Infected Blood Compensation and Standing Charges

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What would you like to see in the Chancellor's autumn budget? But first, the families of thousands of people who were infected with HIV or hepatitis C by the NHS when it used contaminated blood in the 1970s and 80s. may have to pay tax on the compensation that many of them are still waiting for. It's not supposed to be something that's a windfall.

It's a compensation to reflect a massive wrongdoing, and it's heartbreaking. The government did promise that the payments, which could reach a million pounds or more, would be free of all tax. But lawyers have written this week to warn Chancellor Rachel Reeves.

that if she does not change the law, the children of the infected people could be liable to inheritance tax when those payments are passed to them. Dan Whitworth's been looking into this and spoke to that man we heard, whose father died after being infected in the... The affection and love that Owen McLaughlin, who's now in his mid-50s, had for his dad Steve is really obvious.

comes into our family as actually my stepdad. So he was with us when I was very, very young, maybe four or five years old, that sort of age. so um from from then on was absolutely the the dad that we needed in our lives um did everything and ours being my brother and i was absolutely everything you would expect a dad to be at that stage of our life

But Steve suffered with haemophilia. It's a rare disorder which means his blood didn't clot like other people's. That led to health issues and ultimately being infected by contaminated blood products.

1984 is the turning point so that's when his regular use of blood products which had given all sorts of medical complications up until that point hepatitis and so on as we now look back and understand but was diagnosed with HIV and that is traced back to an infection in 1984, ultimately costing him his life in 1989.

And those five years, as Owen told me, were indescribably tough for the whole family. Horrendous. Because you don't, I'm afraid, when you're suffering from HIV and age-related conditions and... um hepatitis c you don't wake up one morning with an infection and die the next day you know there's a horrible period of um

sort of degenerative health when things are just getting worse and worse and worse and um we we went through some miserable times you know my brother and i were teenagers which we're growing up we're you know trying to live a normal life but at the same time this is the the sort of mid-1980s and you know we were sat at home watching tv adverts about aids and not dying with ignorance you'll remember the big old tombstone adverts um and

I can't really put into words what that's like, thinking, you know, why is this happening to us? You know, it's horrible and very, very distressing, I should imagine, from mum's point of view to have this... horrible balance between caring for a husband who is you know going through all sorts of sort of mental trauma as well as physical trauma

And yet at the same time, trying to keep the family going with my brother and I and trying to deal with all the needs that we have as teenage boys. So, yeah, I mean, crikey, you look back on it and think, I don't know how we managed it really, but we did. Now, when it comes to compensation, for victims who are still alive, they get a tax credit, which means any compensation, and the Treasury says some payments will be a million pounds or more, won't be taxed.

But for victims like Owen's dad, Steve, they obviously can't be given a tax credit, meaning any compensation is currently subject to inheritance tax. which Owen says could leave thousands of loved ones facing bills running into several hundreds of thousands of pounds. If you think about the purpose of compensation and why it's paid, it's not... um supposed to be something that's a windfall you know it's a

a compensation to reflect a massive wrongdoing. And it's heartbreaking to see that you could find a situation when an award is made and within short order, 40% is whittled away just through tax. We must get an agreement that things can be dealt with differently. This cannot be allowed to happen. This isn't about me. This is about all of the people who find themselves in this situation.

all of the people who have waited so long to have some kind of justice, and they're staring down the barrel of a gun when they're saying, well, you know, 40% of what you receive could be gone tomorrow. It just can't happen, can it? Owen McLaughlin speaking to our reporter Dan Whitworth. Well, I've now to talk to Jade Garney. She's chair of the Association of Lifetime Lawyers and signed that letter to Rachel Reeves.

Jade Garney, the government has clearly said in the past these sums wouldn't be liable to inheritance tax. Why is it happening? Honestly, I believe that it's an oversight. inheritance tax is extremely complicated it can apply in your lifetime on your death there's lots of different rates and reliefs and exemptions etc

And compared to income tax and capital gains tax, it's extremely complicated. I honestly feel that they needed an expert to guide them when they decided it would be inheritance tax-free to avoid a situation like this. Yes. In your letter to the Chancellor, you asked... swift action. Why is it so urgent to fix it?

