I!j!k) 109,784 138,323 154,895 178,132 23,237 15.0% Percentage of Total claims 27.5% 24.4% 27.2% 31.0% m. Potential Settlements 12,810 14,784 15,710 17,220 1,510 9.6% m(i) Archived (stalled) claims 2,381 1,737 1,626 1,623 –3 –0.2% m(ii) Outstanding Post MAP denials 10,429 13,047 14,084 15,597 1,513 10.7% n. Total Settled claims (l!m) 122,594 153,107 170,605 195,352 24,747 14.5% Percentage of Total claims 30.7% 27.0% 29.9% 34.0%

*1 Claim receipts are those claims that are fully registered, ie exclude pool of claims accepted with minimum data, awaiting further information to permit cross referencing and duplicate checks prior to full registration. *2 Includes incomplete Claims Packs. *3 Includes “Negative OVers”.

Annex G2

VWF (taken from DTI’s Report to Court December 2004)

HEADLINE STATISTICS

General Damages 22/12/03 19/03/04 29/07/04 20/12/04

Claims Received, excluding PL (i) 169,538 169,563 169,592 169,601 Deceased % 11% 12% 12% 13% Settled by payment/denial 77,652 83,056 90,168 96,795 General Damages Interims 41,617 44,125 46,707 49,444 OVers Outstanding with Solicitors 6,099 4,698 4,678 3,663 Settlement Value £612m £644m £707m £758m Total Damages Cost £893m £933m £994m £1.041bn MAP examinations completed 107,921 109,290 109,778 110,277 3030281015 Page Type [E] 27-04-05 22:34:29 Pag Table: COENEW PPSysB Unit: PAG1

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Annex H Breakdown of 25 coalfield areas that have received the highest level of total damages since the schemes inception in 1999.

Constituency Payments as of 31/12/04 Total (£ Millions)

Easington 11,813 82.7 Barnsley East and Mexborough 13,452 78.9 Hemsworth 11,999 68.7 Bolsover 12,656 64.6 Sherwood 12,714 62.7 Mansfield 10,878 58.1 Ashfield 11,269 57.4 Bassetlaw 9,638 57.3 Doncaster North 9,105 55.2 Merthyr Tydfil and Rhymney 7,217 52.8 Ogmore 7,188 51.3 Rhondda 6,625 49.6 Don Valley 8,199 48.2 Cynon Valley 6,464 48.1 Barnsley Central 8,559 48 Wansbeck 7,381 46.7 Pontefract and Castleford 7,481 42.6 Caerphilly 6,083 40.9 Barnsley West and Penistone 7,262 38.7 Houghton and Washington East 5,320 36.6 Islwyn 3,455 35.3 Rother Valley 6,132 35.1 Blaenau Gwent 5,521 34.3 Wentworth 5,892 33.9 Carrick, Cumnock and Doon Valley 4,745 28.8

APPENDIX 3

Supplementary memorandum by the Department of Trade and Industry

CONTENTS Title page Index Minimum Payments Small Mines National Union of Mineworkers Correspondence Fraud Guidelines Rebuttal of CSG’s additional report Annex A—Letter from the DTI to the CSG

Minimum Payments Nigel GriYths oVered to supply a note supporting the DTI’s calculations of the costs of the CG proposal for a minimum payment and setting out why the Department considered there would have been a shortfall on the basis of the CG’s proposal. If the CG and DTI had been able to agree a minimum payment prior to March 2003 on the basis of half of the RPI on solicitors costs, their current proposal, and the scheme had been brought into operation in April 2003, the Department consider the fund would have been £400,000 short by end March 2004. — At the end of March 2003 there were approximately 2,000 claims outstanding, which at an assumed £250 top up per claim would require £500,000 to clear. — Over that financial year (2003–04) there were 5,600 low value settlements. At a top up rate of £250 per claim £1,400,000 would have been required to top up these claims in the year. — Therefore for new and outstanding oVers at least £1,900,000 would have been needed over the year. This is a conservative estimate, if settlement rates increased as would have been expected more would be required. 3030281016 Page Type [O] 27-04-05 22:34:29 Pag Table: COENEW PPSysB Unit: PAG1

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— Half of RPI on solicitors costs in that year would have yielded only £1,500,000—so the fund would have been £400,000 short over 12 months, equivalent to 1,600 claimants at a top up rate of £250 per claim. The reality is that the DTI and solicitors were not in a position to implement the proposal in 2003–04. The formal proposal to use half of the RPI was not made until part way through the financial year—July 2003, and would have taken some months to agree the detail and put into operation. It is unlikely that arrangements could have been put in place much before the start of the next financial year, April 2004, at which point the backlog of unaccepted oVers would have been still higher. In addition there were other elements of the proposal of concern to the Department, apart from the lack of suitable contingency arrangements should the fund run dry in year. The CG request for additional process, a check for five years employment underground before a minimum payment could be made which is not part of the current process for these oVers, was of particular concern, as was the degree of solicitor support for the proposal. The Department remains opposed to the introduction of additional process checks in regard to the minimum payment proposal (we want to focus on claims which have not yet had a full assessment rather than revisiting completed ones), and seeks greater certainty about the extent of solicitor support. Prior to July 2003 the CG’s proposal was that the Department should fund a minimum payment. This was rejected on the basis that the Department believed the focus at that time should be the processing of new oVers in accordance with the CHA, rather than developing new processes and devoting resource to those who had already had properly calculated oVers under the CHA. The Department also considered it wrong in principle to fund top up payments for low value oVers from the public purse, where low value oVers were properly calculated in accordance with the CHA and were the result of discounting in regard to the claimant’s smoking history, dust levels in the mines he was employed at, or for a limited period of employment with British Coal after the accepted date of liability. This discounting is consistent with the High Court judgment.

Small Mines Private mines were not signatories to the COPD Claims Handling Agreement (CHA) that governs the payment of compensation for respiratory diseases to miners and ex-miners in respect of British Coal Corporation (BCC) liabilities assumed by the DTI. Although it contained proposals for dealing with claims where there was a co-defendant element, representatives of the private mines initially rejected the approach suggested and negotiation was required in order to reach a position where they would accede to the CHA. There are two main groups of co-defendants. The first is the small private mines which existed during the nationalised period and which were licensed to mine coal alongside BCC. These have concurrent liability with BCC. The other main group is the successor companies, such as UK Coal, who have consecutive liability, ie post 1994. This note describes the position in relation to the small private mines. A small mine would have had only 30 employees or less underground at any given time. Conditions were often diVerent to BCC mines. Many small mines were much closer to the surface, allowing miners to walk in rather than descend in a cage. They were in general less mechanised. The negotiations for the accession of small mines to the CHA were lengthy and involved, being between three parties, the small mines, the DTI and the claimants’ solicitors. Although there are relatively few claimants—compared to the overall size of the scheme—aVected by small mine issues (some 2,600) many of them are elderly. The key issues that needed to be determined by the parties were (a) how dusty were the small mines compared to BCC mines and (b) how was liability to be divided between DTI and the small mines. The original CHA suggested a simple “time-apportioned” basis (ie DTI and the small mines to pay a proportionate share of the total compensation, depending on how long the claimant had worked for each). However, this method was not acceptable to the small mines representatives, who argued that compensation should be divided on the basis of the dust dosage the claimant was subjected to by each employer. Whilst logical, this method was more complex and therefore took longer to agree and implement. The CG supported this approach and the DTI therefore consented to adopt it also. It was not possible for the Department to pay its full share of compensation while negotiations were ongoing, as the final agreement would aVect both the overall amount of compensation payable (because the amount of dust the claimant was subjected to would aVect the overall recoverable portion of compensation) and the amount payable by each party. However, because of the delay in reaching a settlement, the Department took the decision to make interim payments, wherever possible, from December 2003. Towards the end of 2003 the small mines representatives made proposals for accession, which the Department could accept. Certain key diVerences remained however between the small mines and the CG. These were susceptible to mediation and so this was arranged in January 2004. Although an agreement was not reached during the mediation, a good deal of progress was made and the parties were in a position to announce agreement in February 2004. SuYcient progress was made on the memorandum of agreement between the parties and on operational arrangements to allow full and final oVers to commence calculation in October 2004. 3030281016 Page Type [E] 27-04-05 22:34:29 Pag Table: COENEW PPSysB Unit: PAG1

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A number of claims—those where the final period of employment was with the small mine rather than BCC—are unable to receive a full and final oVer pending the amendment of the pension loss calculator to incorporate small mine cases. The DTI, CG and small mines are seeking to arrange a meeting on this issue. In relation to a number of issues, some of the factual information required for amendment to the calculator is not available—for example on certain wage rates. Once agreed, instructions will be jointly drawn up for the software to be developed It is not possible to give an accurate figure as to how many claims are likely to be included in this group, as it will not become apparent until the work histories are confirmed. Coalfield representatives have raised with the Department the issue of small mine claims pre-1972. Employer’s liability insurance became compulsory in the UK in 1972. Post 1972 the majority of Small Mines were insured under a block policy initially with NEM and latterly with AGF. Although many were insured prior to 1972 in most cases the insurers are not known or are no longer in existence. Coalfield representatives have asked the Department to consider accepting liability on behalf of the small mines pre-1972 where there is no insurer, as well as paying for BCC liability. The rationale for this is that BCC would have licensed the small mines to produce coal, and should therefore accept the liability where no one else is available to pay it. The Department is meeting representatives of the NUM in the near future to discuss the legal position, although the Department’s current stance is that it has no legal liability for the small mines, even in the absence of an insurer. It is possible that the majority of the claims may have some pre-1972 employment.

Letter from Peter Hain MP, Minister of State for Energy and Competitiveness in Europe, to Arthur Scargill, Secretary, National Union of Mineworkers

Thank you for your letters of 23 April, regarding the Claims Handling Agreement for the NUM. As I have said before, I am in full agreement with you that the Department should enter into discussions with your oYcials, with a view to signing Agreements for the settlement of both respiratory and vibration related diseases. In fact, an oVer to enter into such discussions was made by Helen Liddell in her letter of 5 July 2000. she also explained in her letter, however, that our understanding has always been, and continues to be, that members of the NUM have chosen to be represented by solicitors, often on the advice of their regional NUM branches, who in many cases are funding the claims. Notwithstanding this, Ann Taylor, Director of the Department’s Coal Health Claims Unit, is happy to meet you and your oYcials to take matters forward as a matter of priority. She and her team are better placed to discuss the detail of the scheme and how it was put together. Please feel free to contact her on 020 7215 5330. As to the payment of compensation to the NUM, I cannot agree that oVering to sign an identical agreement with the NUM as that for the UDM is tantamount to accepting that the NUM has been financially disadvantaged. As detailed in previous correspondence, the UDM represent many claimants who have chosen to pursue their claims via that Agreement, rather than via solicitors. This option was always open to the NUM, indeed both the Department’s claims handling agents have always advised miners who enquire about making a claim to contact either their solicitor of their union. It would appear that many regional NUM oYces are advising members to use union backed solicitors. I know, for instance, that the Scottish NUM instruct Thompsons Solicitors, who have over 8,000 respiratory claims and nearly 4,000 VWF claims, and are regularly represented in discussion with the Department over the procedures. I am also aware that, in certain instances, regional NUM branches do recover some costs or charge a fee where a claim is successful. Given this, I cannot agree that any compensation is due the National NUM for having been discriminated against. To reiterate, we are happy to sign an agreement with the NUM on the same terms as those signed by the UDM and the Claimants’ Solicitors Group. You have previously indicated that this would be unacceptable, but I cannot agree to a diVerent agreement from that already endorsed by the High Court, and one which would treat some claimants diVerently from others. I hope this fully explains the position and you no longer feel it necessary to proceed with any legal action. Peter Hain 8 May 2001

Letter from The Rt Hon Helen Liddell MP, Minister of State for Energy and Competitiveness in Europe, to Arthur Scargill, President, National Union of Mineworkers Thank you for your letter of 13 June, regarding coal health claims and UDM cases. As I stated in my previous letters, the Department was ordered by His Honour Mr Justice Turner to negotiate with the firms of solicitors acting on behalf of the 300 or so firms who belong to the Claimants Solicitors Group. These negotiations culminated in the signing of the Handling Agreement with them, on behalf of the claimants, on 24 September 1999. We signed exactly the same agreement, albeit with reduced fees, directly with the UDM because they represent some 8,000 claimants who have chosen to pursue claims via their union, and not via solicitors. 3030281017 Page Type [O] 27-04-05 22:34:29 Pag Table: COENEW PPSysB Unit: PAG1

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if the NUM has claimants in a similar position, we are happy to enter into discussions about settling these claims. I understand, however, that the vast majority of NUM claims are handled by firms of solicitors instructed on behalf of regional NUM oYces who form part of the Claimants’ Solicitors Group and who are party to the 24 September Agreement. This is a litigation presided over by the High Court. We cannot simply bypass the solicitors who represent NUM members. As I stated in my last letter, I can see no reason to reconsider the Department’s position. 5 July 2000

Fraud Guidelines

The Select Committee requested to see the guidelines to which Capita’s fraud investigators worked and with which claims handlers identify potentially fraudulent claims. The judge has ruled that it is quite appropriate that these Key Fraud Indicators should not be shared with miners’ solicitors and the Committee is asked to keep them strictly confidential.

Rebuttal of CG’s Supplementary Report

Co-defended claims

The CG state in their supplementary report that 15,000 claims have co-defendant involvement. According to the DTI’s latest statistics, there are only 13,431 claims with potential co-defendant involvement. This number may reduce as periods of employment are clarified. The CG further state that it is not known what steps the DTI have taken at a high level to encourage CMC / CMR co-defendants to deal with these claims as high priority. In fact, various initiatives are underway and being run by Capita to engage with co-defendant insurers. These include the introduction of the insurer liaison manager role, liaison visits (some of which attended by the DTI), face to face file discussions, operations notices/bulletins, all party meetings. The CG also state that the terms of the DTI’s arrangement with CMC defendants or their insurers have not been disclosed. We understood that the CG were aware of the 50% reimbursement in respect of employment at British coal mines and that a very small number of labour-only subcontractors do receive a higher percentage. The co-defendant protocol, which the CG have seen, outlines the evidence that must be submitted in order to receive these reimbursements. The department do not agree that the reimbursement agreement allows us to exert any greater pressure than we currently do through the liaison channels outlined above.

Group 3 Claims

As discussed with the CSG, re-planning was undertaken in January 2005. The previous plan was produced in July 2004 since when investigations have been completed in respect of 2,396 claims. We also challenged the assumptions made in respect of the previous plan. The number of 6,600 is made of 5,400 certain (ready for investigation but not completed) cases and a conservative estimate of 1,200 or so additional cases that could arise by the cut-oV date of 30 June 2005. The current rate of submission of additional cases suggests that we have been pessimistic. The Department acknowledges that there is a need for increased performance and productivity. A number of initiatives are underway, including the recruitment of additional investigators, that will support this need. There is still uncertainty about the number of cases that will require investigation. The Department has confidence that these cases will be completed by the Aspirational Scheme End Date of 30 September 2005.

Services Claims

A copy of the Department’s response to the CSG’s letter of 22 December 2004 is attached as Annex A. 3030281018 Page Type [E] 27-04-05 22:34:29 Pag Table: COENEW PPSysB Unit: PAG1

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Annex A

Letter from Department of Trade and Industry to Irwin Mitchell

Vibration White Finger

Services Claims: Throughput and aspirational Scheme end dates (ASEDs) Thank you for your letter dated 22 December 2004. we apologise for the delay in responding. Over the past year we have made a number of planning forecasts based upon potential claim volumes and processing times in order to determine our ability to meet the ASEDs. However, it has always been a forecast because of the uncertainty over the final population post cut-oV. As such, we anticipate being in a better position to provide you with a more robust analysis of our plans to meet the ASEDs early in Q2 2005 once the uncertainty over the population is resolved. In the meantime, we would like to provide a high level response to your letter of 22 December 2004.

Offers We enclose a copy of the key stage analysis as at 30 January 2005 that was shared with you in advance of the Services meeting of 7 February. You will see that we have now received 32,509 questionnaires of which 9,355 are post oVer ie 29%. Calculating our ability to meet the end dates is not as simple as dividing the revised total outstanding by the number of oVers made each week, as this does not take into consideration the additional staV that have been recruited (and are currently in training) and those that Capita plans to recruit in the future. Furthermore, Capita continues to progress cases through the diVerent stages where it can, however, many of these are currently awaiting action outside of Capita’s control: — Of the 32,509 claims we have received to date, 29,936 fall within the Services process having had a General Damages interim payment. — There are currently 20,581 claims in the process pre oVer (29, 936–9,355 (General Damages interim paid—post oVer)). Of these: — 7,364 are waiting for further information from the solicitor/claimant (query quality/ employment). — 1,197 have had several successful helper call attempts—Capita has written and is awaiting helper/solicitor contact. — 4,411 claims are in Capita control (either awaiting investigation to commence, under investigation or awaiting helper calls to be made). — 3,703 claims are in the Services MAP queue. — 3,906 claims are awaiting oVer post Services MAP. Therefore, of the 20,581 claims that are pre oVer, 12,264 (60%) are not directly within Capita’s control. If we consider claims that are pre Services MAP, the percentage without Capita control increases to 74% ie 12,264 out of a total of 16,675. Of particular concern are those claims where there is outstanding information with a solicitor, and we would ask that you encourage your members to process this backlog as swiftly as possible, particularly in view of the impending cut-oV date.

Medicals The planned staYng for medicals has been set to match the throughput from Capita. CHS is already able to perform medicals in excess of current demand and the plan reflects the anticipated increased throughput from Capita. We continue to plan for the future, for example CHS has recently found a new location to increase capacity at Kilmarnock. Again, we anticipate being in a better position to share with you our plan to meet the ASED once the final populations are known. We remain confident that the ASEDs can be achieved, however, we do require the co-operation of yourselves and your members to provide accurate and timely information to Capita, so that claims can progress swiftly to the MAP process. Nabarro Nathanson 28 February 2005 3030281019 Page Type [O] 27-04-05 22:34:29 Pag Table: COENEW PPSysB Unit: PAG1

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APPENDIX 4

Memorandum by the Scottish Ministerial Monitoring Committee

1. We understand that a more comprehensive report is to be submitted on behalf of our English Monitoring Committee colleagues and so will confine ourselves to a relatively brief addendum report on behalf of the Scottish Monitoring Committee.

2. The Monitoring Committees were set up by the Minister (then Helen Liddell) at the Department of State for Trade and Industry to oversee and report back to the Minister on the operation of the Handling Agreements for coal health Claims (COPD and VWF) and to make recommendations to the Minister from time to time in regard to problem areas. Regular meetings are held to review progress of the compensation Schemes in Scotland (around six meetings per year) in the presence of the Monitoring Committee members who are presently Nicky Wilson, President/Secretary NUM (Scotland area); Rachel Squire, MP for Dunfermline West; David Hamilton MP for Midlothian.

3. In addition to the regional Monitoring Committee meetings, there are between three and four national Monitoring Committee Meetings per annum which are attended by all the representatives of the Monitoring Committees and by the Minister himself (presently Nigel GriYths MP), with the Department and representatives of Capita and the claimant’s group also present.

