Speeches, etc.

Margaret Thatcher

HC S Report [Family Allowances Bill]

Document type: Speeches, interviews, etc.
Venue: House of Commons
Source: Hansard HC [651/544-51]
Editorial comments: For better understanding the whole debate on this amendment is included. MT spoke at cc544-49 and c551, c2045-2100.
Importance ranking: Minor
Word count: 2604
[column 544]

Second Schedule.—(Set-off of Overpayments on Account of Benefit or Family Allowances.)

Mrs. Thatcher

I beg to move, in page 16, line 41, to leave out sub-paragraph (3) and to insert:

(3) As regards benefit under the National Insurance (Industrial Injuries) Acts, 1946 to 1960, provision may be made by regulations under the National Insurance (Industrial Injuries) Act, 1946, for treating benefit paid to any person in pursuance of a decision which is afterwards revised on a review, or reversed or varied on an appeal, as paid on account of any benefit which it is decided is or was payable to him under those Acts in respect of the same accident or disease and, unless either benefit is a gratuity, in respect of the same period.

On the first coming into force of regulations made for the purposes of this sub-paragraph subsections (2) and (5) of section fifty-two of the National Insurance (Industrial Injuries) Act, 1946, shall cease to have effect.

Mr. Deputy-Speaker

Perhaps it would be for the convenience of the House if, with this Amendment, we also discussed the following Amendments in the name of the right hon. Gentleman the Minister of Pensions and National Insurance.

Mrs. Thatcher

That would be convenient, Mr. Deputy-Speaker.

This is a fairly technical series of Amendments which arise out of the following circumstances. They seek to [column 545]extend the scope of the Minister's regulation-making powers in relation to adjustments of industrial injuries benefits, following a decision on review or appeal.

The present position is that where, on review or appeal, a different benefit is awarded in respect of an accident, and the two benefits are of a different kind—that is to say, a pension is awarded in lieu of a gratuity, or vice versa—the Minister already has power to make regulations covering the set-off between benefits. But where the benefits awarded are of the same kind; the Minister has no power to make regulations.

The case law on this subject has, therefore, developed along two lines. First, it has developed from the regulations made pursuant to the Minister's power. To take account of the way that has developed, we could, of course, vary the regulations without asking for extra power in the Bill. But the second branch of case law however, does not derive from the regulations but from the Commissioner's decisions. We should have no power to vary the effect of those decisions by regulation without asking for it in the Bill.

The position is that the two sets of case law have resulted in a considerable number of anomalies, and the set-offs have been adjusted in different ways. This matter came particularly to my right hon. Friend's attention by way of a recent decision by a National Insurance Commissioner. In his report—C.I. 55/61—the Commissioner said:

“We do think it right, however, to express our considered opinion that the law on this topic is in a most unsatisfactory state. It is not merely doubtful but anomalous. One anomaly is that where the set-off is under Section 52 a claimant is entitled to very substantial advantages under Regulation 28, but these are not available to a claimant where the set-off is otherwise than under Section 52.”

At the end of that paragraph, he said:

“We venture to suggest that these are matters to which the attention of the legislature could very properly be drawn.”

It is in response to those remarks by the Commissioner that J. Boyd-Carpentermy right hon. Friend is bringing forward these Amendments. They will give him power to make regulations for adjusting benefits, whether they are of a different kind or of the same kind, and we hope that this [column 546]will enable us to introduce a simplified and consistent code to this field.

It may be helpful if I indicate how my right hon. Friend proposes to exercise his new power of adjustment. It is designedly limited so as to enable adjustment of pensions and allowances to be made on a period for period basis only. To achieve this, a gratuity would be notionally converted into a periodical payment at a rate proportionate to the amount of the gratuity and the length of the period covered by the relevant assessment, taking a life gratuity as seven years.

If I give examples the position may be made a great deal clearer than by the use of a large number of words. For instance, I will show how a case would be dealt with under the present law and how it would be dealt with under the proposed new regulation-making powers. Let us suppose that a medical board assesses a claimant's disablement at 10 per cent for life from 1st January, 1959, and that a gratuity is awarded and paid. On appeal, the medical appeal tribunal varies the assessment to one of 30 per cent. for one year final from 1st January, 1959.

