United Kingdom

Financial compensation scheme for Scotland’s abuse survivors

The Scottish government is setting up a compensation scheme for survivors of childhood abuse in care. Bill Sulman, Chairman of Aon’s Public Sector Practice, assesses the details and considers how it might affect local authorities.

Survivors of child abuse in care in Scotland will be able to claim compensation following the Scottish government’s confirmation that a statutory scheme will be set up without delay.

The announcement, which was made by the Deputy First Minister John Swinney in a speech to MSPs in October 2018, follows the publication of recommendations by the Scottish Human Rights Commission InterAction Action Plan Review Group. This group, which includes representation from stakeholders including survivors, support organisations and residential childcare service providers, published 14 recommendations regarding a potential financial compensation scheme in September 2018, after a lengthy period of consultation.

Government commitments

Although the details of the compensation scheme are yet to be determined, Swinney made a number of commitments in his speech to the Scottish Parliament. As well as stating that the legislation required to set up the scheme would be passed inside the current parliamentary term, which ends in 2021, he also confirmed that advance payments for survivors who might not live long enough to use the statutory scheme due to age or ill-health would be fast-tracked to 2019.

These advance payments will be available to individuals aged 70 or over, or where their ill-health is defined as ‘approaching end of life’. This will include survivors whose abuse occurred before 26 September 1964 and whose rights to compensation through civil court action would otherwise have been extinguished.

In addition, the government has also confirmed that it will begin discussions with providers of care services to consider ways in which the scheme can be funded. This is in line with the review’s recommendation that all those responsible should contribute to the scheme.

Detailed recommendations to come

While the finer detail is yet to be determined, with the government already taking up some of the Review Group’s recommendations, it is worth looking at the other proposals too.

With regard to the level of compensation, the review recommended a combination payment. This would involve a flat-rate standard payment along with an individual experience payment. This individual payment would take into account factors such as the nature and severity of the abuse; the period of abuse; and the life-long consequences.

It also recommended arrangements for interim payments, which would enable priority groups of survivors to access payments prior to full payment.

Interesting development

This is a very interesting development and will no doubt be considered in England and Wales at some point too, especially as some commentators have been calling for such a scheme for many years.

It’s also in keeping with the direction of travel in other countries, some of which have already set up compensation schemes for abuse survivors. Australia’s National Redress Scheme pays a maximum of A$150,000 (£83,000) to survivors, and has set aside A$4bn (£2.21bn) to fund its compensation plan. A scheme is also in place in the Republic of Ireland, where the Residential Institutions Redress Board has paid out almost €970m (£874m) with the largest award €300,500 (£271,000).

Northern Ireland is also exploring a scheme, with a national inquiry recommending payments of up to £100,000 in 2017.

Funding implications

Given the recommendations put forward by the Review Group, it’s fair to assume that both those who provided the care and their insurers will be asked to contribute to the Scottish scheme, including those insurers who were on risk at the time of the abuse and who might well have outstanding claims on their books.

This will also no doubt include Municipal Mutual Insurance (MMI) so we wait to see what effect this might have on its reserves and the clawback facility.

It will not be an easy task to allocate contributions to the scheme. Self-insured retentions of local authorities will no doubt be included, as would those for church and faith organisations. Would the contributions be calculated on a once and for all basis or would organisations be required to contribute as claims come in or incidents are reported? And would the scheme be mandatory?

In addition, how would the varying reserving strategies of the different insurers and that of the local authorities who self-insure be taken into account?

Establishing a compensation scheme for survivors of abuse is a welcome move and we await with interest the next developments, especially with regard to the allocation of contributions.

More information

As more detail emerges on the shape of Scotland’s compensation scheme for survivors of childhood abuse in care, we will keep you updated on the implications for your organisations. For more information, contact Bill Sulman at [email protected].