4. The role of the Scottish Monitoring Committee is perhaps of a diVerent nature to that of other Monitoring Committees in England and Wales because the operation of the Handling Agreements and negotiations between the parties are subject to oversight by Judges in the group litigation procedure South of the Border. There is no such procedure in Scotland. The Handling Agreements themselves were negotiated by NUM (Scotland Area) as lead negotiators. They are based upon the terms of the Agreements applicable South of the Border.

5. From time to time, issues arise that are peculiarly Scottish because of diVerences in the law between the two jurisdictions. These appear to arise most frequently in regard to the handling of posthumous claims. The Monitoring Committee in Scotland has always encouraged a positive approach to these issues, because we are aware that the settlement with the Department of Trade and Industry is a negotiated Agreement and requires a positive co-operative approach in order to ensure that the interests of miners in Scotland are properly reflected in the agreements.

6. An initial period during which there was a good atmosphere and spirit of co-operation has gradually given way to a more diYcult phase with the parties being those who represent miners interest on the one hand, and the Department at the other, increasingly at loggerheads over issues such as the proper amount to be paid for a Loss of Society (bereavement) claim and the treatment of cases in which the miner died before 16 July 1992. There is evidence that the handling of these issues by the Department has been less open in recent months than it would have been previously; our recommendations in regard to the means of resolving these problems have not been followed.

7. This is a matter of regret and calls into question the role that we have as Monitoring bodies and advisers to the Minister. Our function is not to “rubber stamp” the process. In order to have a positive role it is necessary that we are in receipt of all relevant paperwork and oVered invitations to all relevant meetings at which important points of principle and issues are likely to be discussed with the Minister. Whilst we do not say that the Minister should follow all of our recommendations in every case it seems to us that recommendations made should be considered by the Minister and if he disagrees with them then he should meet with us and be able to account for his views and also take account of the views that are expressed to him by Monitoring Committee personnel. This has not happened and increasingly, Monitoring Committees are not kept properly informed and so are not able to advise the Minister as they should. Indeed even when advice is given as in the episode relating to the attempt to introduce a compulsory Fast Track Procedure in the Autumn of 2004, it is not heeded and so it required a special meeting at which a number of diVerent coalfield interests were represented to persuade the Minister to a diVerent view.

8. Overall, it can be seen that the diYculties in dealing with a large volume of claims and addressing the need to conclude those claims fairly and quickly have been largely tackled in a way that has given confidence to coalfield communities, whose representative bodies have contributed to the process. The parties deserve credit for that and for the way that they have gone about their business in diYcult circumstances. Our concern is that as the claims begin to run down in number, and as we move towards the end of these processes, problems will multiply if we cannot reinstate the spirit in which the early diYculties were overcome. 3030281020 Page Type [E] 27-04-05 22:34:29 Pag Table: COENEW PPSysB Unit: PAG1

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APPENDIX 5

Memorandum by the co-ordinating groups of each of the Claimants’ Solicitors’ Groups Introductory Remarks This document is provided by the Co-ordinating Groups of the two Solicitors’ Groups representing men or the families of deceased men who claim compensation for: (a) respiratory disease (RDL) caused by negligent exposure to excessive levels of mixed coal mine dust; and/or, (b) vibration white finger (VWF) caused by negligent exposure to vibration from hand held tools; when working in the coal mining industry. Litigation in respect of Vibration White Finger commenced in 1994 and in respect of Respiratory Disease in 1995. In preparing this document we have endeavoured to provide information pertinent to matters raised in the Committee’s Notice in a succinct manner. We have not attempted to provide a report setting out the full history of each scheme nor of all of the problems identified including the many which have been overcome nor for that matter do we set out a full account of the successes. Unprecedented numbers of Claimants, former miners and their families, submitted claims under each scheme following successful litigation. This undoubtedly resulted in a substantial challenge for those faced with the tasks of devising and implementing processes to achieve fair compensation for those entitled to claim. Whilst there have been numerous issues that have had to be resolved some of which have taken some time, both schemes have delivered compensation to significant numbers of individual Claimants more eYciently than if assessment had been left for determination by individual claims brought before the Court. In the Vibration White Finger scheme 77,214 have now been settled with full and final payments and the figure for Respiratory Disease settlements is 152,500.

Development of the Schemes There are two separate Solicitors’ Groups. Membership of each group is open to any firm of solicitors that represents Claimants. Each group is represented by a Co-ordinating Group of member firms. Those Co-ordinating Groups have had responsibility for prosecuting the group litigation in each case, thereafter negotiating the terms of the respective Claims Handling Agreements with the Department of Trade and Industry (DTI) and negotiating the implementation of the provisions of those Claims Handling Agreements. The DTI personnel involved have with some exceptions, played their part for relatively short spells and have then moved on to other areas of work within the service. Their number has been supplemented by seconded staV from external sources, such as PricewaterhouseCooper. An external consultant (Mark Pyeman) provided project management advice to the DTI shortly after the RDL scheme was agreed. There have been six diVerent Ministers with responsibility for coal health claims to date: John Battle, Helen Liddell, Peter Hain, Brian Wilson, Stephen Timms, Nigel GriYths. The VWF Solicitors’ Group existence is provided for by a Court Order made in July 1994. In RDL an Order providing for the Solicitors Group was made in January 1996. The active members of the VWF Co-ordinating Group are: Hugh James, Irwin Mitchell, Thompsons (Scotland), Thompson & Co, and Watson Burton. The active members of the RDL Co-ordinating Group are: Hugh James, Irwin Mitchell, and Thompsons (Scotland) In the VWF litigation there have been two High Court trials, one of preliminary issues and one of medical causation and quantum of damages. In both trials the Claimants prevailed and in each case the Defendant appealed to the Court of Appeal, unsuccessfully. The VWF Claims Handling Agreement came before the Court for approval in January 1999. It has thereafter been significantly amended and extended as issues have arisen in the assessment of claims. The Respiratory Disease litigation progressed to one High Court trial. There was no appeal. The Claims Handling Agreement was concluded in September 1999 and approved by the Court. This, too, has been significantly extended and amended for similar reasons. Copies of each of the Claims Handling Agreements will be made available to the Committee if required. Annex 1 provides an overview of each scheme. The litigation of both claims was pursued before the Courts in England and Wales. In relation to both, once legal liability was established the DTI accepted liability for Claimants who had worked in collieries in Scotland. Parallel Claims Handling Agreements were negotiated on behalf of all Scottish Claimants by solicitors instructed by the Scottish area of the National Union of Mineworkers. These Claims Handling Agreements are identical save where there are variations between the laws of Scotland and those of England and Wales (principally in relation to the assessment of posthumous claims). 3030281020 Page Type [O] 27-04-05 22:34:30 Pag Table: COENEW PPSysB Unit: PAG1

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In addition, the Union of Democratic Mineworkers subsequently agreed a similar Agreement on its own behalf in respect of RDL. No other trades union has such an Agreement. That both the VWF and the RDL Agreements were negotiated after successful litigation establishing the Claimants legal right to compensation is significant. As a result both schemes are based upon what a miner or his family would recover if they brought a successful common law claim and consequently: 1. Damages are individually assessed based on evidence which means awards of damages vary significantly (in a significant number of cases life-changing sums of money have been received by miners and their families); 2. Legal advice has been, and remains, an integral part of the process of delivering full and proper compensation to miners and their families. In both cases the Claims Handling Agreements were achieved after extensive negotiation between the Co- ordinating Groups and the DTI. The amount of damages paid to any claimant under each scheme is determined by reference to tariVs of damages for various heads of claim which depend on the individual circumstances of the man and in particular his age and level of disability. The tariVs under both schemes are updated annually in line with the increase in Retail Prices Index. The tariVs are in line with that which would be paid at common law following the Courts’ findings in the Judgments in the respective lead actions. The purpose of each Claims Handling Agreement is to provide for fair assessment of each claim, to pay appropriate compensation to those so entitled and to ensure consistency in assessment. Furthermore, in each case designated Judges of the High Court have continued to oversee the litigation receiving regular Reports to the Court through written documentation and oral submissions at hearings (see Annex 2). Scottish jurisdiction is of course separate from English and Welsh jurisdiction and there are certain substantive diVerences in the laws between the jurisdictions. The Agreements that govern the VWF and RDL compensation schemes have, so far as possible, operated on a national basis but there remain specifically Scottish issues outwith the scope of the supervisory oversight of the Court in England and Wales (see also Annex 3). The object of each of the Claimants’ Solicitors’ Group is to represent the best interests of the Claimants in claims for damages. Neither the Co-ordinating Groups nor the Solicitors’ Groups have any disciplinary or regulatory powers. These are matters for the Law Society or other relevant regulatory bodies. It is for each firm to enter into appropriate arrangements with Claimants who instruct them and to ensure that proper advice is given, tailored to the circumstances of each individual Claimant, and to comply with professional standards, for example in relation to client care. In each case the Co-ordinating Group have issued regular Bulletins (112 in VWF and 96 in RDL) to member firms designed to assist those firms in properly advising their clients as to their claims. Training has also been provided. There has been some public controversy about solicitors charges. Both schemes provide that Claimants’ legal fees will be paid by the DTI in successful claims but not in unsuccessful claims. In each scheme the legal fees are prescribed and for the most part agreed fixed sums are payable subject to individual circumstances. The Law Society of England and Wales issued guidance concerning solicitors charges in January 2004 and the OYce for the Supervision of Solicitors has received a number of complaints. Where inappropriate charges outwith the Society’s guidance have been queried we understand that repayments have been provided. Although this is a regulatory issue it seems to us appropriate that repayment is made in such circumstances.

External Oversight—Monitoring Groups The schemes have been, and remain, immensely important to individual Claimants and have a high profile in coalfield communities. No doubt, as a consequence, at an early stage the Minister established Monitoring Groups to review the schemes and report to the Minister. There are Monitoring Groups for each of England, Wales and Scotland and in England there are a number of Regional Groups. The Monitoring Groups assess the activities of the Claimants’ solicitors, the DTI and the various contractors. We believe they have made a positive contribution.

Implementation of the Schemes In both schemes the claims assessment process has been streamlined when compared to the usual Court process. One medical expert is jointly instructed in each individual claim and the extent and nature of factual evidence and the method of presentation of that evidence has been standardised. As indicated above much work has been devoted to providing for the eYcient assessment of the appropriate level of compensation dependent upon the evidence in each individual case. The process has been enhanced by the development of various computerised calculator models which include: 1. for VWF a programme that calculates services awards; 3030281020 Page Type [E] 27-04-05 22:34:30 Pag Table: COENEW PPSysB Unit: PAG1

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2. for RDL programmes that quantify: (a) the extent of dust exposure over the working life of each Claimant dependent upon the colliery or collieries in which he worked and his job(s); (b) the proportion of dust for which the DTI are liable; (c) the extent of the contribution of smoking to causation of chest disease; (d) the assessment of damages payable in each individual claim; (e) the extent of any pension loss recoverable as part of the claim. There are diVerences as between the two schemes which flow from diVerences in the nature of the diseases in respect of which compensation is payable. Vibration White Finger is a condition which aVects the hand or hands to varying degrees of severity with symptoms falling within two broad categories, vascular, induced by cold intolerance and sensorineural which include reduced dexterity, numbness and tingling. General damages are payable in respect of the condition varying according to the age of the Claimant and the severity of the disease. In addition, where proven damages may also be payable for handicap on the labour market, for the inability to undertake tasks (or services) for example, DIY, gardening, basic car maintenance and for wage loss. Respiratory Disease encompasses Chronic Bronchitis (a non-disabling functional disorder), Chronic Obstructive Pulmonary Disease (COPD) a disabling lung condition which can cause death, and temporary exacerbation of asthma. Both Chronic Bronchitis and COPD can be caused by smoking. As the extent of disability caused by COPD can be much more extensive than that caused by Vibration White Finger the range of or heads of damage are more extensive and arise more frequently in individual claims. They include general damages, loss of earnings, the cost of provision of care, loss of mobility, loss of pension and redundancy benefits and where death has been caused by COPD bereavement awards and loss of dependency. Both Claims Handling Schemes have closed to new Claimants. The number of VWF Claimants registered is 169,6011 and the number of Respiratory Disease Claimants registered is 576,0002 The numbers of Claimants for each scheme are unprecedented as is the amount of compensation paid to Claimants. Delays caused by diYculties with the handling of claims or certain categories of claims have been a continuing concern. In some instances the explanation may lie in the unprecedented volume of claims which for both schemes substantially exceeded most estimates. In both schemes the DTI’s desire to close the scheme by imposition of a cut-oV date for claims predictably served to produce a substantial influx of claims in the run up to each of the closure dates. In VWF there was a substantial influx of claims both before the end of the limitation amnesty on 30 September 2000 and a further influx before the cut-oV dates of 31 October 2002 for live claims and 31 January 2003 for posthumous claims. In RDL, as of 31 August 2003 278,3603 claims had been registered—over 300,000 additional cases were registered by the closure date of 31 March 2004. There have been recurring concerns about the planning for claims handling and the organisation and deployment of both IT and human resources and training of human resources by the DTI’s contractors. We have also been concerned about the eYcacy of arrangements between the DTI and its contractors and the extent to which the DTI has been able to manage its contractors and hold them to account. However, the contractual provisions and management control mechanisms have not been made known to us and therefore our concerns arise from close external observation rather than intimate knowledge. Numerous issues have arisen during the course of the implementation and operation of each of the Handling Agreements. Below, in separate sections for each scheme we set out what we believe to be the current principal points of concern. Historically, significant issues have included: RDL 1. Delivery by the first medical report provider, Healthcall both generally and in particular in relation to Respiratory Specialist recruitment and in responding to questions raised on behalf of Claimants in relation to medical reports. 2. The apparent inability of IRISC (now Capita) to respond to Claimants’ Solicitors’ correspondence and telephone enquiries generally and specifically in relation to the resolution of queries raised in relation to settlement oVers. 3. The frequently experienced failure by IRISC to match incoming documentation from Claimant’s Solicitors to files. 4. The lack of continuity of staV handling claims at IRISC and the absence of facilities to discuss claims.

1 The DTI report to the Court for Hearing 20 December 2004. 13% of claims are made on behalf of deceased mine workers estates. The figure excludes the small number of claims against mining contractors for which the DTI also have some liability. 2 There are 248,000 claims brought by living miners and 327,000 posthumous claims brought by family members. 3 149,937 living miners, 128,423 posthumous. 3030281021 Page Type [O] 27-04-05 22:34:30 Pag Table: COENEW PPSysB Unit: PAG1

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5. Mineworkers who left the industry as a consequence of chest disease would, had they remained at work have paid additional contributions into their pension schemes as would their employer. As a consequence these mineworkers lost pension benefits as a result of their chest illness (the sums involved can be significant). The law provides that such losses are recoverable. The relevant Mineworkers’ Pension Scheme and StaV Superannuation Scheme are complex and the benefits have changed over time. Recovery of pension loss was provided for in the Claims Handling Agreement and the parties began to work together with a jointly instructed actuary, expert in the relevant schemes, and a computer programmer to develop an agreed basis for calculating the losses. This proved to be a long arduous process. By January 2001 a calculator for the Mineworkers’ Pension Scheme (MPS) Living Claimants had been prepared. In order to ensure that oVers of settlement could be issued to at least some of the Claimants it was agreed that this rudimentary calculator should be operated on the basis that if a Claimant so elected he could, when the calculator was finalised, claim any additional amount of pension loss over and above the sum oVered provided it exceeded £500.00. There are four components to the pension calculator: live and deceased MPS and live and deceased staV superannuation. The final component calculator was not distributed until October 2004. It should be noted that not all claims include pension losses but nevertheless many claims have been delayed from final settlement as a consequence of the development of the pension loss calculator. This is a clear example of an issue which has taken a long time to resolve. However, calculation of pension loss is complex and without the calculators the time taken to assess these losses would have been even longer. VWF 1. Timely provision of miners training records and earnings records in respect of which there was a long period of unsatisfactory delivery—the records are relevant to job or occupational group which is determinative of entry to the scheme. 2. The apparent inability of IRISC to respond to Claimant’s Solicitors’ correspondence and telephone enquiries generally and to progress claims. Items 3 and 4 above also arose in VWF. 3. The approach of IRISC to the investigation of Group 3 claims (see below) 4. The inability of IRISC to co-ordinate claims involving co-defendants (see below)

Vibration White Finger—Current Issues

Group 3 Claims A summary of the approach adopted by the CHA to determining the issue of liability in individual cases principally by reference to the claimant’s occupation is set out in Annexe 4. The original Claims Handling Agreement contemplated that claims would be brought by men in Group 3 occupations. They would be required to establish actual exposure to vibration. It provided brief guidance as to the information that such a Claimant would need to provide to enable the claim to be considered. However, it appeared that IRISC did not have in place arrangements for investigating and assessing Group 3 claims. In cases where claimants submitted evidence of exposure to vibration there was delay. Subsequently, in March 2001 after negotiations between the CG and the DTI, prompted by the delay in the assessment of Group 3 claims, the Occupational Group Procedure (OGP) was agreed. This was intended to provide an agreed procedure to facilitate the speedy assessment of Group 3 claims. It set out the evidence that was required to be submitted by the claimant and specific witnesses in a standardised questionnaire form. Provided such evidence submitted by the claimant confirming exposure to tortious vibration, was not deficient on its face or inconsistent with mining practice or other evidence then in the absence of evidence to the contrary the claim would be accepted. Although the OGP was intended to facilitate the handling of claims where evidence was submitted that met its requirements it was not intended to preclude consideration on its merits by IRISC of other evidence eg in other cases. However, the requirements of the OGP have been used by IRISC as a procedural bar. Where they are not met, in eVect, the claim is passed back to the claimant’s solicitor. There has been a refusal to consider cases in which the evidence submitted does not meet the OGP’s requirements without detailed explanation as to why those requirements cannot be met and in some cases the approval of the DTI itself is required before IRISC may consider the merits of a case. IRISC employed a dedicated team, based in SheYeld, with mining experience to investigate Group 3 claims in general and in particular to consider whether the claim as put forward by the claimant “made mining sense”. However, IRISC have found it diYcult to recruit and retain suYcient staV for that team. There has been longstanding concern about the adequacy of IRISC resources to assess claims timeously. The rate of investigation has been slow and the approach of the investigators often controversial. Their approach particularly with regard to their application of “mining sense” has, caused disquiet among members of the National and Regional Ministerial Monitoring Groups who themselves have mining experience. So too has the relative (little) weight they have given to evidence from the claimant and his witnesses which will usually include mining oYcials. 3030281022 Page Type [E] 27-04-05 22:34:30 Pag Table: COENEW PPSysB Unit: PAG1

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Following agreement of the OGP, evidence was submitted in many thousands of claims. The DTI imposed the cut oV date of 31 October 2002 for submission of evidence in claims in which the denial was contested. This aVected all but a small proportion of claims in which the denial was recent. The number of claims in which evidence contesting the denial has been submitted now exceeds 16,000. IRISC statistics reveal that prior to the cut oV date of 31 October 2002 (approaching four years after the CHA was agreed) only 1,151 group 3 claims had been investigated.4 In 2003 2,292 investigations were completed. That number rose to 4,055 in 2004. Over 5,000 are currently with IRISC for investigation and all told some six years after agreement of the CHA and over two years after the “cut oV” date investigations have been completed in only about half of the claims in which evidence disputing the denial has been submitted. Investigations in potentially over 7,500 claims are outstanding. Of the claims investigated to date 1,923 (38%)5 have been accepted as Group 1 or 2 suggesting that initially in many cases the claim was wrongly categorised by IRISC. 556 (10%) are accepted on the basis of exposure in a Group 3 occupation. 2,564 (51%) are denied. A significant proportion of the denials are disputed and of the 752 disputes resolved by 31 October 20046 in 105 (14%) had been accepted on the basis that the claimant was exposed to tortious vibration in a Group 3 occupation and in a further 132 (17.5%) it was accepted that the man had the necessary Group 1 or Group 2 employment making a total of 31.5% of disputes resolved in the claimant’s favour7.