That's because interim payments have already been made and further interim payments are due to estates in December. And with these payments, it means that it's very likely that that inheritance tax will now fall due. Yes. And just to explain the detail of why it happens, what the government, if you like, got wrong. How is it that something that regulations say shouldn't be taxed is being taxed?

Yeah, it works fine for those that are alive to receive their compensation. But there's an issue where estates are receiving that compensation because effectively the tax credit can be lost in how estates transfer. It's a complex problem, but there is a very easy solution.

And we have provided three different ways we could resolve this issue by just amending what is already in place. Yes. And just explain the simplest of them to us, if you would. I mean, how can it simply be done by the government?

Well, a lot of individuals who passed away, like Owen's father, leave their entire estate to their spouse. This scandal has been going on for, you know, in some cases up to 50 years. And so what we're finding is that... when the compensation is passed to the surviving spouse it would be inheritance tax-free anyway because their spouse exempt and so the tax credit is lost when it's transferred to them and now because so much time has passed that spouse

may have also passed away. And the estate is then passing down to children like Owen. And it's that transfer that is causing the inheritance tax to arise. But heirs can rearrange it, can't they, if they choose to after a death? Under ordinary rules, when someone passes away, you have a period under legislation of two years in which you can create a deed variation and you can change how an estate is distributed. Now, this is often done either for preference or for tax saving.

purposes. However, because there have been such long delays in paying these compensation payments, we find that we are well outside of that two-year period and they don't have the same protections as everybody else. So in a sense, you're saying that this problem is being caused by

partly because the government didn't get it quite right, but also because of these horrific delays between the events that happened, the people being infected by the NHS, and the compensation being paid. It's that delay that's causing the problem.

That's absolutely right. And we know that there are over 3000 people who have already died as a result of this scandal. And a victim contacted me to say that they had performed a Freedom of Information request and discovered that just in the last two years, spouses of those people who were infected and already died have also died themselves. So it's a growing problem the longer the government takes to issue these compensation payments. So those thousands of people could be affected.

Very briefly and simply, how would your scheme work? We would make amendment effectively that would give the estates involved in this scandal that same two year period so that they could vary things to make them more tax efficient and make the most of that initial tax credit that is provided.

So that would start when the compensation was paid rather than the death, which was 40 years ago in some cases. That is what we're suggesting, yes. It is, though, a bit complicated for people, isn't it? Are they going to have to get advice briefly?

I always suggest that where there is a possibility of any inheritance tax being paid, that you do take professional advice, specifically from someone either qualified with the Association of Lifetime Lawyers or with the Society of Trust and Estate Practitioners, because they have extra qualifications.

can help. And finally, the Treasury has told Moneybox it is, quote, considering the issue, unquote, with a decision expected to be made at the budget. Does that give you hope it might be the right decision, briefly? Well, I'd like to give the government the benefit of the doubt. But if they don't affect this very simple change, it's yet another broken promise, which would be highly disappointing. Jade Garney from the Association of Lifetime Lawyers. Thank you.

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Plans to reform standing charges for gas and electricity are half-baked and should be scrapped, the trade body for the energy industry, Energy UK, has told Moneybox. Standing charges, of course, are those fixed daily costs that households... pay just to be connected to electricity or gas supplies. They rose sharply this month to an average £320 a year. If you have both fuels, that's more than £6 a week. And that's a cost you must pay before you turn on a light or cook.

dinner. Suppliers say it covers the cost of providing and maintaining the supply, but the energy regulator Ofgem is considering proposals to give all customers the choice of a reduced standing charge, but only if they pay more. electricity and gas they actually use. The consultation finished this week. Our reporter Joe Krasner asked these people in Crosby and Merseyside what they make of the plans.