Under the present rules, the insurance officer, when awarding a pension consequent upon the 30 per cent. assessment, will regard the whole of the life gratuity as available for adjustment against the pension. Under the new rule, only one year's worth of the life gratuity will be available for adjustment against the pension.

The second example is where, consequent upon the decision of a medical board, the insurance officer awards a 5 per cent. life gratuity. On appeal, the medical appeal tribunal makes an assessment of 15 per cent. for one year final. Under the present rules, the whole of the 5 per cent. life gratuity would be regarded as available for adjustment against the 15 per cent. for one year gratuity, which means that the man would be paid nothing.

Under the new rules, only one year's worth of the 5 per cent. life gratuity would be regarded as available for adjustment against the 15 per cent. gratuity, with the result that a further payment could be made to the claimant. This type of case has given rise to some [column 547]difficulty in the past, particularly where the second award is provisional. It is not easy to explain to a claimant that he cannot have any more money even though his assessment has been increased.

I must make it clear that though the new rules will, in some cases, be more favourable to the claimant, in some cases they will be less favourable. The National Insurance Commissioner's decision which has given rise to these Amendments was far more favourable to the claimant than the law had been up till then. In some cases however, the new law would be much more favourable. I would not like to mislead the House.

This new method should produce a more consistent and simplified code. It will also mean that where we find further anomalies they can be dealt with by further regulations without my right hon. Friend having to come to the House for a specific new power—subject, of course, to any new regulations coming before the House in the ordinary way.

It might be convenient if I refer to a further Amendment—all these Amendments are consequential—and make a small comment on it. That Amendment is the one to paragraph 10 of the Third Schedule. This is a transitional provision to enable the regulations to provide that where a decision relating to adjustment has been made in accordance with rules existing before the date of the coming into force of the new rules, and that decision is the subject of an appeal or review after that date, then the appeal or review is to be determined in accordance with the old law. It is similar to the provision in paragraph 9 of the Third Schedule to cover the change from “good faith” to “due care and diligence.

Mr. Prentice

I should like to make one or two comments on what the hon. Lady has said and to express my doubts and uncertainties about what is concerned here in the hope that these matters may be made a little clearer.

I appreciate that the way in which the law operates at the moment produces anomalies and I see the strength of a need for some review. I understand that at the moment if an appeal resulted in a [column 548]gratuity being changed into a pension or a pension being changed into a gratuity, an adjustment can be made, but it cannot be made if what had been a gratuity were still a gratuity or what had been a pension were still a pension.

Mrs. Thatcher

Adjustment is made in either event. Adjustment between unlike benefits is made by virtue of regulations made under Section 52 (2). Adjustment of like benefits is not provided for specifically in the Act, but it is provided for by virtue of the National Insurance Commissioner's case law. There is adjustment in either event, but on different principles.

Mr. Prentice

I am grateful to the hon. Lady for that explanation. I see the case for being able to make the kind of adjustment to which she referred in her speech.

Perhaps I may put my point in this way. There are certain kinds of adjustment to which I would see some objection. I am not sure whether this kind of adjustment will be made in future. If it will not be made, I should be happy, but if it were to be made I should object. Suppose a man has been awarded by a medical board a disability pension of 40 per cent. which is reduced as a result of an appeal by the Ministry to one of 20 per cent. Will it then be the intention that he should have to repay the difference between the 40 per cent. and the 20 per cent. which he has already received? If it is the intention that he should repay it, would not the practical effect be that from the date of the appeal tribunal decision he would receive less than the 20 per cent. until he paid off the extra amount? Is it the intention that that should be done?

Mrs. Thatcher

Not so far as I am aware. I have a specific example with me which I have had carefully worked out. If it is convenient, perhaps I may give it now. Where a pension has been awarded on the basis of a 40 per cent. assessment by a medical board and the medical appeal tribunal subsequently substitutes for the board's assessment one of 20 per cent., the over-payment in respect of the 40 per cent. award will not be recoverable from future payments of the 20 per cent. pension. All that will [column 549]happen is that payments of the 40 per cent. pension will be treated as made on account of the arrears of the 20 per cent. award. I think that meets the case made by the hon. Member.