Services Claims The major symptoms of VWF are numbness, loss of dexterity and cold intolerance. The latter is principally associated with the vascular component of the condition rather than the nerve damage (sensorineural) component. For claimants significantly aVected there are implications for their ability to do everyday tasks such as gardening, decorating, DIY, car maintenance etc. (“services tasks”). At common law an injured claimant can recover the cost of assistance with everyday tasks such as these that he is no longer able to do, whether such assistance is provided gratuitously (usually by family and friends) or by professional assistance. In the lead actions a number of the significantly injured claimants recovered damages for this head of claim. Consequently, recovery for this head of damage was contemplated by the original CHA. However, initially no procedure for assessing such claims was agreed between the DTI and IRISC and IRISC did not make arrangements to assess these claims. Subsequently, following negotiations, in the latter half of 2000, a separate agreement was reached in early 2001 between the CG and the DTI, which provided in detail for the handling and assessment of services claims. The Services Agreement provided for submission of factual evidence in standardised (questionnaire) form from the claimant and those who currently provided assistance with various tasks. It was expressly intended to limit the factual evidence required to assess claims and provided for the assessment of claims by reference to agreed tariVs, depending upon the severity of the claimant’s VWF, and after taking into account any co- morbid conditions that he suVered from which would have limited his ability to do the tasks in any event. The Services Agreement was then partially implemented as IRISC began investigation of the factual basis of claims. There were concerns from an early stage as to their approach, which in many cases involved detailed investigations of a nature not contemplated by the agreement and the relevance and focus of which was not apparent. There were also concerns about the adequacy and training of IRISC’s adjusters. It is conceivable that the terms of the arrangement between the DTI and IRISC played a part in this regard but we have never been privy to these. There was also delay in full implementation of the Services Agreement because of the need to put the co- morbid medical assessment out to tender. Concerns about delivery of the Services Agreement remain. There are continuing concerns about the adequacy of the training of IRISC adjusters and the focus and relevance of their investigations in many cases. These matters may impact on the overall rate of investigations about which there are also concerns. Cut oV dates by which claimants’ must intimate claims and lodge evidence in support have been provided for, at the DTI’s request, by Court Order. They will result in an increase in the rate of claims in the period preceding the cut oV and may serve to adversely aVect the claims handling process. However, although the cut oV dates will cap the size of the pool of claims to be assessed, recent analysis of available statistics suggested that the DTI’s aspirational end dates for settlement of all services claims are unlikely to be met by some margin.

4 In November and December 2002 a further 459 investigations were completed. 5 This percentage will decrease as a number of completed cases accepted as Group 1 or 2 were identified following special review exercises, now completed, and not part of the routine investigations. 6 More recent figures for the outcome of disputes are not available to us. 7 IRISC Group 3 figures. 3030281022 Page Type [O] 27-04-05 22:34:30 Pag Table: COENEW PPSysB Unit: PAG1

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The extent to which IRISC and the DTI are able to monitor delays in the processing of claims at IRISC is not clear. It is understood that key stage analysis showing the length of time claims sit at any key stage in the process is not yet available for claims for Services (although it has been used for some time for early stages in the general VWF claims handling process). Following our suggestion this is now understood to be under discussion between the DTI and IRISC.

Co-defended Claims The approach of the VWF CHA and that of the RDL CHA diVer in the manner in which co defendant claims are addressed. In the VWF scheme claims relating to exposure during periods of employment with mining contractors must be directed to the contractors (or their insurers) who deal with them in the first instance although the DTI contribute to meeting the contractors’ liability. The VWF scheme was achieved in January 1999 and it was not until mid to early 2001 that the major contractors’ insurers and the mining related defendants representing small mines and companies such as UK Coal (formerly RJB) joined the agreement after pressure had been exerted through a number of Court hearings. The number of claims in which there is involvement of mining co-defendants significantly exceeds 10,000. Under the CHA IRISC have the responsibility for co-ordinating claims involving co-defendants. The co defendant interests in the form of the various insurers and claims handlers have been disparate and uncoordinated themselves. It has appeared that initially IRISC focused on the bulk of claims in which there was no co-defendant interest and declined to focus adequate resources on the more arduous task of dealing with this category of claims. This has led to delays in dealing with claims with co defendant involvement which only comparatively recently have begun to settle in significant numbers.

Stalled Claims In early 2004 the DTI raised the prospect of introducing a procedure to address claims that had been stuck or “stalled” within the claims handling process and indicated that they wished to focus on such claims that had become stalled with solicitors. The CG indicated a willingness to discuss and develop such a proposal, providing that it was widened to also address claims that had become stalled with their contractors, principally IRISC. At the end of July 2004 the DTI tabled a detailed proposal addressing only the problem of claims stalled with claimants or their solicitors, which we were told they intended to proceed to implement despite the lack of agreement that they should do so and even though implementation represented a significant change to the claims handling process. A number of detailed objections were raised to the procedure which we considered was unfair and unworkable. As implemented, the procedure provided that following a request for information from a claimant (via his solicitor) if the information remained outstanding for more than three months then IRISC could write giving notice that the stalled claims procedure was to be invoked. If a substantive response was not received within a three month period, during which a further reminder would be sent, a claim could be closed. Once closed a claim could only be re-opened upon application to the Court. Between 1 October and 20 December 2004 IRISC wrote out on over 4,000 cases informing the claimant’s solicitor that the case was subject to the stalled claims procedure and therefore, as noted above, the timetable towards closure of the claim within 3 months had begun to operate. In view of the draconian consequences for Claimants in receipt of such notification meant that Claimants’ solicitors were obliged to divert resources from other claims handling activities to focus on claims that IRISC had identified as stalled. A high proportion of cases were put into the stalled procedure in error. The DTI have subsequently agreed to a number of amendments that the CG had suggested to the procedure intended to make it more practical. Had they been in place from the start many claims to which the procedure was applied would never have been subject to it. The exercise revealed concerns about IRISC’s organisation and the training of their staV. It also raised concerns about their resources. They were unable to respond to replies from claimant’s solicitors regarding claims to which the stalled claims procedure had been applied. Notwithstanding that the procedure required prompt response from the claimant’s solicitor IRISC, with the DTI’s agreement, did not plan to address such responses until the beginning of 2005. This approach, driven by limited resources at IRISC, created uncertainty as to the status of cases to which the procedure had been applied. During this period although the procedure had been implemented we sought to continue to negotiate with the DTI to improve its terms. Because of diYculties in its operation it was suspended between 20 December and beginning of February 2005. Its operation was the subject of detailed representations by the parties at a hearing on 21 January, by which time it had been substantially amended to make it workable. The major outstanding issues by then were as to when it should be introduced and whether it should be extended to apply to claims stalled with IRISC. 3030281022 Page Type [E] 27-04-05 22:34:30 Pag Table: COENEW PPSysB Unit: PAG1

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On 21 January the Court directed that the procedure should be re-introduced from 1 February 2005. However, the Court indicated that in future IRISC needed to exercise greater care in the operation of the stalled procedure and in particular to ensure that it was only applied to appropriate claims. Introduction of the stalled claims procedure so far as claims “stalled” on the claimants side is concerned is largely a matter of recent history. However, it is significant because the episode illustrates the diYculties that arise when the DTI have sought to unilaterally impose changes without proper consultation or agreement. It is also significant because although when the proposal was first raised it was made clear that the CG considered that a similar initiative was required to address claims “stalled” with the DTI’s contractors IRISC and notwithstanding that a detailed proposal was submitted months ago, that issue is one that the DTI and IRISC are clearly reluctant to contemplate and have, as yet, to give serious consideration.

Respiratory Disease Litigation

Speeding Up The Scheme: Fast Track OVers From 1 March 2005, live claimants under the RDL scheme will be able to obtain fast track oVers after a spirometry test in four distinct categories of case. This extends the opportunity for early settlement and conclusion of claims within the scheme that was previously possible only in a smaller number of cases under the expedited tariV. Damages are fixed by reference to the average payment made to date through the scheme, after a full MAP, to Claimants within each of the four spirometry categories. In addition to live fast track oVers, the Court has ordered that in posthumous cases where there is no indication of COPD on a death certificate, called “category 3” cases, it will be possible for widows and families of deceased miners to obtain modest “fast track” payments if they wish to do so (cases with such an indication will proceed through the full MAP process without a fast track oVer). It is not known yet when the posthumous “fast track” oVers will be introduced but it looks as though this will not take place until the middle of the year. It is thought that 100,000 live “fast track” oVers will be made within a year. As many as two-thirds of the remaining posthumous claims might be eligible for a “fast track” oVer. The move towards introducing these “fast track” oVers, which is supported by the Judge with supervisory jurisdiction over the RDL Claims’ Handling Agreement, Sir Michael Turner, took place at first in a spirit of co-operation as all parties and the Court were agreed that it was wrong to take no action in the face of a projected end date for the scheme of December 2011. This distant end date arose as a consequence of the large number of claims registered by the closure date and the principal limiting factor upon “throughput” of Respiratory Specialists availability to carry out Claimants’ medical assessments. By late September 2004, the DTI advocated—as it had done previously—a fast track option for miners to speed up their claims, or to allow them to proceed through the full MAP compensation process. Within a very short space of time however—a few weeks at most—the DTI’s position changed for reasons unclear; instead, it argued for a compulsory “fast track” oVer procedure that would have had the eVect of leaving very few claims to proceed through the full process. It was only after a meeting at the House of Commons, in mid October, at which there was unanimous disapproval of the compulsory “fast track” scheme from coalfield representatives present, that the DTI altered its position and accepted that “fast track” oVers should be optional. The DTI appears to have been content to let the Court rule upon the substance of the “fast track” oVer and associated costs to be paid to claimants’ representatives, rather than to engage in substantive negotiation, whether over the fast track tariV of payments or costs or over the important matters of detail that require to be ironed out so that the “fast track” procedures might be introduced speedily and eVectively. As a consequence, there remains even now doubt as to the level of “fast track” payment to be paid to certain categories of live claimant and that only three weeks before the introduction of the tariV itself. Issues have arisen over the way in which the average payment has been calculated for the category of claimant with FEV 1 greater than 90%. There also remain issues over the inclusion of withdrawn cases in the cohort of claims used to work out the average payment. There is moreover, uncertainty over the identification of men who were medically unable to take the test as “avoidably unreliable” claimants or as men who were simply too ill to test properly. As regards posthumous cases, the payment scheme will not be introduced for several months yet, and important transitional arrangements have still to be agreed. The DTI proposed (and the Court has accepted) that the posthumous “fast track” oVer will be an “opt in” scheme. As the cut-oV point for eligibility to a “fast track” oVer in category 3 cases will be the production of a MAP report from the medical service provider (ATOS), it is essential that claimants are able to postpone delivery of the MAP report to their representatives and to Capita until advice is given and instructions obtained in regard to the “fast track” oVer entitlement that they may have. Representations to the DTI on this point have so far been rebuVed, 3030281023 Page Type [O] 27-04-05 22:34:30 Pag Table: COENEW PPSysB Unit: PAG1

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save for an oVer not to commission any further MAP reports (beyond those already in the system) as at 21 February 2005, until 21 August 2005. This leaves the problem group—category 3 cases currently in the MAP queue ı unaddressed. These remaining issues will have to be resolved by the Court if not by agreement and it is to be hoped that a reduction in the overall life of the scheme is achieved.

Minimum Payment

The protracted discussion over the possible introduction of a minimum payment for claimants under the RDL scheme has caused frustration to a large number of claimants. At one point during discussions last year, the DTI intimated that these might be of the order of 3,500 claimants or so, but it now appears that there may be as many as 7,500 claims blocked pending resolution of the minimum payment issue. The background is that in other compensation schemes such as that operated for industrial deafness claimants and pneumoconiosis claimants (and in other large settlement schemes overseas), a minimum level of payment was set. No doubt there were good reasons for this and one was that a claim meritorious to any extent should attract a value which should not be seen as an insult to the person to whom the payment was oVered and so act as a disincentive to settlement. The DTI would not accede to the suggestion that there should be a minimum payment when the scheme was first set up in England and Wales in 1999. They also rejected a proposal from the Co-ordinating Group that in the event that a revised Chronic Bronchitis Only TariV Scheme might be introduced, there would be transaction savings both in solicitors’ costs and in costs incurred by the DTI’s contractors and these might be used to create a fund for a minimum payment. These discussions broke down in 2002. In July 2003, claimants proposed a minimum payment scheme to be wholly funded by money released from adjustment of solicitors’ costs. This required consultation and approval from the regulatory body in each jurisdiction. There was then consultation with the wider Solicitors’ Group before a revised proposal was advanced to the DTI in March 2004 to top up oVers falling below £500 by a reduction in the increase in solicitors costs that would normally have occurred through the Retain Price Index mechanism. The rate of progress made on this issue has been slow and we believe that the DTI has been reluctant to implement a minimum payment provision within the RDL scheme. Claimants frustrated at the delay experienced in resolving this issue over several years might by now have opted to accept very low payments. In any event, a very large number of settlements is likely to be obtained at a stroke when this scheme is introduced and it is to be hoped that it will not be delayed much longer. The DTI have said that the mechanism for the finding of minimum payments is now an issue and that a case by case approach is favoured rather than the RPI fund referred to above which takes the debate back to where it was some 18 months ago. The members of the Claimants’ Solicitors Group are being consulted on this currently.

Surface Dust Exposure

The RDL was pursued on behalf of lead claimants all of whom have worked wholly underground. Following the conclusion of the trial and during negotiation of the Claims Handling Agreement both the CG and the DTI were aware that there were certain jobs on the surface which led to exposure to coal mine dust. The CHA contained a Statement of Intent that the parties would seek to resolve liability for exposure to surface dust by agreement. Investigation of the likely extent of exposure to surface dust in certain occupations was initially undertaken jointly. In 2000 it was thought by the CG that agreement would be achieved and indeed the DTI submitted a Treasury Minute to Parliament (see Annex 5). Within a week or so of the publication of this Minute the DTI disclosed to the CG evidence as to levels of dust exposure that led to the conclusion by their appointed medical expert that no significant lung damage would result from surface dust exposure. This was not accepted by the Claimants and following further negotiation a mixed underground/surface worker agreement was achieved whereby men who worked in certain defined occupations on the surface and had also five or more years underground employment were compensated for that part of their respiratory disease caused not only by underground exposure but also by the surface exposure. The parties endeavoured to achieve agreement in relation to those exposed to dust in surface jobs only (or for less than five years underground). The DTI declined to accept liability in February 2003. The CG then investigated further the prospects of pursuing group litigation on behalf of the estimated 3,000 to 5,000 men who had registered claims. This involved extensive review of documents in the former British Coal Corporation archive and seeking medical and mining engineering evidence. The Court was advised, in December 2004, that group litigation would not be pursued. A significant factor was the risk of men having to pay the DTI’s legal costs if the litigation was unsuccessful. The DTI were asked to waive this right but declined to do so. It is possible that claims may be pursued by some individual Claimants. 3030281023 Page Type [E] 27-04-05 22:34:30 Pag Table: COENEW PPSysB Unit: PAG1

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Both Schemes

Securities Investigation Department (SID) The DTI has appointed a specialist unit to investigate claims which may have been made fraudulently. From the outset, the CG accepted the DTI’s right to do so, as it is plainly appropriate to seek to detect and deter potentially fraudulent claims. However, we have asked that the DTI should carry out their investigations into such claims within a reasonable framework, understood by Claimants and their Solicitors and that such investigations are completed within a reasonable timetable in the interests particularly of those claimants whose cases turn out after all to be genuine. In particular, we asked that Claimants should be advised of the basis of the DTI’s concerns in any claim under investigation. We also sought clarification of the guidance or instructions given to investigative staV carrying out interviews of witnesses. Controversially, the DTI began to seek interview facilities in some cases with claimants themselves. As to the first of these requests, it has proved a diYcult and slow exercise in cases under investigation to obtain from SID an account of their concerns. Initially, claimants’ Solicitors complained that reference was made in correspondence from SID to “anomalies” in the presentation of evidence but little else was oVered by way of explanation of them despite requests. There were also complaints in some instances, of heavy handed investigations of witnesses who were interviewed though unclear of the nature and purpose of the interview. The SID procedure appears beset by delay. Further, figures produced by the DTI suggest that only a very small number of cases under investigation do not return to the normal process eventually, to be assessed in the normal way. “Since May 2002, 1,470 potentially suspicious cases have been referred for additional investigation. These claims have a total potential claim value of “£21.3 million. Approximately 60 new cases are referred each month directly to the Security Investigation Department (SID). The majority of cases still relate to VWF Services, but since the COPD cut-oV date the number of COPD claims being referred has increased dramatically. Currently 33% of all referrals relate to COPD claims. Of the 1,470 referrals, 737 are currently under investigation and 773 have had their investigations completed. Of those that have had investigations completed, 132 claims have been denied and 86 claims have been reduced, with a total value of £2.6 million. The remaining claims were returned for processing once it was confirmed that there was no fraudulent activity, a claim was valid within the remit of the schemes, or any anomalies were clarified. Process streamlining and improvements are continuing to be introduced to minimise any unnecessary delay to valid claims. Where the Department is unable to complete its investigations (for example, where a witness or a claimant declines to be interviewed), then such cases are held in abeyance until such time as the Department’s concerns are either confirmed or allayed. Currently in excess of 34 claims are in abeyance.”8 In the meantime the Minister has recently indicated that he does not think it appropriate to disclose details of the procedure under which SID operate, since that may assist those intent upon falsifying claims. A recent request to the DTI for information as to the number of claims currently under investigation by SID has been declined and of that number how many have been under investigation for over three and over six months. The DTI insist upon their right to interview claimants where required in certain cases, although this would not be permitted in civil proceedings where a defendant would always have the right to cross-examine a claimant in evidence but not to interview him. Our continuing concern is that the public perception of the process will suVer if genuine claimants and their witnesses believe that procedures to investigate doubtful claims end up by stigmatising them and are characterised by secrecy and delay. In many of the cases under investigation, the CG believe that there are reasonable explanations that can be proVered for anomalies in evidence as regards dates of service provision and the like. Solicitors are willing to assist in the process in their client’s interests and accept that if no reasonable explanation can be oVered to SID then matters may proceed further. The balance to be struck as between the proper interest of the DTI in weeding out false claims and the interests of claimants who might be able to explain evidential discrepancies if given the chance to do so, is in our view in need of adjustment.

Openness We have been concerned, from time to time, as to whether or not the DTI has always been as open in sharing concerns about issues in relation particularly to the implementation of schemes as perhaps might have been hoped for in the interests of the prompt resolution of those concerns. This has been a more significant concern over the last year or so. By way of example, at Annex 6 we attach an article from “The

8 DTI’s Report to the Court January 2005. 3030281023 Page Type [O] 27-04-05 22:34:30 Pag Table: COENEW PPSysB Unit: PAG1

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Guardian”.9 We make the point that the words quoted from the internal DTI document indicate an unwillingness to share the idea of introducing of the proposed technology with the Co-ordinating Group: indeed, their intent was to conceal it.