It's a cold, wet afternoon in Crosby and even more reason to have your heating on. But how much is that actually going to cost? Paying far too much. Shouldn't even be a standing charge. We pay enough for gas and electricity. I'm not very happy about the standing charges because I think it should be abolished anyway and my fear is that obviously when they reduce it they're going to put the cost of electricity and gas and everything else up.

to compensate for it because they're not happy to lose money in any sense at all people out there just can't afford the moment and the bills are so high it's unbelievable so really they need to do something about it yeah at the end of the day all these companies want to do is to make money and that's all They don't care about anybody else as long as they make enough money. I would always be worried about what the gas and electricity bills are going to be. Always.

Because I don't really trust the gas or the electricity people. So I'd want to know exactly how much I'm going to pay. And do you know how much you are paying for your standing charges? It's very difficult to read a gas bill and know what you're doing. You just pay us. because they've got the monopoly. Ned Hammond is Deputy Director of Customer Policy at the trade body Energy UK, which represents suppliers. I asked him what they made of Ofgem's plans.

So this proposal from Ofgem is to mandate that all energy suppliers provide a tariff in the market that has a lower standing charge than the price cap level. So it would be £150 below the price cap level of standing charge.

And that cuts it about in half, doesn't it, from what it is now? Roughly in half from what it is at the moment, yeah. And the problem here is that there are already tariffs available in the market that are offering lower standing charges. So it's really just unnecessary for Ofgem to be getting involved in this way and mandated.

things that suppliers have to do it also increases risks for customers so particularly those that are on like low incomes or vulnerable but have high consumption if they move to this they could potentially have much higher costs and people who see like changes in their circumstances

health conditions or a family edition could then see that they unexpectedly have higher energy use and then have much higher costs than they would have on existing tariffs. But you could solve that as suppliers, couldn't you? You could simply look at someone's... bill and how it was made up and put them on the best tariff, whether it was a low standing charge or the full standing charge. You could do that month by month, day by day now with a smart meter, if you wanted to.

that would be very complicated to try and do for every single customer in the market. So it's really important that customers engage with their supplier and take the opportunity to find the best tariff for them. But as I say, there are already lots of tariffs available in the market, some of which have lower standards. charges.

And then actually the sort of like fixed tariffs in the market are often the cheapest deals for people. So people absolutely should look around for those options. But what we don't need is Ofgem coming in and mandating that suppliers have to provide a specific type of tariff that actually creates a lot of risk for customers. and it creates risk for suppliers as well. And that just potentially increases costs for everyone. So what have you said to Ofgem? Presumably you've put in your...

comments now on these proposals. What have you said to them? Our response to this all along, and this started last year and Ofgem has kind of iterated its plans, but even this proposal we don't think works very well at all, and we've suggested that they should scrap these plans.

And instead, they should focus on the bigger review that they are doing that they've kicked off last month and would actually have a sort of proper look at the overall costs across the system rather than implementing a sort of like half-baked measure that would just create unnecessary...

risks for everyone well you say it's half-baked it was 22 000 words long they've thought about it very carefully haven't they well um yeah actually look at you know what what they've done to to create this actually probably not as much work as we would like to have seen on the risks i mean this and

sort of like level of impact assessment is not significant. So, you know, I do think there are sort of significant risks to both customers and suppliers from off-gen mandating this tariff. It really is unnecessary. You say there are risks on both sides. What are the risks of scrapping standing charges? Then behave like...

almost every other business in the country and include the overheads in the price. And then if I see that one firm wants to charge me 29 pence a unit and another charges me 25... I'll go to 25. That is how competition would work effectively, isn't it? It's a decision that has got to be made. It's not an easy one and there are various places that you could put it. Part of that is to cover those fixed central tops. But it's also a factor that if you reduce the standing charge, you will need to...

increase the unit rate for everyone and that means that people with higher consumption will end up having higher costs. Now not everyone who's got higher consumption is just a high-income household. And actually Ofgem did a big review last year, decided not to change the standing charges because they were worried that a large number of...

low income and vulnerable households with high consumption would be heavily affected by a decision to move some things from the standing charge to the unit rate. So that's really one of the biggest issues is that there's a lot of risk to customers if you were to just scrap the standing charge completely. Currently, since prices rose in October, 22% of a typical electricity bill is a standing charge before you've turned on a light.

