DSS `reclaims' £280m from injury victims

Rosie Waterhouse on the clawback of benefits from compensation pay

For four years, James Sharp battled with the after-effects of lung cancer and with lawyers representing former employers who failed to protect him from asbestos.

A former heating engineer in Glasgow, he eventually won £75,000 damages in an out-of-court settlement with three companies that had employed him since 1945 and shared liability.

Within days of the settlement a letter arrived from the Department of Social Security, demanding almost £47,000 of his compensation to repay the invalidity benefits he had been paid since his cancer was diagnosed in January 1989 until the compensation settlement in February 1993.

About £20,000 of the compensation was awarded for loss of earnings, during the period he received benefits until the settlement; the remaining £55,000 was for "pain and suffering" and the care provided by his wife, Phyllis, and three stepsons. So the DSS's initial claim for £47,000 - later reduced on appeal to £33,000 - deprived Mr Sharp of money awarded for his pain and suffering and the cost of his care.

Mr Sharp, aged 63, from Bearsden, Glasgow, had been routinely exposed to asbestos - without any protective clothing - during his apprenticeship and early years as a boiler lagger.

He became ill and deteriorated until an X-ray early in 1989 revealed a tumour on his left lung. Part of the lung was removed but he is permanently disabled.

Mr Sharp is bitter about the state taking some of his compensation.

"I think it's a disgrace that I've had to fight for an out-of-court settlement and the very first thing the DSS does is grab the lion's share. I have worked the best part of my life and I have paid National Insurance which should have covered me for my disability. There is no justice in this system".

Mr Sharp is one of 120,000 people who have been forced to repay benefits to the DSS's Compensation Recovery Unit since it was set up in September 1990. A campaign to abolish or reform the CRU is gathering momentum. Protest groups, lawyers, insurance companies and MPs claim the system is fundamentally flawed and unfair.

They warn that unless the formula for clawing back benefits from compensation is changed, the unit, part of the Benefits Agency, could become as unpopular as the Child Support Agency. One law firm, Robin Thompson and Partners, is dealing with 4,000 personal injury claims involving the CRU, many of them suffering from the effects of working with asbestos in cases going back 50 years.

The Labour MP Tony Worthington has tabled an early day motion calling for the abolition of the CRU. It has been signed by 209 MPs and he has received letters of support from more than 100 victims.

The Commons Social Security Select Committee is holding an inquiry into the CRU, and it will advise ministers whether the unit should be reformed or abolished. This week the TUC is submitting evidence highlighting cases of injustice.

Established by the Social Security Act 1989, the CRU costs £4m a year to run. By April it will have reclaimed a total of £281m from people who receive benefits as a result of accident, injury or illness and who later receive compensation. It expects to recoup £100m this year alone.

about £1m from people suffering from asbestosis.

The CRU can reclaim all benefits paid after the incident until the compensation claim is settled up to a maximum of five years.