Concerns For The Future Concerns for the future include: 1. The eVectiveness of the implementation of Fast Track OVers process and whether or not in practice the introduction of such will reduce the time taken for the assessment of claims overall, and, 2. The management of the closure of each of the schemes. This is currently in progress in relation to VWF and will have to be addressed in RDL in the not too distant future. 3. The recent deterioration in constructive dialogue aimed at resolving issues by agreement. Much of what has been achieved has been as a consequence of, (often robust) discussion and agreement. It will hinder the operation of each of the schemes if this does not resume. 4. The length of time it is likely to take for IRISC to complete their investigation of VWF Group 3 claims and the factual basis of services claims; and with regard the latter the extent to which information submitted in support of the claim will become out of date and thus require to be supplemented with obvious ineYciencies in the claims handling process and frustrations for the claimants. 5. IRISC’s capability to make available adequately trained staV at appropriate points in the claims handling procedure for both schemes so as to suYciently reduce delays in the claims handling procedure that have been endemic to date. 6. The DTI’s capability to monitor the performance of IRISC and keep it to account. 7. The DTI’s willingness to always to share information required to monitor performance and to engage in constructive dialogue over proposed changes to the CHAs and claims handling process. February 2005

Footnote As indicated above both schemes arise as a consequence of litigation which is an adversarial process and in respect of which both the Claimants and the DTI are entitled to legal advice which it would not wish to disclose to the other and, of course, are not obliged so to do as a matter of law. Please note that this has not impacted upon our ability to set out our views within this report.

Annex 1

OVERVIEW OF EACH SCHEME

Vibration White Finger 1. The Claimant submits questionnaires giving information about employment history in the industry. 2. If allocated to Group 1 or 2 proceeds to Medical Assessment Process (MAP); 3. If found to suVer from VWF/CTS is entitled to an oVer of general damages; 4. In certain circumstances may be entitled to an additional award of damages for handicap on the labour market and/or for wage loss (in respect of wage loss there is a defined procedure). 5. Subject to extent of VWF disability may be entitled to claim for the value of lost services in respect of which a defined procedure exists. 6. If not found to suVer from VWF claim denied. 7. If not found to fall within a Group 1 or 2 occupation claim denied but Claimant has right to seek to establish either that he should be within a Group 1 or 2 occupation or that he was exposed to tortious vibration as a group 3 Claimant in respect of which a defined procedure exists. 8. Where employed by employers in the coal industry other than BCC the Claimant to pursue claims against those employers in accordance with CHA principles save to the extent that various employers do not accept some of the constituent parts of the agreement, notably services and wage loss. 9. There is a disputes procedure and the right to pursue a common law claim is retained. 10. There is a medical reference panel which provides oversight of the medical process.

9 Not printed. 3030281024 Page Type [E] 27-04-05 22:34:30 Pag Table: COENEW PPSysB Unit: PAG1

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Respiratory Disease Litigation 1. The Claimant submits a claim indicating extent of ill health and work history and smoking habit; 2. Work history is relevant to calculating the extent and nature of the dust exposure; 3. A living miner attends for spirometry test and subject to the outcome may be entitled to an expedited oVer of settlement; 4. If an expedited oVer is made and refused or if the man is not entitled to an expedited oVer he may proceed to a full Medical Assessment after medical record collection (MAP); 5. In posthumous cases following submission of Claims Questionnaires medical records are collected and the claim proceeds directly to medical assessment (MAP); 6. Following MAP if a relevant respiratory condition is diagnosed then subject to proof of employment an oVer of damages will be advanced in accordance with the relevant provisions of the CHA. 7. Proof of employment requires establishing the Claimant worked underground in a British Coal Corporation colliery post 1954 and if he worked in a defined dusty job on the surface that he worked for more than 5 years underground. 8. There is no need to pursue a claim against a coal mine contractor who employed a miner to work in a BCC operated mine prior to privatisation. For men employed in the privatised industry post 1994 there is a need to bring a separate claim against that employer. 9. Small Mines employment (private licensed mines) is pursued separately and the block insurer, AGF for the period 1972 to 1992, has accepted that claims will be handled in accordance with the CHA. 10. There is a disputes procedure and the right to pursue a common law claim is retained. 11. There is a medical reference panel which provides oversight of the medical process. Both schemes contain procedural timetables for the advancement of individual claims. Unfortunately, these timetables were abandoned at an early stage in each scheme because the DTI’s contractors were unable to meet them.

Annex 2

JUDICIAL OVERSIGHT OF EACH SCHEME

Vibration White Finger The nominated Judge is Lady Justice Smith. Lady Justice Smith was not the trial Judge. Last week Lady Justice Smith stood down and has been replaced by Mr Justice Mitting.

Respiratory Disease Litigation The nominated Judge is Sir Michael Turner. Sir Michael Turner was the trial Judge. In both cases Review Hearings take place at a frequency of three or four per calendar year where formal Reports are delivered to the Court and where necessary indications are given by the Judge as to how issues may be resolved. In a number of specific instances there have been hearings to resolve disputes between the parties. The Court hearings take place in public and are regularly attended by members of the Claimants Solicitors Group, by members of the Monitoring Groups, by Union oYcials and, from time to time, members of the press.

Annex 3

SCOTLAND The Scottish version of the VWF Claims Handling Agreement was entered into after the English and Welsh Agreement in 1999. The RDL Claims Handling Agreement similarly, was negotiated after the English and Welsh Agreement, in 2000. Each Agreement was negotiated, with the NUM in Scotland taking the lead negotiating role for Scottish claimants there (the Agreements are open to all Scottish Claimants irrespective of Union membership); there is no formal Court Order or supervision of Scottish issues that arise from time to time and which are distinct from those dealt with by the Court south of the border. The role of the Ministerial Monitoring Committee (MMC) in Scotland in overseeing each Agreement assumes greater significance than that of MMCs elsewhere because of the lack of formal process. Like any Agreement, goodwill on both sides is needed to make it work. We believe that such goodwill did exist in the first two to three years of operation of the Scottish version of the Handling Agreement despite the enormous problems that were thrown up by the volume of claims, the complexities of the handling procedures and the initial lack of trained resource available to deal with cases in the numbers required. All 3030281024 Page Type [O] 27-04-05 22:34:30 Pag Table: COENEW PPSysB Unit: PAG1

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parties worked together to ensure that Scottish claimants and Scottish issues where they arose, as they did from time to time, were handled in a constructive atmosphere and in a fair way, having regard to both the interests of claimants and of the public purse. Regrettably however, it has appeared in recent months that the DTI has been less constructive and less willing to heed the views of the Monitoring Committee in Scotland on issues of principle between the parties and on the best way of resolving them within a negotiated context. Recent examples of this approach are the protracted discussions over the Loss of Society tariV (bereavement award) in Scotland and the sensitive issue that arises when a widow entitled to a payment under the Agreement with the DTI for her husband’s pain and suVering, whose husband died before 16 July 1992, herself dies in process and before the payment is made to her. The DTI have dragged their feet over agreeing a reasonable procedure to ensure a fair outcome in these cases consistent with its stated intention to see that no benefit should arise to the DTI from death in process. It continues to be diYcult to get the DTI to honour that commitment for this group of claimants. The agreement with the DTI provides that the widow of a miner should receive his damages even though the law in Scotland (as it then was) made no provision for transmission of the deceased person’s right to general damages (solatium) after his death. The lack of such provision in Scotland was clearly seen as indefensible, not least because of the approach of certain insurers in defending serious personal injury claims. Claimants who were dying from the eVects of a disease for which they sought damages (such as mesothelioma) might receive no oVer of compensation before their deaths and thus present the insurer concerned with a windfall gain in a claim destined to settle, equivalent to the injured person’s damages for pain and suVering. The change made in the law has no retrospective eVect on deaths before 16 July 1992, but the Scottish RDL agreement records that damages will pass to a miner’s widow notwithstanding. The problem now is that widows are dying in process and the question arises as to whether damages that they ought to have received and to which they had a right under the agreement with the DTI, should in turn be allowed to pass to their estates in all cases. This is challenged by the department, which has dragged its feet over agreeing a reasonable procedure to ensure a fair outcome in these cases consistent with its stated intention—often repeated by the Ministers responsible—to see that no benefit should arise to the DTI from a death in process. It continues to be diYcult to get the DTI to honour that commitment for this group of claimants. The position of co-defenders who have a joint liability with the DTI for coal health claims is one of the outstanding issues still to be fully addressed for Scottish claimants. Whereas contracting companies such as Thyssens (GB) Limited and AMCO have been largely willing to deal with VWF claims on the same terms in Scotland as apply south of the border, their position in regard to RDL claims is unclear. Purely Scottish companies such as Scottish Coal and Monktonhall Mineworkers Limited have still to confirm that they will accede to the RDL handling arrangement on the terms applied to AGF (for the small mine interest) or UK Coal claims. The DTI’s claim handling oYce in Scotland is at Capita (formerly IRISC), 40 Torphichen Street, Edinburgh. The oYce was established to deal specifically with Scottish claims but does not deal with all aspects of the VWF and COPD Handling Agreement. Some matters such as Group 3 cases in the VWF Scheme and Fast Track OVers, are dealt with from Capita’s SheYeld OYce. There has from time to time been an unsure grasp of Scottish issues (such as the pre-16.07.92 issue referred to above) and there were for a time, resource issues as IRISC (as they then were) sought to recruit staV to deal with the large volumes of claims. It has appeared that Capita are very much a target driven organisation which may simply reflect the terms of their contract with the DTI (unknown and unseen on our side). In 2002–03, Ministerial targets for oVers in the COPD Scheme were met but as there were no targets set for oVers that required to be reviewed by Capita before a settlement could be obtained, considerable delays were experienced at that time before the necessary reviews were carried out. Capita in Edinburgh have been more responsive of late, particularly to the issue of old claims in the COPD Scheme that were not being addressed despite assurances from Capita in SheYeld that the “priority points” system would always work eVectively to find such cases. This was not always our experience. To their credit, Capita in Edinburgh responded finally to our eVorts to have them identify old claims “Stalled” at Capita and this has seen good progress made in recent months. In posthumous cases, title to a deceased person’s estate needs to be formally completed before final settlement. In Scotland, the procedure required is to obtain a Confirmation from the sheriV court (a Probate in England and Wales). Whilst this in itself causes no undue delay, obtaining multiple Confirmations in cases where there is a “chain” of succession and deaths (from miner, to widow, to son/daughter, and on) is causing significant delay in a number of claims, especially those where the miner died a long time ago. DiYculties in tracking down relevant documents (old Wills and title deeds) and in tracing all relatives who may be entitled to succeed to compensation payable, are the cause of further delays. Insurance policies must be taken out in certain cases where no Will can be found. It would assist in speeding the process up—and be much less costly to the public purse ı if the rules could be relaxed for the more modest settlement amounts due, say up to £1,000. 3030281024 Page Type [E] 27-04-05 22:34:30 Pag Table: COENEW PPSysB Unit: PAG1

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There are continuing reservations over Capita’s resourcing and application of such resource in VWF claims. The national picture on group 3 claims reflects the Scottish position as there is no separate service allocated to these cases in Capita Edinburgh’s oYce. Services’ claims have taken a very long time to begin to move through the procedure designed for them. Co-defended cases have simply not been handled as they ought to have been by Capita as the lead Insurer and continue to suVer from relative neglect at the handling stage, though allowance must be made for the diYculties in co-ordination of claims with reluctant co- Insurers. These have also attended upon the resolution of wage loss claims in the VWF Scheme. Looking to the short and medium term, concerns persist over the approach to the outstanding issues which may yet result in litigation in Scotland, aVecting the management of the run down of each Scheme; these would benefit from a more constructive joint approach than has been evidence of late.

Annex 4

VWF GROUP 3 CLAIMS The original High Court ruling has established that British Coal should have known the risks of VWF by 1 January 1973 and within two years taken steps to warn the workforce, put in place a system of medical surveillance for employees who were exposed to vibration and take steps to reduce the vibration exposure of men exposed to vibration beyond a limited extent. In failing to take those steps British Coal were negligent and significant subsequent exposure was tortious. To avoid the need to investigate every claimants exposure to vibration (a lengthy and costly exercise) an approach was adopted whereby for certain occupations in which use of vibratory or percussive tools was either a substantial part of the job of use was likely to have been significant, time spent in that occupation would be taken as surrogate for establishing actual exposure to vibration. Jobs were categorised into occupational groups, “Group 1” being those in which use of tools was recognised as a substantial part of the occupation, eg face workers, development workers, blacksmiths and 12 months employment post 1 January 1975 in such an occupation was required to establish entitlement of compensation. “Group 2” comprised those jobs in which use of pneumatic or percussive tools may have been less than Group 1 occupations but nonetheless was likely to have been significant and 2 years in a Group 2 occupation post 1 January 1975 would establish entitlement of compensation . Examples of Group 2 occupations are face or development deputies, general underground labourers, salvage workers. This left a third group of occupations “Group 3” occupations for which there was no assumption as to use of vibratory or percussive tools and evidence of tortious exposure would be required to substantiate a claim. That group included transfer point attendants, deputies other than those on face or development work, loco drivers and men engaged on haulage supply work and many other occupations including all those not included in Group 1 or 2.

Annex 5

Letter from the Department of Trade and Industry to Irwin Mitchell

Coal Health:Surface Dust I attach a copy of the Minute laid before Parliament yesterday advising the House that, subject to no objections being raised, the Department proposes to accept liability for disability caused by exposure to dust in surface jobs. Ann Taylor 11 July 2000

Non-statutory Liability to Pay Compensation to Miners for Exposure to Surface Dust 1. It is normal practice when a Government Department proposes to take on a liability in excess of £100,000 for which there is no specific statutory authority, for the Department concerned to present to Parliament a Minute giving particulars of the liability created and explaining the circumstances. 2. This minute explains the liability the Department of Trade and Industry proposes to accept in respect of exposure to surface dust for employees in British Coal mines.

Background 3. In 1998 the Court found British Coal liable for exposure of mine workers to excessive dust which caused lung diseases. The DTI. Which had shortly before taken over the health liabilities of British Coal, was instructed by the judge to set up a Scheme to provide compensation for miners suVering lung diseases as a result of employment with British Coal. A Claims Handling Agreement to deal with compensation was negotiated with solicitors representing miners and signed in September 1999. 3030281025 Page Type [O] 27-04-05 22:34:30 Pag Table: COENEW PPSysB Unit: PAG1

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4. The Court case and the Handling Agreement dealt with dust exposure underground. There are currently nearly 110,000 claimants and compensation is expected to amount to approximately £1bn. It will take around three years to deal with these claims.

Surface Dust 5. Many of the existing claimants also have potential extended claims for exposure to dust in jobs on the surface at mines. In addition, some surface only workers have test claims pending. Exposure to dust on the surface leads to the same lung diseases as dust underground. The DTI has investigated the levels of dust prevailing in surface jobs in British Coal mines, measures which could have been taken to reduce dust and those which were taken. The DTI proposes to accept that British Coal did not fully meet its responsibilities towards certain categories of workers in dusty jobs on the surface. (If the liability is not accepted these issues will be put to the Court to decide.) 6. In accepting this liability, the DTI would propose to miners’ solicitors that compensation for surface dust exposure be handled within the current Agreement for underground exposure. How this would work would need to be negotiated in detail. Agreement would be needed on what jobs would be covered and on what levels of dust could reasonably have been avoided. 7. Until these details have been agreed it is not possible to make any firm estimates of the likely costs of the new liabilities for surface dust. But it is likely to be substantial (perhaps upward of £100 million). provision for any payments to discharge these liabilities will be sought through the normal supply procedure. 8. Acceptance of this additional liability will mean that current claimants can extend their claim to cover time spent in dusty jobs on the surface and men who have only worked on the surface will be able to put in a claim. 9. The Department will keep the House informed of the extent of these new liabilities as they become clearer. 10. The Treasury have approved in principle the acceptance of this liability. If during the period of 14 days (exclusive of Saturdays and Sundays) beginning on the date on which this Minute was laid before Parliament, a Member signifies an objection by giving notice of a Parliamentary Question or by otherwise raising the matter in Parliament, final approval to proceed with accepting the liability will be upheld pending an examination of the objection. Ann Taylor Director of Coal Health Claims Unit, Department of Trade and Industry 10 July 2000

APPENDIX 6

Supplementary paper submitted by the Claimants’ Solicitors’ Group

IN THE HIGH COURT OF JUSTICE CLAIM NO: 960177 QUEEN’S BENCH DIVISION

BETWEEN: BRITISH COAL VIBRATION WHITE FINGER LITIGATION Claimant and BRITISH COAL CORPORATION Defendant Prepared by the Co-ordinating group for the Claimants’ solicitors This document is prepared by way of addendum to the report already submitted to the DTI Select Committee and to supplement that report by addressing the issue of the Department’s aspirational end dates for the VWF Scheme which were raised at the hearing before the select committee on 23 February. The DTI’s aspirational end dates are: 1. General Damages: settle all general damages claims by the end of the third quarter 2005, subject t co- defendant co-operation. 3030281026 Page Type [E] 27-04-05 22:34:30 Pag Table: COENEW PPSysB Unit: PAG1

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2. Services Claims: conclude services MAP by the end of 2006 and settle all services claim by end of 2007. 3. Group 3 Claims: complete investigations of Group 3 Claims by the end of the third quarter of 2005. We comment on each of these below.

General Damages: Co-defendants In the overwhelming majority of claims oVers for general damages have been made and either that head of claim has settled in its entirety or agreement has been reached and a substantial interim payment made. However, there remains two substantial cohorts of cases in which settlement of the general damages element of the claim remains outstanding. These are Group 3 claims (see below) and claims involving co- defendants. It is understood that there are currently approaching 15,000 claims in which there is co-defendant involvement. That is to say in addition to the claim against British Coal. (DTI) there is also a claim against a co-defendant who may be liable to make a contribution to the compensation payable to the Claimant under the terms of the handling arrangement. The contribution will vary from case to case depending largely upon the length of the claimant’s period of exposure to vibration with the co-defendant when compared to that of his period of exposure with British Coal. In several thousand claims involving co-defendants agreement has yet to be reached with all co- defendants as to the contributions what they will make to the Claimant’s compensation so as to ensure that he receives his full entitlement under the CHA. The vast majority of co-defended claims involve other mine operators (CMR defendants) or mining contractors (CMC defendants). The CMC and CMR defendants were not initially parties to the handling arrangements when it was achieved in January 1999. However, by the spring of 2000 most had indicated an intention to accept the handling arrangement and had formally confirmed that acceptance by the late spring of 2001 (after detailed consideration of the medical assessment process). Under the CHA, the Claimant makes separate claims against each co-defendant and IRISC are committed to use their best endeavours to persuade other defendants (or their insurers) to accept the terms of the CHA and to co-ordinate claims so that compensation is oVered (paragraph 11.2) The CMR defendants (or their insurers) are responsible for paying to the Claimant directly in full their contribution to his compensation. So too are the CMC defendants (of their insurers). However, as the DTI would also have a liability in respect of the exposure which occurred in British Coal Mines during the Claimant’s employment with the CMC defendant, the DTI subsequently refund to the CMC defendants (or their insurers) a proportion of the sum that they have paid. This is usually 50% of more of the compensation paid by the CMC defendant to the claimant. As noted in our report (page 11). Initially IRISC focused on the bulk of claims in which there was no co- defendant interest and declined to focus adequate resources on the more arduous task of dealing with co- defendant claims. Although latterly IRISC have shifted their attention and more resources to address the problem of co-defendant claims settlement of the general damages element remains outstanding in several thousand co-defendant claims. It appears that may CMC and or CMR defendants (or their insurers) have also given these claims a low priority and the co-ordination and handling of claims involving CMC and CMR co-defendants have been plagued with continuing diYculty. It is not known what steps (if any) the DTI have taken at a high level to encourage CMC or CMR defendants and their insurers to give dealing with these claims the priority that they deserve. The DTI will have contact with CMC and CMR defendants or their insurers as a result of the other aspects of the DTI operation and area of responsibility. Neither have the terms of the DTI’s arrangement with the CMC defendant or their insurers been disclosed to us and it is not known to what extent, if any, those arrangements adequately enable the DTI to exert influence on the co-defendants handling of claims, particularly bearing in mind the financial contribution that the DTI are making to the co-defendant liability, indicated above. There is significant concern that by the aspirational end date of 30 September 2005 a settlement of the general damages element of a significant number of co-defendant claims will not have been achieved.