Mr. Prentice

I want to make quite clear that what ought to be avoided is, as it were, penalising a claimant in any way for the fact that he was fortunate enough at the medical board level to receive an assessment which has subsequently been found at the appeal tribunal level to be too high. In the interval he has perhaps enjoyed something to which he was not entitled, but to which he thought he was entitled and he received it in good faith. Because of an industrial accident he has had to spend money. It would be a hardship if he had to pay back the amount he should not have received. If that is not the intention, I am happy.

The other case I have in mind—which, from what the hon. Lady has said, is probably excluded—is that if there is an addition to the disability pension by reason of a special hardship allowance and if that is awarded and then it is found that the claimant is not entitled to special hardship allowance, as the law stands, I understand that from the moment of the Commissioner's decision that allowance will be suspended, but he does not have to repay it unless in some way he has acted in bad faith. I believe that there are regulations about that.

It seems reasonable to recover if the man acted in bad faith, but if he acted in good faith it would be unfair to try to get it back from him because a lower court had decided in favour and then the appeal tribunal decided against it. I hope that that is not the intention.

Mrs. Thatcher

It is proposed that the regulation power for which we are asking should not have the effect of requiring the recovery of an overpayment where a payment was received in good faith. In that respect it would re-enact the existing law in the example given by the hon. Member. May I emphasise that we are asking only for power to make regulations, and that the regulations will be laid in the usual way?

[column 550]

Mr. Prentice

I am grateful to the hon. Lady for that explanation. I think we shall want to see the regulations when they are made, but certain doubts have been cleared up on these points.

Mr. Houghton

This is one of the occasions when the House of Commons ought to have a blackboard. Then we could see these things a little more clearly. The hon. Lady has done her valiant best with her most reassuring manner, but she was candid enough to say that some people might be worse off under this equalisation of treatment scheme while others would be better off.

My hon. Friend has been applying his mind to the document which the Minister allowed us to have—for which I am grateful—in connection with these Amendments so that we could study the matter a little more closely. I find the report of the decision of the National Insurance Commissioner a very long and rather bewildering document. I have never seen anything like it outside documents concerning Income Tax. I did my best with it late last night, but I was unable to report progress and I handed it over to two of my hon. Friends and asked them to be ready to speak intelligently about it at some time during the day. I cannot say any more than that I have tried to master it and that we shall have to leave it until the regulations to be quite sure what the Minister intends to do.

Clearly, however—speaking seriously—the anomalies to which the Commissioner has drawn attention have to be tied up. It was indefensible to go on like that. As in all cases when one is trying to get a unified code, sometimes advantages which have been enjoyed by some people for a time are modified in order to establish some unified code applicable to all concerned. At the risk of being discovered quite wrong and corrected by the Parliamentary Secretary, I wonder whether I can clear my mind on the three points which were mentioned in a summary of this matter which I looked at. At present, where a 40 per cent. assessment for life is replaced on appeal by 20 per cent. for life, the arrears overpaid are not available for set-off against a future pension.

Do I understand that it is proposed that in such a case the arrears overpaid will be available for set-off against the [column 551]lower pension during the same period? That is not expressing myself very clearly. Let me put it this way. Will the existing position be continued in regard to this class of change?

Mrs. Thatcher

I understand that the answer is, “Yes” . I thought that I gave a specific example to that effect. It reproduces various figures.

Mr. Houghton

Which shows how dull I am.

On the second example, where 10 per cent. for life is replaced on appeal by 30 per cent. for one year, at present the whole of the life gratuity is available for set-off against pension. I understand that now the gratuity will be apportioned over a seven-year period and that one year of that gratuity will be available for set-off against the 30 per cent. grant instead of the whole of it. I understand from the hon. Lady that I am correct in saying that that will be so, and similarly with a third category in which 5 per cent. for life is replaced on appeal by 15 per cent. for one year. At present the whole of the life gratuity is available as set-off against the one-year gratuity, and in future, as I understand it, that will continue as at present, and the whole of the 5 per cent. gratuity will be available for set-off against the 15 per cent. awarded. Am I correct in that? There will not be a double benefit for that period?

Mrs. Thatcher

I am not certain about the actual example, but the general principle up to date in the cases which the hon. Gentleman has given has been to get a set-off of money against money. What we are trying to get now is a set-off of period against period, which is much better.

Mr. Houghton

In those circumstances, we on this side of the House are agreeable to the Amendment.

Amendment agreed to.