or boil the kettle why is it so big more than a fifth of your bill just to pay overheads this is partly because of like changes that have been made historically that i would say try to make this sort of like fairer system so that the people that

can most easily reduce or flex their consumption are not being able to kind of like reduce their costs more so than other people are able to. And if you were to make any changes, you would need to increase those union rates. So just the big challenge here is that if you make

changes to the standing charge, you make changes to the unit rate of each unit of energy that's consumed, people with high consumption would have high costs. Ned Hammond from Energy UK speaking to me earlier, and let us know what you think about standing charges.

The inflation figure announced this week will affect all of us, of course, with prices 3.8% higher than a year ago. But that's also the figure the government uses to calculate the increases in most benefits from next April. Moneybox's Sarah Rogers is here with me. Sarah.

Yes, Paul, and we've lots of numbers coming up, so do keep listening for the ones that affect you. Inflation, that 3.8% figure you mentioned, is what the government base's most benefit increases on, although nothing's been officially confirmed yet. Based on what normally happens, personal independence payment would go up by £4.20 a week and for those on the highest rate. And for carers allowance, it's £3.15 extra a week and those changes would come in in April.

Not universal credit, Sarah, because that's a big one. Eight million people roughly get it, don't they? It is. Again, no announcement's been made, but the government introduced a law to Parliament this year, meaning those claiming the benefit would get an extra boost. So the standard allowances paid to single people and couples would go up by nearly 6.2% from April. So for someone aged 25 or over, the standard allowance would go from £400 a month to nearly £425.

And the state pension will rise by average earnings. Yes, so the government uses average wage growth to get this figure, and that's 4.8% this year. That will make the new flat rate state pension £241.30. a week and the old basic rate £184.90 and all this of course Paul to try and keep up with the rising cost of living.

Thanks, Sarah. And on Wednesday, Felicity Hanna is looking at the cost of living. Inflation is not as high as it was a few years ago, but it is still nearly double the Bank of England's target, and even more when you do the food shop. 4.5%, ONS says. She wants to know how you're finding the cost. of living and what you're doing to cope with it. You can email moneybox at bbc.co.uk or send a voice note or comment to Moneybox on WhatsApp 0306 783 183.

Well, four weeks on Wednesday, the Chancellor will present her second budget. And every day there seem to be new speculations in the newspapers about what Rachel Reeves will or won't do on November 26th. Reeves considers breaking manifesto pledge with income tax rise. Labour must raise growth, not taxes. Is Reeves mounting a pension tax raid at the budget?

UK housing markets loses momentum ahead of budget. Major bookmaker warns it could close all 1,300 UK shops if Rachel Reeves increases gambling taxes. Chancellor reconsidering cash ISA reforms in budget. No agreement from the papers there. An economist seemed a bit lost too on just how big a black hole she has to fill. Earlier this month, the Institute for Fiscal Studies projected a £22 billion gap. Others have said £30 billion, even £40 billion.

Or whatever its size, nobody knows how she'll fill it, but even Rachel Reeves herself has warned of tax rises. To help you through a month of future speculation, live now to talk to Elsa Littlewood. She is the tax partner from the accountancy firm B. EDO. Elsa Littlewood, a month out, speculation growing, and the Chancellor is boxed in, isn't she, by her repeated manifesto commitment not to raise income tax, national insurance, VAT. Might she have to break one of those?

Yeah, budget speculation is rife at the moment. It's creating some huge uncertainty. And the risk is people are rushing to do things that they otherwise wouldn't do. These sort of knee-jerk reactions, some difficult decisions ahead. Yes. I mean, do you think seriously income tax rates might rise for the first time for, what, 17 years? I just don't know. It's the honest answer.

There's so much speculation. I think Rachel Reeves is looking at everything right now. It's a possibility. And one of the things she... maybe looking at, which came off the agenda, now seems to be back on it, is limiting the amount you can pay into a cash ISA. It's currently £20,000. Is that back, do you think? Is that being looked at? Would that help her?