Group 3Claims Group 3 claims were addressed in our report from page eight onwards and on page nine figures are given for the number of completed investigations to date. It is noted that the investigation remains to be completed in potentially over 7,500 claims. It is understood that the DTI estimate that the number will in fact turn out to be lower and for planning purposes have assumed the number to be about 6,600. 3030281027 Page Type [O] 27-04-05 22:34:30 Pag Table: COENEW PPSysB Unit: PAG1

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Targets for the quarters to the aspirational end date for completion of all investigations (30 September 2005) have now been set and these are: — First quarter—1,700 — Second quarter—2,275 — Third quarter—2,647 Achieving those targets would require a substantial increase in the rate of investigation to date. The latest figures made available to us reflected the position as at 31 January 2005. From then, eight months remained until the aspirational end date. To achieve the target would require 825 investigations to be completed on average each month. This would represent a significant increase in the target figure to date. Attached at Annexe 1 is an extract from the Group 3 statistics produced by IRISC dated 30 January 2005. The first sheet gives in the “total” column, monthly figures for the number of investigations completed. The target figure is indicated in the far right hand column. It is readily apparent that the target is rarely achieved. The second sheet illustrated the position graphically. Despite the continuing failure of IRISC to achieve target, the DTI have expressed a high degree of confidence that the aspirational end date for completing investigations in outstanding Group 3 cases will be achieved. We are less sanguine.

Services Claims The Department acknowledged in its report to the Court for the hearing on 20 December that there had been some slippage in the timetable for processing claims. It was suggested that the slippage was about six months. Our analysis of the available figures suggested that the slippage was greater and gave us real concern that there appeared little prospect of achieving anything close to the aspirational end date for completion of services claims (end of 2007). Subsequently, we wrote to the Department’s solicitors setting out our analysis and concerns and inviting a response. A copy of our letter of 22 December is attached at Annexe 2. We have yet to receive a substantive reply.

Annex 1

IN THE HIGH COURT OF JUSTICE CLAIM NO: 960177 QUEEN’S BENCH DIVISION

BETWEEN: BRITISH COAL VIBRATION WHITE FINGER LITIGATION Claimant and BRITISH COAL CORPORATION Defendant

Month England Wales Scotland UDM Total Cululative Target Total December 2001 19 4 0 1 24 24 January 2002 18 4 0 4 26 50 February 2002 93 8 0 16 117 167 March 2002 60 4 1 18 83 250 April 2002 61 1 3 19 84 334 May 2002 78 6 1 14 99 433 June 2002 46 5 1 8 60 493 July 2002 92 31 1 28 152 645 August 2002 79 16 0 27 122 767 September 2002 88 11 1 26 126 893 October 2002 180 25 4 49 258 1,151 November 2002 205 32 3 33 273 1,424 December 2002 133 29 2 22 186 1,610 January 2003 185 17 10 27 239 1,849 February 2003 201 42 7 53 303 2,152 March 2003 132 21 7 49 209 2,361 April 2003 214 28 10 60 312 2,673 May 2003 225 15 15 80 335 3,008 June 2003 81 13 3 17 114 3,122 3030281028 Page Type [E] 27-04-05 22:34:30 Pag Table: COENEW PPSysB Unit: PAG1

Ev 86 Trade and Industry Committee: Evidence

Month England Wales Scotland UDM Total Cululative Target Total July 2003 49 9 5 5 68 3,190 August 2003 57 6 4 4 71 3,261 September 2003 28 4 1 7 40 3,301 October 2003 31 5 6 8 50 3,351 November 2003 19 10 4 6 39 3,390 December 2003 32 9 4 8 53 3,443 January 2004 48 7 8 12 75 3,518 224 February 2004 191 19 18 41 269 3787 256 March 2004 231 26 17 63 337 4124 368 April 2004 173 35 21 60 289 4413 296 May 2004 166 53 26 54 299 4712 342 June 2004 257 56 15 76 404 5,116 512 July 2004 198 57 11 38 304 5,420 390 August 2004 228 61 10 23 322 5,742 521 September 2004 253 75 15 34 377 6,119 459 October 2004 226 44 9 77 356 6,475 489 November 2004 384 70 25 133 612 7,087 617 December 2004 267 32 16 95 410 7,497 595 January 2005 222 33 9 100 364 7,861 527 Not Classified 12 1 0 8 21 7,882 Totals 5,262 924 293 1,403 7,882

Group 3 Completed Investigations

700

600

500

England 400 Wales Scotland UDM Volume 300 Total Target

200

100

0 July - 2004 - July July - 2003 - July May 2004 - April - 2004 June - 2004 March - 2004 Not Classified August - 2004 August - 2003 January - 2005 January - 2004 October - 2004 October - 2003 February - 2004 November - 2004 November - 2003 December - 2004 December - 2003 September - 2004 September - 2003 Period

Annex 2

Letter from Irwin Mitchell on behalf of the British Coal VWF Litigation Solicitors Group to Nabarro Nathanson

Re: British Coal Vibration White Finger Litigation Services Claim: Throughput and aspirational end dates Your clients have previously given aspirational end dates for services claims of end of 2006 for completion of all medical assessments and end of 2007 for all settlements. In your client’s report to the Court it was suggested that there may have been six months slippage in relation to the timetable for completion of medical reports. 3030281029 Page Type [O] 27-04-05 22:34:30 Pag Table: COENEW PPSysB Unit: PAG1

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We have been reviewing the latest statistics that have been made available to us. These are the VWF Services Key Stage Report as at 14 November 2004 and the figures that we have been given at the meeting on 29 November which show throughput together with the information contained in your client’s report to the Court. Paragraph 7 of the report to the Court shows that some 30,452 claims questionnaires had been received at IRISC. Of these 28,155 are being worked by IRISC and 2,297 are “parked” pending completion of the general damages stage. This is broadly in line with the figure in row four of the VWF Services Key Stage Report which records the number of cases in which questionnaires had been received as 30,004. the diVerence between the two figures is presumably explained by the diVering dates at which the count has been raised. There is a three to four week gap and questionnaire receipts appear to have been running up to the 15 November at 122 per week on average.

Offers If the figure for questionnaires received is taken as 30,452 and this is then reduced by the figures contained in the services key stage report of 14 November 2004 for —OVers outstanding 2,258 — Claims denied 522 — Settled with outstanding issues 4,309 — Settled in full 4,104 — Withdrawn 749 which together total 8,252. This leaves 22,200 cases on which an oVer still has to be made if only those cases in which questionnaires have not yet been received are considered. Over the 12 weeks to 15 November oVers were running at 119 per week. 22,000 divided by 119 gives a figure of 186—the number of weeks it would take, at that rate, to make oVers only those cases in which questionnaires have been received to date. The potential pool of outstanding claims is some 22,227 greater (paragraph 7 of the DTI’s Court Report) which would require an additional 186 weeks making a total period to oVer on the two pools of 372 weeks or seven years all of which makes the aspirational end date for the scheme look optimistic. According to paragraph 6(b) of the report for the DTI for the July Hearing this was end of 2007.

Medicals If the number of cases being worked by IRISC (30,452) is reduced by the number settled, denied etc 8,252 this gives a figure of 22,200. if that figure is further reduced by the number of medical reports in progress 2,995 and claims where medical reports have been received but an oVer has yet to be made 3,846 this leaves a figure of 15,159, most of which will require a medical. (The exception being a small proportion denied or withdrawn pre MAP). Medical reports were running over the 12 week period to 15 November at an average of 152 a week and at that rate it would take 99.7 weeks to do medical reports in the existing cases in which questionnaires have already been received. That is virtually two years instead of one year to the end of year 2006, from which the DTI acknowledged they are six months behind schedule. It appears that the slippage in relation only to the cases in which questionnaires have been submitted is greater. It is understood that CHS have been recruiting with a view to increasing capacity. They have recruited some sessional doctors and a second wave of recruits was scheduled to undergo training starting last week. I do not believe that we have had details of the numbers and/or likely capacity yet, but clearly it will take some fairly dramatic increase in capacity to complete all medical reports within two years (a year after the aspirational end date) if a significant proportion of the 22,277 claimants who are eligible to pursue a services claim but have yet to submit questionnaires. Such claimants have a further six months to the cut oV date.

MAP Throughput Overall, looking at the statistics, there must be concern about the throughput for MAPs, but perhaps more significantly concern about throughput at IRISC.

Throughput From the services key stage report there are over 9,000 claims at the initial stages of investigation with IRISC and a further 2,101 at the helper call stage. 3030281029 Page Type [E] 27-04-05 22:34:30 Pag Table: COENEW PPSysB Unit: PAG1

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Conclusion On the basis of the information available it appears that there is little prospect of achieving anything close to the aspirational end date for completion of medical reports (end of 2006) or settlements (end of 2007). This is a matter of some concern and we should be obliged if your clients would share their latest projections (together with the figures and assumptions upon which they are based) with us so that we can discuss these issues when we next meet in January next year. Irwin Mitchell 22 December 2004

APPENDIX 7

Supplementary memorandum by Claimants’ Solicitors’ Group

EVIDENCE GIVEN BY THE MINISTER, DTI OFFICIALS, CAPITA AND ATOS PERSONNEL ON 1 MARCH 2005 Note: references below to the OE and page numbers are to the uncorrected transcript of oral evidence given on Tuesday 1 March, and to the pages where the relevant evidence may be found. Use is also made of question numbers (Q then the number) for ease of reference. In this addendum report to the Committee, we have prepared a commentary upon the evidence given on 1 March, where it appears to us that the evidence was factually incorrect. Whilst we take issue with some of the opinions expressed, the extent and nature of our disagreement with them is set out in the written material we have submitted and in the evidence that we have given.

Scheme Capacity The Minister gave evidence that all parties including the unions and solicitors under-estimated the total likely numbers of claimants who would present themselves through the compensation schemes (OE, p.27, Q 119). CG comment: Neither the unions nor claimants’ solicitors were involved initially in estimating likely claim volumes and capacities in either scheme. It appeared to the Claimants’ Group after agreeing the COPD claims’ handling agreement, that there had been inadequate planning and provision for what was likely in our view, to be very many more claims than the DTI envisaged. By around 2000, it was clear that the medical contractor Healthcall was struggling to cope with volumes. They disclosed that they had been instructed to cater for around 70,000 COPD claims in total. We accept that volumes have been diYcult to predict but the initial under-estimation was achieved without the involvement of unions and solicitors.

Minimum Payments The Minister gave evidence that he was not against the principle of a minimum payment funded by solicitors, only against such payment funded by the Department. His objection to the RPI method was that this would not provide suYcient funds. He indicated that his oYcials had advised of a shortfall of £400,000 on the CG’s original proposal to fund by half the RPI for the year. He also objected that there was no guarantee that the proposal would be “self funding” for all claimants going forward (OE, pp.38-42, Q 141-145). CG comment: In formulating our proposal, we relied entirely upon information provided by the DTI concerning the numbers of oVers not accepted below the proposed minimum payment threshold of £500.We calculated that the fund needed to ensure that £500 could be oVered to the 3,500 claimants whom we were advised were then outstanding, would be less than a sum yielded by one half of the RPI due to be added onto solicitors’ costs for 2004. The DTI were plainly opposed to this method of funding a minimum payment scheme but that was not because there would be insuYcient funds yielded by the RPI; rather, they wished to impose their own preferred method of funding the payment case by case instead. Just before the end of 2004, we were advised that the numbers had grown to 7,500, and so the RPI fund we proposed would not be enough. This is hardly surprising, since it can be anticipated that numbers outstanding will continue to increase unless and until the minimum payment is introduced, resulting in settlement of claims. Once the first RPI fund is exhausted, funding for claims subsequently falling below the minimum payment level can be considered in light of the numbers that can be safely predicted (in prospect), or the numbers known (in retrospect). The DTI has exacerbated the problem by resisting the minimum payment. The Department’s position, which is that they do so because the eventual numbers are unknown, would result in no decision being made regarding the minimum payment until the value of the last oVer is determined, which at the very least, would lead to unacceptable delay in concluding cases aVected. 3030281030 Page Type [O] 27-04-05 22:34:30 Pag Table: COENEW PPSysB Unit: PAG1

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The Chairman’s summary of the position reached in regard to minimum payments (OE, p.40 ) which the Minister accepted as an accurate summary, is incorrect in two particulars. First, minimum payment cases do not require any less work of the solicitor than other cases within the process. Claims are fully appraised and valued on each occasion and it is only when that exercise is completed after due application of the CHA procedures, that it may be appreciated that a claim is worth less than £500. Second, the department maintains that it has refused to fund a minimum payment not because the judge would not permit its introduction were it proposed to pay for it through public funds, but for the reasons set out by the Minister in his answer to Q 137 (concern over the setting of a precedent by overruling a court formula).

Surface Dust Claims The Minister said his responsibility was to ensure that people who were injured by dust get compensated and this could either be done by civil action or bringing them into the Scheme. The Minister gave evidence that he had “opened the records for inspection” to claimants’ solicitors and then pointed out that a number of extensions to the court’s timetable for proceeding with surface dust litigation had been granted. The CG had eventually withdrawn the group litigation on the 14 of December 2004. He had written about this to the CG but had yet to receive a response (OE, pp.42-45, Q 148-154). He suggested that unions did not enforce the sampling regime on the surface and said that spirometry and other tests showed little evidence of damage. He added that there was no evidence of measurable lung damage to surface-only workers. He confirmed however that further discussion would be helpful and that he would maximise co-operation to resolve the issue. CG comment: As the Respirable Dust Regulations (RDR) did not apply to the surface, mining unions could not seek to enforce a regime which did not exist. The absence of regime is one of the main reasons for the sketchy nature of the dust readings now available to claimants looking for proof of the excessive levels of dust. As Mr Clapham said (p.44), samples were rarely pursued on the surface but that does not mean that this was because there was no hazard. The Minister and his oYcials have invited further litigation from the mining communities on the issue of surface dust exposure despite the terms of the Minute laid before Parliament in 2000.The access granted to the surface dust “archive” was in reality, access to a huge amount of documentation that was not indexed or arranged so as to permit searchers to find surface dust records separately from underground records, or indeed from other unrelated documents. The search itself would have taken several more months to complete satisfactorily. The Department were not willing to allow that to be done without (a) pressing for the surface dust litigation to be commenced and (b) ensuring that claimants proceeding with litigation would require to pay the Department’s costs in the event of failure. Six volumes of material yielded by the search were produced to the Department’s solicitors, including records which contain evidence of excessive dust exposure.

Fast Track Offers/Compulsory Scheme The Minister and his senior civil servant (Ann Taylor) gave evidence that it was the Judge’s idea for the Department to advocate a compulsory scheme, and that this had only been intended for people with low levels of disability, not for people at higher levels of disability. Ann Taylor commented that they were looking at a compulsory scheme only for people with normal spirometry (OE, pp.36-37 Q 135-136). CG comment: The Department did not confine themselves to such claims in formulating their compulsory scheme proposal. Relatively few claimants would have been able to escape the compulsory tariV (men unfit to test at spirometry, and some widows). The judge did not advise the department to argue for a compulsory scheme; rather, he encouraged the parties to consider all the options, of which a compulsory scheme was one. It was for the department to determine their position. The judge made no comment when the department did not proceed with their proposal for a compulsory scheme at the court hearing which followed. The department also abandoned their earlier advocacy of fast track oVers in posthumous claims based upon the average damages paid out to a given cohort of claimant. Thus, the average damages actually paid within the fast track scheme to category 3 claimants (no COPD on death certificates) is of the order of £9,000-£10,000, whereas the flat rate amount payable under their fast track proposal is £1,200 (widows) and £1,000 (estates).

Stalled Claims The Minister said there was some confusion as to where claims are in the chain, with solicitors or with Capita. Although he said he was grateful for suggestions on speeding up the process on both sides from the CG, the Minister added that it wasn’t in Capita’s interest to stall claims as they were paid by meeting targets (OE, p.34). There was earlier evidence from ATOS (Ms Gibson) that they were not penalised in their contract for delays or late handling (OE, p.3); and there was evidence from Martin Trainer (Capita) that their reward is based upon the achievement of targets (OE, p.13) ; he made no reference to penalties for poor performance (Q 131-134, and Q 66-68, Q 85-87). 3030281030 Page Type [E] 27-04-05 22:34:30 Pag Table: COENEW PPSysB Unit: PAG1

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The Department were asked about the 4,000 letters sent out that Capita could not deal with when responses were made by solicitors. Christine Chamberlain did not answer this question but gave evidence that it was proper to look at blocked claims and then said that the onus is on solicitors to tell the Department where a claim is blocked. The Department claimed credit for suspending the process which the Judge had “endorsed” (OE, pp.35-36 Q 133-134). CG comment: Given that the DTI maintain that they are actively managing their contractors, it is surprising that Ms Chamberlain should express the view that the onus is on solicitors to advise the Department what the problem is, even if the claim is stalled at Capita. As to the Minister’s observations regarding Capita’s financial incentive to ensure that claims progress, it is identical to the incentive which exists for solicitors to do likewise: they will not get paid for their work until settlement. Nonetheless, the department has required no persuasion (as it does in respect of its contractor) to pursue claims stalled with claimants or their solicitors by additional means. The Department has resisted tackling its contractor Capita over claims languishing in their oYces, whether contractually or in terms of the process. That it appears that no penalties may be visited upon the contractor for unacceptable delays in handling is a major diYculty. This may also explain the reluctance to support a stalled claims procedure designed to address claims stuck at Capita. The underlying problem here may be under-funding or resourcing of the claim handling contract. The Department did not promote the suspension of the stalled claim procedure designed to address claims stuck within solicitors’ oYces which it activated in VWF claims in October 2004; suspension was requested by the CG in correspondence dated 16 December 2004, in view of reports from solicitors as to the chaotic manner in which implementation had proceeded up to December 2004.

