Coal health compensation schemes : twelfth report of session 2007-08, report, together with formal minutes, oral and written evidence

In January 1998, the Department of Trade and Industry (now the Department for Business, Enterprise and Regulatory Reform and the Department for Innovation, Universities and Skills) took responsibility for the accumulated personal injury liabilities of the British Coal Corporation.

In the same year, the courts found the Corporation negligent in respect to lung disease caused by coal dust (Chronic Obstructive Pulmonary Disease or COPD) and hand injuries caused by using vibrating equipment (Vibration White Finger (VWF)).The Department established two schemes to pay compensation and received over three quarters of a million claims from former miners, their widows, or their estates for COPD (592,000) and VWF (170,000).

Many claimants were elderly, ill, and anxious to receive their compensation and the number of claims greatly exceeded the Department's initial forecasts of 173,000 COPD and 45,000 VWF claims.

The Department was ill prepared for the number and complexity of claims made; some claimants have had to wait as long as ten years or more.In 2005 the Department, in negotiation with solicitors, introduced a fast track arrangement to process COPD claims in an attempt to address significant backlogs. By September 2007 there were around 116,000 COPD claims and 12,000 VWF claims remaining to be settled and the Department seeks to process most of the remaining VWF claims by March 2008 and COPD claims by February 2009.

By the time all the claims have been settled, the Department estimates that it will have paid some GBP 4.1 billion in compensation.Administration costs for the schemes, including contractor and medical costs, are expected to total almost GBP 2.3 billion.

Claimants' solicitors and other representatives' fees account for just under GBP 1.3 billion of this total.

The Department's negotiation of the fees with solicitors was weak, with the result that it paid fees significantly in excess of costs.