That's what we understand from the press speculation. You know, successive governments have encouraged investments through cash ices and pensions, which no doubt we'll talk about.

And what they're looking to do really, I guess, here is to encourage investment in stocks and shares. But that's not right for everyone to take that investment risk. No. And with pensions, of course, they're trying to save money, aren't they? I mean, they'll be subject to inheritance tax from April 2027, we know. But how about a more fundamental...

to look at the tax relief people get when they pay into a pension or indeed when they take that tax-free lump sum out of it. Yeah, pension savers currently get relief at their marginal rate of tax, so if they're 20%, 40% or 45%. taxpayers, they get relief for that.

So there are a couple of ways the Chancellor could look at changing this. She could cut the basic rate at 20%, or perhaps putting in a more general rate of, say, 30%, which would give more relief for lower and medium earners, but lower relief for those higher earners. I mean that's been talked about a lot in the past hasn't it and everyone says oh it's very complicated for people like civil servants who have pensions paid related to their salary.

Yes, that's absolutely right. There's a lot of final salary schemes still out there. Very complex indeed. There's also another way she could look at the relief that's given on pensions, which is looking at the national insurance contributions under salary sacrifice. There are a lot of items that will be looked at at the moment, I'm sure. Because that's a way of getting national insurance relief as well, by saying, oh, I'm not paid.

$40,000, I'm paid $25,000, and then you don't pay national insurance, you pay the rest into a pension. There were also suggestions that gambling firms might have to pay more. They threatened to close shops, as we heard. Would that affect gambling firms more?

more than the people who bet or might it be passed on? I think with any of these tax increases, whether it's... something around national insurance, like we've seen on jobs, employers paying higher national insurance or additional costs for businesses, there is a risk that that will be passed on.

So the odds might change in the bookies' favour, as they always are, I think. The papers today suggest that she'll raise the national living wage ahead of inflation, perhaps by wage rises. Now, that's good news, isn't it, for people with jobs? already saying it's going to be difficult for them to employ people.

Yeah, I've read those same reports. There's suggestions that the national minimum wage will go up ahead of inflation and also that it'll be extended to those between the ages of 18 and 21. And I think whereas we would all... Welcome, lower paid people being paid more. It's inevitably going to have an impact on business in sectors where these wages are at the lower end. You mentioned right at the start about knee-jerk reactions and very briefly, people worried about all this.

How can they budget-proof their finances, in a word? Plan and think. Three words. Three words. That's very good. Thank you very much, Elsa Littlewood of BDO. And of course, we want to hear from you about your budget fears and hopes and questions. Send us a voice note on WhatsApp 0306 783 183 or email us moneybox. Well, for more Moneybox podcasts until the budget, that's how we measure it here, you can contact the programme with any of your financial thoughts and questions.

By those same emails and WhatsApps, we do read them all. And remember, you can hear the programme first when it's broadcast live on BBC Radio 4 at noon every Saturday. In this podcast, the team was Dan Whitworth, Joe Krasner, Sarah Rogers and Ema... Edlin. Studio manager, Simon Kelsey. Our editor is Jess Quayle. I'm Paul Lewis and this was a BBC News Money and Work production for BBC Sounds. And now, how many more sleepless nights till this?

The figure's face was featureless and its entire body was jet black. I'm Danny Robbins, and throughout October, I will be sharing uncanny listeners' real-life ghost stories. That's one every single day as we count down to the spookiest time of the year. Suddenly. All hell lets loose the sound of glass smashing, heavy objects being thrown, doors being ripped off hinges. It was coming from the cellar. I looked up and was staggered to see a humongous black...

Triangle floating silently over the rooftop. Join me as Uncanny counts down to Halloween every day in October on BBC Sounds. In business, they say you can have better, cheaper, or faster, but you only get to pick two. What if you could have all three at the same time? That's exactly what Cohere, Thomson Reuters, and Specialized Bikes have since they upgraded to the next generation of the cloud. Oracle Cloud Infrastructure. OCI is the blazing fast platform for your infrastructure, database,

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