Securities Investigation Dept During Kate Roy’s evidence it was said that there required to be a robust process in place to vet claims. She said that there were 1,500 claims referred for SID consideration. 800 investigations had been concluded and in 300 cases there had been deductions from compensation or nothing at all had been paid (OE, p.22- 24 Q 107-113). In Ms Roy’s evidence a distinction between an intention to mislead and exaggeration was accepted, but the distinction was not further explained or developed. She said that the investigation process was to correspond with the solicitor and seek an interview and give an option to solicitors to attend or to be copied in on correspondence. When pressed as to whether solicitors were told of the reason for the request, Ms Roy’s evidence was that they were advised of “the potential for further investigation”. This was done to internal guidelines based on FSA standards. Capita had no objection to release of these documents to the Committee for appraisal. The Minister’s evidence was that there were 1,549 claims referred to SID or about 2% of the schemes (OE, pp.47-48 Q 161-164). Ann Taylor indicated that in 156 denied claims there had been a saving of £1.85 million and the reduced value claims (132 cases) had resulted in a saving of £1.25 million or a total of £3.1 million. Investigation costs were given as £0.5 million and it was confirmed that this was an annual cost. This appeared to be confined to the costs of running SID rather than the knock-on transaction and processing costs. CG comment: Ms Roy’s evidence confirms that claimants’ representatives are still not being made aware of the nature of the department’s concerns even in cases where there is a request for claimant interview. Claims made that settle for less than the full amount sought should not be regarded as necessarily fraudulent or exaggerated. Many claims settle for less because the evidence adduced in support is alleged to be unsatisfactory, causing them to be queried. By no means are all such queries valid or properly raised. Claimants may be willing to accept oVers for part only of their claims for various reasons, including the diYculties experienced in tracing reliable witnesses, and the frustration occasioned by protracted delays in concluding their cases. The annual expenditure on the SID (£0.5 million) does not represent the full cost of the unit’s work. Extra process and handling costs arise as claims are investigated both at Capita and within solicitors’ oYces. The Department have agreed to meet the extra costs payable to claimants’ agents where cases are concluded by payment following investigation. There was no evidence as to how long the unit has been operational. This has probably been for longer than two years. Without more precise information as to whether the DTI/Capita view of exaggerated or fraudulent claims excludes claims where there is no reasonable basis for suspecting deliberate misrepresentation, it is diYcult to say whether the savings quoted by the Minister (£3.1 million) represent a reliable guide to the benefit to the taxpayer derived from the work of SID. It seems that most cases are returned to Capita for normal processing. The Minister’s evidence that potential fraud accounts for some 2% of claims within the schemes, should be 0.2% (about 1,500 claims from 750,000). 3030281031 Page Type [O] 27-04-05 22:34:30 Pag Table: COENEW PPSysB Unit: PAG1

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Services Inept questioning by Capita staV of services’ questionnaire forms was put down by JeV Wilson to the pilot project experience and his position was that his team are constantly discussing problems and that there is rigorous training to improve performance. There was a continuing need to review eVectiveness. Feedback from solicitors about problem areas was very helpful (OE, pp.20-21 Q101-104). CG comment: The services’ pilot took place four years ago. Our experience has been that the problems encountered in agreeing the extent of service provision and the periods of time involved, have continued since then to the present day albeit there are fewer reported instances of mis-handling. It appears that the training given to Capita staV proceeds while they are working on claims, which may explain some of the mistakes encountered.

Capita Performance Kate Roy answered a question about this primarily by reference to the meeting of targets in the COPD scheme rather than Capita’s ability to meet targets in the VWF scheme as it winds down. However, Capita said that they are able to cope with the various aspirational end dates in the VWF scheme which they and the department have formulated (OE, pp.14-17 and 24-25 Q 90-96, and 114-115). Capita referred to a business improvement programme and said that there were a number of initiatives agreed with the department particularly as regards the high turnover of staV (25% loss in 2004) to retain staV, reward and recognise them for their performance; pay best market rate and bonuses and improve their surroundings. CG comment: There are signs of significant slippage in Capita’s progress towards meeting the group 3 aspirational end date of concluded investigations by September 2005. Moreover, there are concerns that other work required of Capita to bring claims to a conclusion (for example, attention to claimants’ wage loss schedules and services’ claims) may suVer as pressure mounts to meet the targets set. The sometimes terminal consequences visited upon claimants who are not able to comply with the end dates fixed, may be contrasted with the apparent lack of any sanction against Capita for delays that may follow from juggling and shifting resource from one area of the process to another to meet the Department’s demands (or even failing to meet them).

Relations/Dialogue The Minister gave evidence that it was not his impression that there had been deterioration in constructive dialogue. He said that there might be frustration for solicitors in the CG because of the lack of success in some areas and did not accept that there were fair criticisms of his oYcials in the CG evidence (OE, pp.30- 31 Q 125-126). Sir Robert Smith asked if it was not a symptom of problems in the negotiating forum when the Department had to rely upon the Judge as much as it did in the “fast track” context and Ann Taylor’s answer was that the Judge was drawn into that process (OE, p.32 Q 128). Christine Chamberlain said that the department were no less transparent or open than they had been. There were sticky issues now to resolve towards the back-end of the schemes and the impression given was that this was only to be expected (OE, ibid.). Ann Taylor at the end of the session objected to the chairman’s comments in the CG session about oYcials’ alleged lack of transparency, and said that oYcials had all tried very hard to share information and there was a mass of it produced for all sides (OE, pp. 48-49). CG comment: There have been many fewer meetings than required in past months in the context of the construction of a new fast track process. The Department have in our view, abandoned the notion that the Court is a last resort and have preferred to leave it to the court to deal with many of the diYcult issues attendant upon the introduction of this procedure while (a) there continues to be a full process available to claimants in tandem and (b) a large number of claimants are and were at various stages of progress through the full process and (c) many claims have been concluded without a fast track process. We have seen a more traditional adversarial approach taken by the DTI in preparing its position before the court, that has been inimical to the consultation and discussion processes the parties had previously fostered. There has also been absence of transparency which contrary to Mrs Taylor’s evidence, is not vouchsafed by provision of a mass of data (much of which is unilluminating in regard to key matters, such as the performance of the Department’s contractors), but which requires instead an open approach to the means by which each side seeks to resolve problems. Examples of the use of stealth and attempted imposition of the DTI view have been cited in the CG evidence to the Committee. Finally, there is no reason why problems that cannot be resolved between the parties should naturally increase as the schemes begin to wind down. It might be thought that with relatively little at stake, and against a background of large sums of damages paid and the volumes processed, parties would be able to bring the schemes to a negotiated conclusion instead of leaving over the prospect of further litigation. As 3030281031 Page Type [E] 27-04-05 22:34:30 Pag Table: COENEW PPSysB Unit: PAG1

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one Monitoring Committee member of parliament has observed outwith these proceedings, that seems an unfortunate and unnecessarily acrimonious way to bring an end to two remarkable compensation processes; and it may tarnish the credit that should otherwise reflect upon those responsible for them.

APPENDIX 8

Memorandum by the members of the English Monitoring Group 1. Following the Court Judgments which determined a liability upon British Coal (DTI) for injuries to health caused by exposure to COPD and VWF, and after the Handling Agreements had been determined by the parties, the Minister, Helen Liddell MP, by personal invitation (26.10.99) invited Mr Michael Clapham MP, Mr Peter McNestry (retired General Secretary of the National Association of Colliery Overmen, Deputies and Shotfirers), and Mr Vernon Jones MBE (the Chief Executive of the Coal Industry Social Welfare Organisation) to become members of the English Monitoring Group. Similar monitoring groups were established for Wales and Scotland. 2. The original remit was: “To review on a regular and transparent basis and to advise the Minister for Energy of progress with the implementation of the Handling Agreement on COPD so that communities concerned can be confident everything possible was being done to ensure a sensitive, rapid and eVective delivery of compensation to ex miners”. 3. The motivation for the Minister to establish an independent structure to monitor the activities of the Department’s oYcials in delivering the compensation schemes is a question for the Minister and not for our speculation.

COPD 4. The Courts determined that there were likely to be so many claimants under both compensation arrangements that a method should be found for determining individual levels of compensation for specific levels of disability outside of a common-law procedures within Court because the legal system could not cope with the volumes. A Handling Agreement was negotiated by the parties for both schemes but they still fall within the jurisdiction of the Courts. There are regular reporting back hearings reviewing progress and directional hearings when the Judges, Mr Justice Turner for COPD and Dame Janet Smith for VWF are asked to issue orders when the parties cannot agree on solutions to specific problems. The Handling Agreement for COPD was based upon anticipated volume claims in the region of 100,000, although the EMG have never been able to understand from whom advice was taken to produce such a calculation because it was obvious to those with considerable experience in the industry that the potential claims from mineworkers, widows and estates would be considerably higher as the liability upon the DTI commenced in 1954 given the number of men employed in the industry on a cumulative basis since that date. The 100,000 estimated claims had been surpassed by the 26 March 2000 at a ration of two thirds live claims, one third deceased. 5. From the outset the EMG asked the Department for details of the contractual arrangements with the various service providers, excluding confidential financial information, but this was denied and it has always been impossible for the EMG to comment upon whether delivery targets were or are being met. The EMG have not been involved in any subsequent re-tendering procedures. 6. From initial separate meetings with the DTI and the Claimant Solicitors Group (CSG) it was obvious that the whole arrangements were underpinned by an adversarial arrangement, presumably left over from the Court process. The EMG took the view that this extraordinarily complicated and large compensation arrangement would require co-operation between all parties including service delivery organisations and the EMG were actually the first to call a meeting to which all parties were invited. This was to try to obviate a blame culture which had developed whereby at any meeting where there was a problem this was attributed to the party which was not present at the meeting. The EMG was not established until after the Handling Agreement and the registration process of claims having commenced. The EMG had meetings with all service providers who were then Hayes (employment record collection), IRISC, (the claims processing organisation), Health Call (providing medical record collection services, spirometry, and subsequent medical examinations by respiratory consultants, whether for live claimants or purely record based for widows and estates claims. Business Health Call were visited, the former privatised Medical Department of British Coal, and in relation to Health Call the EMG visited their Head OYce in London to examine processes and procedures but also visited all of the major English Spirometry Centres. Complaints had been received that a number of the technicians were being over zealous in what they were requiring elderly men with respiratory problems to do ie to breath harder than their capacity allowed which in one instance it was alleged had led to an individual suVering a heart attack. The EMG designed a form to be used when monitoring the spirometry appointments and all of the visits were made on an unannounced basis although each claimants was informed of our role and asked whether he wished us to observe or did not. Only one 3030281032 Page Type [O] 27-04-05 22:34:30 Pag Table: COENEW PPSysB Unit: PAG1

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individual declined to allow the EMG to observe. The EMG successfully insisted that Health Call had a duty of care for all claimants whilst on their premises and suitable instructions to that eVect were issued to all spirometry centres. 7. The EMG reported that as a result of these visits they could find no evidence of any technician being over zealous in the breathing tests, although we did comment on a number of other issues of concern which were: (a) One centre (Leicester) was not disabled friendly in terms of access to the actual building and Health Call had declined to send out a map making the location rather diYcult. Advice that it was located some 300 yards from the main rail station did not also say that this was up a fairly steep rise. The Manchester centre had concentrated entirely on domiciliary visits to ensure that the most elderly and ill were assessed first, whereas in complete contrast there were very few domiciliary visits in South Yorkshire due to the fact that the technicians at SheYeld had no vehicles. We also commented upon the suitability of some of the places being used ie Pontefract Hospital where car parking was extremely diYcult and the actual Spirometry Centre was located after travelling through very lengthy corridors. (b) Questions were also raised as to the rather excessive travelling requirements of claimants based in Leicestershire and despite repeated requests for the mobile units to visit Coalville such requests were refused. As the spirometry test involved two separate tests 20 minutes apart it enabled members of the EMG to discuss claims with the claimants. One such claimant interviewed in Barnsley did not understand why he was using a solicitor based in Manchester other than the solicitors had written to him at his home address oVering their services but he had never had any contact with this firm but his letter was received some two weeks after attending his annual medical at the DSS. 8. Complaints had already been received about the operation of a number of claims handling companies or claims farmers, one in particular named the Miners’ Welfare and Compensation Agency which was using a title implied to suggest that it was linked to a charity because there are over 300 Mining Recreational Charities that are colloquially referred to as Miners’ Welfare Schemes. However, complaints were also being received about solicitors, particularly in relation to non-communication once claims had been submitted. From the outset solicitors were concentrating upon the business activity associated with the Handling Agreement ie encouraging as many claimants as possible through both TV and press advertising. The corollary of this is that many solicitors were not investing in their own infrastructure (staV and IT facilities) until they had determined what volume business they had. One firm of Solicitors even sent out a letter requesting claimants not to ring the oYce. When Brian Wilson MP was the Minister responsible he personally witnessed the antagonism felt by claimants because at a public meeting in Barnsley Town Hall (19 July 2002), there was no criticism as such of the Department, only of Solicitors not providing information on the progress of claims. 9. The fee structure for solicitors provides no incentive to check or query the calculations for compensation, other than a solicitor’s own professional conduct. Concern is expressed about the ability of some solicitors to check accurately compensation levels when they have high volume claims with few qualifies solicitors. One firm with 80,000 claims only has three qualified solicitors. There is a marked trend of variance between the average claims on a solicitor by solicitor basis. This is a cause for concern. 10. The business nature of the Handling Agreement which had encouraged the development of claims farmers, solicitors with advertising and publicity measures which included fly leafleting whole estates was exacerbated by recent changes in Legal Aid and the emergence of “no win no fee” agreements. A considerable number of claimants had signed up to various arrangements whereby additional fees were being charged or a proportion of a settlement could be deducted by the solicitor even though the solicitors had their fees paid by the DTI through a fee structure initially negotiated through the Handling Agreement and subsequently updated. The Ministers subsequent letter to all solicitors who had received fees from the DTI stating that additional fees should not be charged, and if they had, should be paid back was most welcome. However, the willingness of the Law Society to examine complaints brought by MP’s has led to the paying back of additional fees but these requirements are not of a generic basis. 11. The EMG maintained that it was important within mining communities for there to be an appreciation that the most vulnerable, frail and disabled should be dealt with first as a matter of priority and although a priority points system was introduced this was not operated either by solicitors feeding claims in a priority or being dealt with by IRISC on that basis. Having invested what was then believed to be the appropriate resource levels, IRISC were keen to maintain volume activity and were not particularly concerned that the priority system was being adhered to. When Peter Hain MP was the Minister he re- aYrmed the need to ensure that the priority cases were dealt with first and foremost following home visits made to claimants in the Kent Coalfield, organised by the EMG, when the Minister saw the level of suVering, frustration and lack of progress with the system. 12. An initial major diYculty concerned the employment records because the Handling Agreement was based upon an erroneous assumption that the employer would have perfect employment records on every individual that British Coal had employed. Perhaps the saddest example of this is when the EMG were contacted by a widow who had received a letter from IRISC stating that there was no record of her 3030281033 Page Type [E] 27-04-05 22:34:30 Pag Table: COENEW PPSysB Unit: PAG1

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husband’s employment in the industry when she stood possessed of a 51 year Long Service Certificate signed by Sir Derek Ezra, the then Chairman of the NCB. The EMG saw this Long Service Certificate. The problem was also compounded because from the outset when IRISC were requesting employment records from Hayes they were only being sent the front and back cover of a training record, if one so existed, whereas for a fee of £50 solicitors were obtaining from Hayes the entire training record. Solicitors therefore felt that IRISC were either hiding or not disclosing information. This tended to add to a generally held view that the system was designed to slow down settlements on the basis that men would die before their claims could be settled and this would in turn save Government money. This slightly erroneous view was not held by the EMG because the claim could continue in the widow’s name and had the man died a bereavement award would also have been payable. All Ministers up to that time, namely Helen Liddlell MP, Peter Hain MP and Brian Wilson MP publicly stated that financial limitations on the amount of money involved to settle the claims was not and had not ever featured. 13. The issue of employment records, or the lack of them or their incompleteness, was beginning to cause considerable blockages and both on moral and practical grounds the EMG suggested a significant change. The feeling in the Coalfields was that the issue of employment records and the need to evidence employment was producing a culture of “blaming the victim”. Following representations made by the EMG the Minister Brian Wilson MP accepted that when no evidence existed to the contrary the statement by the claimant would be accepted in relation to his employment history. The Minister announced this at the public meeting in Barnsley on 19 July 2002, and it had an immediate eVect upon unblocking the system. In the early days of the COPD compensation arrangements much criticism was made by IRISC and the DTI of solicitors in that there was a considerable time delay between the registration of the initial claim and the subsequent receipt of claims questionnaires. The EMG blamed solicitors for this delay in that there was no personalised service or assistance given to claimants, particularly widows, in filling in the claims questionnaires, which included certain questions by definition, which a widow would not necessarily know. To prove that this non- personalised service was a problem because up until that date most solicitors had been acting or dealing with claimants in writing was tested in Yorkshire when four public venues were booked in Bentley, Dodworth, Pontefract and Maltby, to which the three major firms of solicitors, namely Irwin Mitchells, Raleys, and Towells were appraised of seating capacity of each venue and asked between them to agree which of their claimants should be invited to attend these public meetings. The constituency MP’s attended each meeting. 14. Each firm of solicitors was represented at the public meetings and Andrew Tucker from Irwin Mitchells addressed each one on how the claims questionnaire had to be completed and the most important comment he made was that if a claimant particularly a widow, did not know the answer to a question they could put “don’t know”. With the help of volunteers who had been provided many of the claimants completed their claim questionnaires there and then and the solicitors acknowledged that a more personable service was required if the whole system was to run more eYciently. The EMG attended a number of training sessions provided by the CSG for solicitors and although some of these were organised long after the system had started it was evident that many local small firms of solicitors did not understand the Handling Agreement, the processes involved, or what was expected of them and their clients. 15. At meetings of the EMG when the CSG, DTI and Minister were present often delays in settling cases were attributed to outstanding policy issues. The EMG insisted upon a list of all the outstanding policy issues, and the name of one lead individual from the DTI and one lead individual from the CSG charged with the responsibility of negotiating an agreement, and by a specific date or if no agreement could be reached an early referral to the Judge. It became obvious to the DTI that the management of the process was in diYculty and to their credit they seconded a logistics expert from Shell, Mr Mark Pyeman to undertake a review of systems procedures and management accountability. The EMG insisted that he could only fully understand why systems had to be improved if he met some of the claimants and witnessed their frustrations with the process. Arrangements were made for Mr Pyeman to visit several claimants, both former mineworkers and widows in the Yorkshire Coalfield. Mr Pyeman informed the EMG that without their involvement those improvements which had been introduced would not have been introduced on the time-scale, if at all, and he was going to recommend to the Judge that the role of the EMG should be expanded. He stated that the Monitoring Groups in Scotland and Wales were performing well because of their smaller geographical areas and less solicitors involved, albeit with high levels of claims. He suggested that the EMG, through the DTI, establish smaller regional sub-groups to address perhaps more localised issues and bring them to the attention of the EMG. These sub-groups were formed and a member of the EMG has attended each regional meeting. In addition the EMG wrote to 572 English solicitors dealing with claims informing them that the EMG could be used as a vehicle for examining points of principle but not individual cases. The DTI have been faced with a number of technical problems, particularly in relation to the development of the two pension fund calculators which were considerably delayed and held up settlements or involved settlements proceeding with manual calculations. They have also been severely hampered because the Handling Agreement did not embrace mining employers other than British Coal Corporation, mining contractors, other co-defendants and licensed mines. There has therefore been considerable delay, not of the DTI’s making, in trying to settle a whole raft of claims which involved these latter employers. Although this is technically not the Department’s responsibility they have tried to resolve all co-defendant cases by embracing the mining companies and contractors within the general principles determined in the Handling Agreement but some of the Insurers have been extremely diYcult to deal with, primarily because their traditional role in common-law has been from an adversarial background. The insurance provision or lack 3030281033 Page Type [O] 27-04-05 22:34:30 Pag Table: COENEW PPSysB Unit: PAG1

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of insurance details relating to small mines has been more problematic although recently resolved for those claimants with post 1972 small mines employment. There are still, however, problems for those with pre 72 employment. 16. Mr Justice Turner has been concerned for some considerable time about the length of time settlements are taking, and will take, to settle all the COPD claims. To this eVect he accepted that there had to be some alternative to the Handling Agreement and the principles contained therein which were that in accordance with common-law the level of compensation received should be based on individual assessments of the damage caused to health for which British Coal/DTI were liable. The CSG and DTI, at a workshop with the Judge on 22 September 2004 were asked to consider the issue of an alternative and in negotiations between the parties the principle of an alternative fast-track option for both live and deceased claims (widows and estates) was agreed. At the hearing on 4/5 October the Department proposed that the fast-track oVer for both live and deceased claims should be mandatory and if unacceptable then the claimants could resort to common-law. When the Judge asked if this was approved by the Minister, following a short recess the Department’s Counsel reported that the principle of a fast-track oVer had been accepted by the Minister. This could be interpreted as the Minister having approved the principle or the mandatory scheme as outlined by the DTI. The hearing was adjourned until 18/19 October and the Department had cancelled a Ministerial Monitoring Group which was due to have taken place on Tuesday 12 October on the basis that the Minister was unavailable. As a consequence of the discussions in Court on a mandatory fast-track solution the EMG decided that the meeting should continue even if the Minister was unable to attend. The Department said the room was no longer available so the EMG arranged for the meeting to take place in the House of Commons. The meeting took place with a considerable number of MPs from mining constituencies present, and oYcials from the DTI and to the surprise of the EMG the Minister attended despite his alleged unavailability. Members of the EMG, supported by coalfield MPs spoke passionately that any mandatory fast-track system would not be well received in the coalfields because it would be seen to be taking something away and a fast-track system should be a choice whereby a claimant had the opportunity of going through the entire process, recognising that this would take some time, or electing to go on a voluntary basis through the fast-track process. The Minister accepted the EMG’s recommendations and instructed the Department to inform the Court that the fast track arrangements were to be of a voluntary nature. 17. Recognising that the lead cases did not involve any question of liability for surface workers in relation to COPD the Department’s opposition to any arrangements to compensate a limited number of surface men, with respiratory problems, has surprised the EMG given that the number of men who worked in enclosed dusty environments were primarily confined to those employed in coal preparation plants. It is suggested that the opposition to considering the position of these men is more related to the perceived impact upon other former nationalised industries where coal handling took place although it is suggested very little of this would have taken place in a confined environment. 18. Sheer volumes have obviously caused logistical problems particularly in relation to the impact upon time-limited CRU certificates, many of which initially had to be renewed, blockages at probate registries, and the availability of respiratory consultants to conduct the full map or for deceased cases review medical notes. The volumes also caused diYculties in relation to medical record collections, particularly given the number of GPs and hospitals involved. 19. However, it is suggested that insuYcient logistical planning was given prior to or during the negotiations of the Handling Agreement. The first erroneous assumption related to the number of potential claims, which had an impact, as did assumptions about employment records and their detail and availability, and dust records being available for all collieries over the appropriate time-scale, a fact which required the establishment of a dust reference panel to work averages in certain coalfields where local colliery records no longer existed. Considering that the judgement of the Court took place in January 1998 and the Handling Agreement was signed on 24 September 1999, it is a criticism of both the CSG and the DTI that certain policy issues remain outstanding which are prohibiting settlements. 20. One issue which caused the EMG some considerable consternation was the non-disclosure by the DTI that a separate Handling Agreement had been given to the Union of Democratic Mineworkers’, dated 17 November 1999, particularly as they had not been involved in any of the lead cases. The UDM, however, had established a company (Venside), a claims handling arrangement, incorporated in May 1997. Presumably, because the UDM had no representatives in Court during the trial they had been informed that the CSG were confident of success and had put measures in place to enable special treatment to prevail. It is also presumed that the UDM’s own Handling Agreement had Ministerial approval. When the EMG found out that the UDM had their own Handling Agreement they asked the Department why similar arrangements had not been oVered to the other Mining Unions and were told that such oVers had been made, subsequently denied by the Trade Unions and the DTI were never able to evidence such oVers. This has caused particular diYculties in the Nottinghamshire, Derbyshire and Leicestershire coalfields, although there is one issue that the EMG do not understand and despite requests from the DTI no adequate explanation has been received. Based upon a statistical comparison, using the post codes of claimants across all coalfields, there would appear to be 20,000 less deceased claims in these regions than would have been expected if the ratio of deceased to live claimants was common across all coalfields. 3030281033 Page Type [E] 27-04-05 22:34:30 Pag Table: COENEW PPSysB Unit: PAG1

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ARespite Centre 21. Recognising that compensation for COPD did not improve the quality of life of a respiratory suVerer the EMG undertook a review across South Yorkshire of the range of statutory services available, the knowledge of such services within a claimant group and ready access to such services. The results of an initial questionnaire revealed poor knowledge of service availability. A one day conference was held attended by clinicians, statutory service providers and individuals suVering from respiratory diseases, together with their carers. The results of the survey and one-day seminar supported the EMG’s contention that a respite centre involving short stays, day care and from where community services could be delivered would have a dramatic eVect on quality of life initiatives. Rotherham PCT agreed that their level of service provision needed to be fully re-examined and they, together with the EMG, and Coalfields Regeneration Trust embarked upon a project to develop a Respite Centre with a subsequent evaluation, which if successful, could lead to the rolling out of a number of centres of excellence in those parts of the country where high levels of respiratory illness are recorded. 22. The project development has involved discussions with Ministers in the Department of Health and the ODPM. A building design has been completed, with a site secured in Rotherham, for which the capital costs have bee found. Discussions are continuing to secure the initial two years’ revenue funding after which Rotherham PCT will become responsible for all ongoing costs. A detailed report on the development of this unique respite centre is available on request.

VWF 23. Despite the Handling Agreement having been signed in January 1999 the terms of reference which applied to the Ministerial Monitoring Groups for COPD were not extended to VWF until 18 May 2002. This was primarily because the Ministerial Monitoring Group were asked to concentrate on COPD (Minutes 5.6.2000), which with hindsight was an error as an input in the early days of establishing processes could have avoided some of the problems subsequently experienced. The Handling Agreement determined, for the purposes of paying compensation, 3 occupational groups.

Group 1 Where vibratory tools were generally recognised as a substantial part of the occupation.

Group 2 Where vibratory tools were not necessarily a substantial part of the job but may well have been used.

Group 3 Where there should have been no use of vibratory tools and evidence of exposure would be required to substantiate a Group 3 claim. 24. As with COPD most of the original activity of the Monitoring Group was not in relation to determining whether individuals had or had not been exposed but the process by which a claimant actually was able to reach a medical, which by definition would determine whether he had suVered from exposure. 25. The EMG’s late entry into the monitoring of VWF claims, which involved considerable less volumes than COPD, actually resulted in the first major issue being the cut-oV date for claims. The CSG and DTI were primarily arguing as to whether a cut-oV date on the 31 October 2002 should end at 4.30 pm or midnight. The EMG argued that the cut-oV date should be extended, particularly for deceased claims as the protocol for dealing with deceased claims had not even been agreed and as an advertising process had been impossible the EMG stressed that a number of potential claims had yet to be registered. The Minister subsequently agreed to extend the closing date for posthumous claims until the 31 January 2003 and that in order to register a claim a lower initial evidential base would be accepted. The EMG’S position was fully justified in that during the additional three months over 6,000 posthumous claims were registered. 26. Problems were associated with time-scales within the Handling Agreement which were not being met, for example, there were cases where records had been requested by solicitors but were outstanding for up to two years. The EMG were particularly concerned with VWF claimants who had a limited life expectancy because the crucial test would be the actual medical whereas for COPD if a claimant died in process medical records would still be available for examination by a Respiratory Consultant. The EMG successfully argued that claimants, irrespective of age, with confirmed limited life expectancy should be allowed to proceed to the medical irrespective of liability being established. It was also argued that those over a minimum age of 71 subject to certain satisfactory evidence within the OGP being established should also proceed to MAP without liability being confirmed. Solicitors were providing the EMG with considerable complaints about delays within the process and the alleged ineYciency of IRISC. The EMG undertook a number of audit trails for examples provided by one firm of solicitors. These audit trails showed that there was some considerable diYculties around process and that the time-scales within the Handling Agreement were totally unrealistic. 3030281034 Page Type [O] 27-04-05 22:34:30 Pag Table: COENEW PPSysB Unit: PAG1

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Progress with claims had been encouraged by the actual request to undertake audit trails, implying that there was no systematic file review system. The quality of claimants’ records was poor with no evidence of periodic review or progress chasing. Audit trails were also undertaken of solicitors’ records which were in marked constrast, with notes of telephone calls, copies of e-mail, and monthly file reviews. In one case the solicitors had sent, at IRISC’s request the same information three times. The contrast in case management records between IRISC and solicitors was stark. 27. EMG were concerned, based on evidence provided by Solicitors of the volume of Group 1, 2 and 3 denials and the basis upon which denials were made. It appeared to be that many rejection letters were based on quotations from “manuals” without a proper examination of witness information or records. As with COPD the EMG requested the DTI to prepare a list of outstanding policy issues, identify the lead individuals from the DTI and the CSG whose responsibility it was to resolve these issues with in a time-scale (letter to DTI 06.01.2003). The evidential base for a Group 3 claim require two witness statements, one of whom should be an oYcial. It appears that many of these witness statements, made by oYcials were being discounted mainly on the availability of the oYcial. In one rejection letter the term “could not have been an eye witness” was used and in another “the opportunity to work together on a regular basis is required for at least one of the witnesses, is not there”. None of these requirements were specified in the Handling Agreement yet IRISC were prepared to rely on telephone conversations with their rebuttal witnesses even when the witness said that while they knew of the individual and the general work performed they had not been on the same district or shift. 28. At an exploratory meeting with IRISC on 11 December 2002 it was admitted that in relation to Group 3: “the initial decision is left to an adjuster, therefore it is an individual decision”. It was also stated that “initially only assessors are involved” and “in July 2000 IRISC did not have the expertise they now have on Group 3 claims”. 29. This is yet another example which pervades the compensation processes of investment in staV and IT infrastructure following volumes and causing delay and the subsequent duplication of work. Because of the concerns raised by the EMG, at a meeting held on 12 November 2002, the Minister directed the EMG to review a number of cases and report their findings. Initially a total of 16 individual cases were examined, which had not been selected by the EMG but had been received from solicitors who did not understand the rationale for the claims being rejected. This review was undertaken at the oYces of IRISC and while a full report was made to the Minister on Wednesday 11 February 2003, a copy of which is available, the principle conclusions were: 1. Group 1 and Group 2 denials had been wrongly moved by IRISC to the Group 3 process, therefore unnecessarily increasing the evidential basis (two witnesses as opposed to one) which had not been challenged by the Solicitors aVected. 2. Claims handlers placed undue reliance upon the importance of a limited evidential base. 3. Some denials demonstrated a distinct misunderstanding of mining practice and a misunderstanding/disregard of some of the evidence provided, compounded by a solicitor’s incapability to question such judgements, either through an inability or unwillingness to engage professional advice. 4. The use of the vibration calculator for 9 claims to deny exposure was inappropriate. 5. The number of employees wrongly assigned a Group clarification, and despite the requirements of the Handling Agreement for full disclosure evidence had been wrongly withheld. 30. The recommendations to the Minister were that (a) all denied Group 3 claims should be reviewed by an independent panel, (b) the role of the claims handlers was to be re-assessed, (c) the principle of the balance of probabilities was to be restored to the process as it was meant to underpin common-law, (d) all claims denied using the vibration calculator be reinstated, (e) all evidence used by IRISC on which to make a decision be disclosed to the claimants solicitors, (f) delays to the process be avoided as some claims were now entering their fourth year. 31. In addition to the report that was tabled to the Ministerial Monitoring Group on the 11 February the EMG wrote to the Minister on 3 March 2003 concerning not only the report but the lessons which should be learnt from the review and a request that they now be translated into practical instructions for the assessors and adjusters. 32. In examining a number of individual cases it became apparent that notes were being taken of telephone calls to claimants witnesses which were not being disclosed or kept in any agreed format. In addition, witnesses for IRISC, involved telephone conversations where the witness did not sign to confirm that the notes were a true record of the telephone call. A number of complaints were received from claimants’ witnesses saying that the telephone investigation was of a badgering nature and from the outset many witnesses had the impression that they were not believed. Although the Department reacted to these issues 3030281034 Page Type [E] 27-04-05 22:34:30 Pag Table: COENEW PPSysB Unit: PAG1

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with an arrangement in February 2003 by arranging for telephone training techniques for IRISC staV and Nabarros were to prepare a template for the writing up of telephone statements, this was some years after it should have been introduced ie from the outset of the claims process. 33. The DTI reported back on 15 January 2004 in relation to the results of the 16 case review. Six had been accepted and damages paid, one involved liability being accepted but the claimant was waiting to go to the MAP, three were parked due to an outstanding policy issue—pre 1975 exposure, and six remained with denials but pending further action from the claimants Solicitors. In the review of the 16 cases the EMG had been extremely critical of a number of the processes involved, the way in which witness information had been interpreted, concerns about the interpretation of mining practice and that decisions should be based on the balance of probabilities. 34. At a meeting of the Kent Monitoring Group on 13 October 2003 IRISC informed the members of the Regional Monitoring Group that they had to work within the guidelines laid down by the DTI. At a meeting of the Groups on 10 December the EMG members asked the Minister for copies of all guidelines and desktop instructions issued to IRISC and that the current copies should also indicate where revisions had been made against any original and the originals also provided. Despite the protestations of the Department the Minister agreed that the guidelines could be made available. It is worth recording that during 2003 Messrs Ernst and Young audited the processes of IRISC in relation to VWF which, despite certain minor criticisms, basically produced a clean audit, but Messrs Ernst and Young were by the terms of their remit excluded from commenting upon issues of mining sense and this was the first external auditing of processes since the signing of the Handling Agreement in January 1999. 35. Based upon the lessons learnt from the EMG’s review of cases, the Minister requested a review of all Group 3 denied cases. Following a meeting with Capitas the (claims handlers) on 15 June 2004 of those cases investigated 57% had been restored for consideration. As at the 20 June 2004 there were a total of 20,788 denied or withdrawn claims (excluding those that had been denied for a 12 month period and had exceeded the time period allowed for within the agreement for the submission of additional evidence (10,000). Of this 20,788, 15,567 were contested as Group 3 claims with liability. 5,037 had been investigated of which 2,299 (46%) had been accepted as Group 1 or Group 2. 628 (12%) had been accepted as Group 3 with liability to exposure. This showed an extraordinary high level of incorrect assessments either at the initial stage or through the informal appeals procedure. The amount of resources undertaken in order to complete these reviews and more accurately determine Group classification or in the case of Group 3, liability to exposure, could have saved significant sums of public money had the appropriate procedures, personnel and investment been in place at the appropriate time. 36. Despite the Minister determining that the guidelines and desktop instructions could be disclosed to the EMG they were not received until the 24 June 2004 of which sections had to be subsequently re-circulated because of poor copy quality and indeed parts were subsequently revised. The time delay is perhaps attributable to the fact that there had never been a systematic procedural manual (guidelines and desktop instructions) and one had to be rather hastily put into place on a retrospective basis. 37. Having eventually received the guidelines, the EMG spent over 200 working hours reviewing the documentation, particularly the job descriptions quoted, or the functions of a job so described. This was deemed critical as adjusters were comparing what a claimant and/or witnesses said in relation to tasks performed and were concluding whether this was feasible given the individuals job title and description. The EMG took the view that the appraisal of claimants statements should be on the basis of “is what the claimant and/or his witness saying possible/likely” whereas it appeared that adjusters were taking a view that the specific description for a particular job heading would have precluded an individual from using vibratory tools or prohibited him using them on the time-scale alleged. The task involved the review of legislation, rules of the mine, NCB/British Coal production instructions, and an intrinsic knowledge of specific changes within the industry namely the revision of the old grading structure (Black Book) and changes in mining production techniques with the introduction of the incentive agreement in the late 1970s. 38. One member of the English Monitoring Group spent 18 months during 1975 and 1976 reviewing all of the then job titles and job descriptions in order to produce a sophisticated grading system with appropriate pay diVerentials for diVerent classes of underground and surface workmen. The job descriptions which emerged from this process were more generic, listing areas of broad responsibility and experience (skills and/or training), to identify comparable tasks to be banded in the diVerent pay grades. These job descriptions were never meant to be an exhaustive list of all the tasks which a man was meant to perform, according to his job title, or for which he was trained to do. Having analysed their findings the EMG met with Capitas and the DTI on 24 November 2004 and during their presentation they were interrupted by the DTI who said the job descriptions in the guidelines were “meaningless”. They had only been produced as: (a) An aid memoire for staV involved in the process who did not understand certain tasks performed by a colliery workforce; and (b) to help phrase rejection letters. 39. At a meeting the following day (Thursday 25 November) of the English and all the English Regional Monitoring Groups, the EMG reported that having initially blamed the assessors and adjusters for erroneous decisions, then subsequently believe that the fault lay with the guidelines and desktop instructions 3030281035 Page Type [O] 27-04-05 22:34:30 Pag Table: COENEW PPSysB Unit: PAG1

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prepared by the DTI, it now emerged that the fault was back with the assessors and adjusters as the job descriptions, were meaningless. However, it is argued that a knowledge of a man’s job and the potential tasks to be performed is a crucial part of an evaluation process. 40. Most of the adjusters are unknown to the EMG although their collective experience in terms of combined years and range of activities has periodically been recorded. However, it is know that one adjuster was not even employed in the industry or of employable age, during the initial period when exposure applied which is critical for determining mining knowledge. Equally one of the lead adjusters who reached the level of Deputy was not employed in the industry in 1975 and only worked in a limited number of coalfield operations. 41. The position of Overman and Deputies is particularly bizarre in that either claims by these categories of men or their witness statements in support of the workmen, have tended to be rejected with the rejection letters quoting their statutory duties which would have precluded them from either doing the work claimed or observing other workmen. For those in the industry this is diYcult to comprehend and is best evidenced by a statement from a Colliery Manager where he clearly states that he would not have employed an Overman who was not prepared to “get stuck in”, or “take a lead”. Equally the long-running argument whether face trainees would have used pneumatic tools during their training is incomprehensible. It appears to be based on one adjuster who claims that he did not use such tools during his face training whereas there are a number of representatives on the Ministerial Monitoring Groups, and the Regional English Groups, who have confirmed that the use of such tools was an integral part of their training and at the end of that training their employment records confirmed that they had undergone all aspects of face work. There were no separate authorisations for other workmen to use pneumatic tools which would have been identified on their training records. This can be exemplified by a Group 3 claimant who’s exposure was denied on the basis that he would not have used vibratory tools, and had not been authorised so to do, despite the records which were disclosed to the Solicitor which included the report of an accident investigator in 1983 which determined that the claimant, who was a surface worker, had sustained an accident while using a jigger pick breaking up concrete on the colliery surface and this individual had been part of a surface team for 30 years doing similar work throughout South Yorkshire collieries. The name of the claims investigator in 1983 was Mr J Hinde, who is currently a Senior Manager with Capitas involved in the VWF claims process. 42. The statistics produced by Capitas for monitoring the Group 3 review/disputes progress has recently included a new heading namely “VRP finding would have altered the original denial but the Department found the VRP’s finding perverse and we have maintained the original decision”. The Handling Agreement which was negotiated by both parties and accepted by the Court does not support the Department in being Judge and Jury. 43. Capitas have now started producing statistics, at the request of the EMG, on Group 3 claims which enables the EMG to monitor progress. Given the introduction of an informal disputes resolution arrangement in order to try and reduce the volumes being referred to the Vibration Reference Panel (VRP), as at the 5 December 2004 there had only been 12 referrals to the VRP but five had resulted in a decision being changed from denial to acceptance. This high level of positive outcomes, bearing in mind the reviews that were undertaken following the lessons learned from the EMG’s review of 16 cases, raises serious questions about issues of mining sense as interpreted by Capitas’ investigators. 44. Given the evidential base required for disputed Group 1 and Group 2 claims, and Group 3 claims, the Department’s willingness to establish a national witness database was most welcome, although their subsequent decision that this should only include witnesses to date for claimants, and exclude their own witness database on grounds of data protection was disappointing. The Department’s witnesses could have been asked in writing for their agreement to publicise their names and addresses which would have over- ridden the requirements of the Data Protection Act. The most alarming position was when the Department said that this database could not be used for those claims which had been denied when claimants could not provide witness details. As most of the early claims were from elderly men, whose witnesses, by definition, would have been even older it was surprising that the Department could not seen that such a policy would not be well received in the coalfields. They eventually agreed to re-consider this position and either they did not understand the perception within the coalfields, or it was not an issue of concern to them. 45. As with COPD there are problems endemic in the system, some of which the DTI have been trying to resolve although technically it is not their direct responsibility, ie the issue of co-defendants who are not part of the Handling Agreement and the insurance issues relating to licensed mines. There are, however, a number of current issues which are causing concern. The long term failure of the DTI and CSG to agree on crossover claims, (service claims where a claimant has both COPD and VWF claims) will lead to a direction of the Court through a joint hearing heard in front of Dame Janet Taylor and Mr Justice Turner. There are also particular concerns about referrals to the Special Investigations Department (SID), ie on what basis referrals are made, the nature of investigations and interviews, and the non-disclosure of information to Solicitors which is contrary to the principles of criminal law. Many of the complicated issues around calculations for services will be very dependent upon settlements resulting from a review of the oVers and calculations underpinning those oVers by Solicitors and where firms have volume claims the same concerns are expressed as are those for COPD whereby some Solicitors have a large number of claims with limited number of qualified Solicitors. 3030281035 Page Type [E] 27-04-05 22:34:30 Pag Table: COENEW PPSysB Unit: PAG1

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Conclusion 46. The EMG believe, with some justification, that they have tried to fulfil their remit and certain key recommendations accepted by Ministers during the course of both schemes have helped and resolve blockages, and enhance to a limited degree the perception within Coalfields of how the compensation process is being delivered. 47. However, our role regrettably has tended to have been reactive to problems and blockages, some of which could have been avoided had there been prior consultation. Information on proposed policy/process changes has rarely been volunteered and our role has tended to be more of a detective rather than advisory. The claims initially started as an adversarial process, improved significantly but has reverted to a more adversarial approach which may be partially explained by the introduction of end dates for various stages of the process, designed to conclude the compensation arrangements at the earliest possible opportunity and therefore relieve Departmental oYcials from what may be regarded as a deflection from the current overall political remit of the DTI. However, the Department stands in place of British Coal and the Courts determined that miners whose health had been adversely aVected by COPD and/or VWF were deserving of compensation as measured by the individual impact on their quality of life. 48. One could be forgiven for thinking that the DTI and their Legal Advisers were still fighting a case which they lost. Having accepted at the outset Ministerial statements that delays, particularly in relation to COPD, were unrelated to the financial costs of the compensation arrangements one could also be forgiven for concluding that costs now are of paramount importance. This is evidenced by the arguments in Court over the solicitors fees for the COPD live and deceased fast-track oVers, the fast-track arrangements being sought on a compulsory basis by the Department with the only recourse being common-law; the resources being applied to the Special Investigations Department which have shown relatively low levels of fraud. It is interesting to compare that what may be regarded as exaggeration in relation to services claims is fraud whereas exaggeration by the adjusters in terms of mining sense is regarded as either errors or diVerences of opinion. 49. Although the EMG have tried to follow the entire Court process through attending both formal review hearings and directional hearings this has not always been possible for VWF in that the Department have on occasions chosen not to inform the EMG of where and when Court hearings were to be held nor made available copies of their submission to Court. There is quite a stark contract between the courtesy shown in relation to the COPD Court process as compared to VWF. Despite the success which the EMG claim there has been little progress or improvements achieved during the last six months and given that the DTI now appear to hold the EMG with some disdain, the members of the EMG are currently considering their position. 50. In addition to the specific points there are a number of broader conclusions emerging from the process: (a) Given that the COPD claims have involved the widest collection of medical records from an industrial workforce these should be examined, particularly in relation to co-morbid conditions amongst miners which are higher than the national average. For example, the incidence of bowel cancer is five times higher amongst mine workers than the national average. (b) There could be lessons to be learnt for GPs in relation to the diagnosis of respiratory diseases. A number of miners who have been treated for many years for asthma did not have asthma according to their spirometery test, but COPD. Conversely, a number of men had been diagnosed with COPD by their GP but in fact have asthma. (c) There is inadequate regulation of claims farmers who often raise expectations of compensation levels and their cold calling techniques often cause distress, particularly to the elderly. (d) While the Law Society’s decision to vary the normal complaints procedure has been welcomed, their subsequent decisions where a proportion of the compensation has been deducted from a claim, or that an additional fee was charged should be repaid, were confined to individual complaints. These decisions should have been of a generic basis and the firms concerned instructed to repay all claimants where fees/a proportion of compensation were inappropriately deducted, rather than just in response to individual complaints channelled through constituency MPs. (e) The Law Society should conduct sample reviews of case files for those solicitors with large volume claims to ensure that claimants have received a professional service for the fee paid by the DTI. (f) Given the extraordinary sums of money paid to solicitors, including the Department’s own legal advisors, and contracted service providers the Public Accounts Committee should be asked to satisfy themselves that value for money has been obtained even though the cost of delivering compensation for a significant number of claimants has exceeded the value of the individual compensation received. (g) The independent monitoring of an activity of a Government Department has been fraught with diYculties, given that this was undertaken by volunteers who were not resourced by the DTI. However, it has had some positive eVect and potentially has some future policy considerations for Government. 3030281036 Page Type [O] 27-04-05 22:34:30 Pag Table: COENEW PPSysB Unit: PAG1

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APPENDIX 9

Memorandum by The Law Society

REGULATION OF CLAIMS HANDLING COMPANIES The Law Society is responsible for regulation and representation of solicitors in England and Wales. The Law Society saw the transcript of the oral evidence given by Mr Andrew Tucker and colleagues on 23 February, and in particular the exchanges concerning claims handling companies. Following discussion with the Clerk to the Committee, the Law Society submits this note for the information of the Committee. The Law Society recognises and shares the widespread public concern about the activity of claims management companies. The Society knows that there is concern that some claims management companies attract business in undesirable ways—such as by cold calling on prospective clients. There have also been suggestions in the past that some claims handling companies have encouraged prospective claimants falsely to exaggerate their injury, although the Law Society has no direct evidence of that. The Law Society has for some years been pressing Government to introduce eVective regulation of claims handling companies. The Society has suggested that this could be done by amending the definition of litigation in the Courts and Legal Services Act 1990, so as to cover advice given in contemplation of litigation. This would have the eVect of meaning that only those who were qualified to conduct litigation could operate claims handling businesses on a commercial basis. Alternatively, the Society has suggested that regulation could be achieved through the OYce of Fair Trading. The Law Society has raised this with Ministers on a number of occasions, and in the context of Sir David Clementi’s review of regulation of legal services. We hope that the Government will decide to introduce regulation of claims handlers as part of the process of implementing Sir David Clementi’s recommendations. Before March 2004, solicitors were not permitted to pay third parties for the referral of cases. The rule was designed to ensure that there were no improper influences constraining the independence of advice given by solicitors to their clients. However, the rule was subject to significant criticism from the OYce of Fair Trading (and some solicitors’ firms) as being anti-competitive, in that it went further than was necessary to achieve the legitimate objective of ensuring that solicitors could advise clients entirely in the client’s best interest. Accordingly, the rule was changed in March 2004. Under the current rules, solicitors are permitted to pay claims handlers (or other third parties) for the referral of cases provided that: — full information about the charges is given to the client, both by the introducer and by the solicitor; — the introducer does not itself attract business in an unacceptable way (for example through cold calling); — no constraints are placed on the solicitor’s freedom to advise the client in the client’s best interests. This new rule is currently under review, as agreed with the Master of the Rolls at the time of the rule’s introduction. The Law Society’s powers of regulation apply only to solicitors, and (to a limited extent) to others employed in solicitors’ practices. The Society through its current rules tries to curb undesirable activities of claims handling companies, such as cold calling, by prohibiting solicitors from accepting referrals from those who act in an unacceptable way, but the Society does not have power directly to regulate the claims handling companies themselves. There are also limits on the obligations that the Society can place on solicitors to “police” claims handlers when accepting referrals as it would be unrealistic—and would be seen as undermining the liberalisation of the rule which OFT sought—to make solicitors totally responsible for the activities of claims handlers. The Society would be happy to answer any particular questions the Committee may have about these issues.

APPENDIX 10

Supplementary memorandum by Capita IRISC

Inquiry into the Coal Health Compensation Scheme Capita Group plc welcomed the opportunity to contribute to the Select Committee’s Inquiry on the Coal Health Compensation Scheme and its administration. When we saw the supplementary evidence which other witnesses had submitted we felt that it would be appropriate and helpful to submit a short additional memorandum. 3030281037 Page Type [E] 27-04-05 22:34:30 Pag Table: COENEW PPSysB Unit: PAG1

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This short memorandum complements the more detailed memorandum submitted by the Department for Trade and Industry and our oral evidence. It seeks to explain Capita’s role and responsibilities in respect of the Scheme and to address specific issues raised in other supplementary evidence. Capita assumed responsibility for the administration of all of the claims handling process and the medical examinations for claimants for the Vibration White Finger (VWF) element of the Scheme in February 2004. Capita had had no involvement with the Scheme prior to this date. As a service delivery partner for the Department of Trade and Industry, Capita has defined contractual roles and responsibilities. However, as in its other major public service delivery partnerships, Capita seeks wherever possible to draw on its wider expertise, experience and values to work with the Department and the other stakeholders to ensure the development and the success of this critical Scheme.

Capita IRISC—Claims Handling—Key Responsibilities — claims handling of all British Coal personal injury claims arising from a range of identified industrial diseases — maintenance of eVective working relationships with all the stakeholders to ensure the smooth operation of the services, and to avoid where necessary, resolve disputes — provision of generic legal advice as instructed by the DTI — support to the DTI in the management of responses to Parliamentary Questions, Ministerial and oYcials’ correspondence and media relations, and the provision of an advice and support service to coalfield MPs — establish and maintain electronic links with all parties to the Claims handling process — the management of all financial matters to a high degree of probity and the provision of internal audit systems agreed with the DTI and its auditors — contribution to the anti-fraud management for the Scheme together with the provision of an internal anti fraud audit programme which agreed with the DTI — provision of policy support and advice in relation to claims handling required by the DTI including contributions to the continuous policy review and the development of policy particularly in respect of future of the Schemes — the development and implementation of the ‘World Class Programme’ of service improvements and eYciencies — upgrading the IT systems and business process re-engineering to support the claims handling processes Capita IRISC employs 1339 staV in SheYeld (961), Manchester (178), CardiV (112) and Edinburgh (88) Capita Health Solutions (CHS)—VWF medical assessments Capita Health Solutions (CHS) is the DTI’s service provider for the VWF Services Medical examination, where a Co-Morbidity Assessment is carried out as part of a compensation claim against the former British Coal Corporation. The medical assessment has been designed to concentrate on the claimants well being and how they are aVected in their everyday life, by any health problems they may have. Medical examinations are conducted with the claimant and the results passed on to Capita IRISC. Services examinations are undertaken at centres in: Barnsley, Stapenhill (Burton), Stretton (Burton), Canterbury, Doncaster, Mansfield, Seaham, St. Helens, CardiV, Swansea, Glenrothes, Kilmarnock, Livingston and Prestwick CHS role is limited to the medical assessment process. It does not have any claims handling responsibilities

Services Claims The CG has questioned JeV Wilson’s evidence that inappropriate questioning by Capita staV of services’ questionnaire forms was due to inexperience whilst the pilot project was underway.

Capita comment: — We would re-iterate the evidence given by Mr Wilson. Capita measure performance on a regular basis across all claims in terms of quality assessments and checking. We constantly review performance and provide training and advice based upon this. In addition, issues which arise from monitoring group meetings and feedback received from the Claimants’ Group are built into our training programme. 3030281037 Page Type [O] 27-04-05 22:34:30 Pag Table: COENEW PPSysB Unit: PAG1

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— In addition, Ms Roy’s subsequent evidence went on to inform the Select Committee (OE p21 Q103) that Capita have fairly rigorous internal audit procedures and processes where, by checking individual claims and looking at the quality of claims handling decisions being made within those claims, we analyse the outputs from that, and feedback, not only to built into our training programmes, but also to the individuals concerned and subsequently shared with the claims adjusters . . . There is a need for us to constantly review how eVective our decisions are. Feedback from solicitors is exceptionally helpful in these instances.

Stalled Claims /Capita Performance

Stalled Claims Reference was made to the evidence given by Martin Trainer on behalf of Capita that Capita’s reward is based upon achievement of targets (OE,p.13), that there is no reference to penalties for poor performance (Q131-134, and Q66-68, Q 85-87). The CG states in its addendum that “The Department has resisted tacking its contractor Capita over claims languishing in their oYces, whether contractually or in terms of the process. That it appears that no penalties may be visited upon the contractor for unacceptable delays in handling is a major diYculty. This may also explain the reluctance to support a stalled claims procedure designed to address claims stuck at Capita. The underlying problem here may be under-funding or resourcing of the claim handling contract”.

Capita Performance The CG has referred to the evidence given by Kate Roy in relation to meeting targets on COPD and aspirational end dates in the VWF scheme which Capita and the DTI have formulated (OE, pp 14-17 and 24-25 Q90-96). The CG states in its addendum that “there are signs of significant slippage in Capita’s progress towards meeting the group 3 aspirational end date of concluded investigations by September 2005 . . . The sometimes terminal consequences visited upon claimants who are not able to comply with the end dates fixed, may be contrasted with the apparent lack of any sanction against Capita for delays that may follow from juggling and shifting resource from one area of the process to another to meet the Department’s demands (or even failing to meet them)”

Capita comment: — It is not accurate for the CG to suggest that the current Capita contract does not contain any penalty provision. Capita can confirm that there is provision within the current contract for financial penalty relating to specific areas of claims handling performance. — The CG has put proposals to the department regarding sanctions when delays are due to the department’s or its contractors handling of the claim. A response is due by the end of March. Capita are currently in dialogue with the DTI on this matter. — We are contractually measured on both volume and quality targets, set each quarter by the client and independently verified by PwC. The volume targets are always shared and discussed with the CG at monthly operational meetings and the COPD targets are reported upon publicly by the DTI. — Our contact with the DTI has in place reward mechanisms dependent upon delivery of short and long term volume targets in accordance with the DTI’s plans and with continually improved quality levels. Failure to achieve these targets would result in a significant reduction in profit. — Resource levels are planned on all aspects of the scheme by Capita using a sophisticated model implemented in July 2004 as part of the business improvement programme. These plans are based upon the requirements of the DTI and recruitment programmes are put in place to meet the plans. There is a constant need to balance capacity with all contractors and solicitors, as steady throughput is reliant upon this. For example for VWF Services (ie services pre MAP), only 27% of cases are within the control of Capita and there is now a real risk of work drying up until solicitors submit outstanding info. In addition, Capita as an organisation has over 23,000 employees, 5,000 of whom are employed in the general insurance (majority claims handling) environment. Finally there is no financial benefit to Capita to restrict resource on the contract. The reverse is actually the case. — The aspirational end date for Group 3 investigations is to be completed by the end of September 2005. The appropriate resource is in place to support this. With the full cooperation of all parties Capita believe this date can be achieved. 3030281037 Page Type [E] 27-04-05 22:34:30 Pag Table: COENEW PPSysB Unit: PAG1

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Security Investigation Department Reference has been made to Kate Roy’s evidence in respect of this Department. It is said that 1,500 claims were referred to SID for consideration, 800 investigations had been concluded and in 300 cases there had been deductions from the compensation or nothing at all had been paid (OE, p 22-24 Q107-113). She said that the investigation process was to correspond with the solicitor and seek an interview and give an option to solicitors to attend or to be copied in on correspondence. When pressed as to whether solicitors were told the reason for the request, Ms Roy’s evidence was that they were advised of “the potential for further investigation” . . . internal guidelines based on FSA standards. Ann Taylor (DTI) indicated that in 156 denied claims there had been a saving of £1.85 million and the reduced value claims (132 cases) had resulted in a saving of £1.25 million or a total of £3.1 million. The CG state in their addendum “that claimants’ representatives are still not being made aware of the nature of the department’s concerns . . .” Without more precise information as to whether the DTI/Capita view of exaggerated or fraudulent claims excludes claims where there is no reasonable basis for suspecting deliberate misrepresentation, it is diYcult to say whether the savings quoted represent reliable guide to the benefit to the taxpayer derived from the work of SID.

Capita comment: — The Security Investigation Department is in place to investigate potential discrepancies or misrepresentations, be that deliberate or otherwise which to date has resulted in compensation savings of £3.1 million. The claims handling arrangements require the claimant to substantiate their claim. (with evidence where available) — It is accurate to say that the costs quoted relate specifically to the SID costs and do not include “extra process and handling costs” as these would arise in any event, when discrepancies occur in the process. — We would also point out that, in relation to “FSA standards”, as detailed in the evidence given by Ms Roy (OE p 23 Q111), our investigators are an external organisation, part of the Capita Group, who are compliant to FSA standards. — The SID team has been operational for no more than two years. — Following the VWF Court hearing of 20 December 2004, and Dame Janet Smith’s comments, we are taking steps to ensure suYcient information is included within the initial letter of contact to the solicitor. John Tizard Director of Policy and Public AVairs The Capita Group Plc 21 March 2005

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